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Saturday September 30th, 2023

Sri Lanka Human Rights Commission probing rehabilitation centre mass escape

ECONOMYNEXT – The Human Rights Commission of Sri Lanka (HRCSL) is investigating the escape of nearly 700 detainees at the Kandakauwa Drug Rehabilitation Center in Polonnaruwa, on Wednesday (29) June, an official said.

HRCSL Acting Director Sulari Liyanagama told EconomyNext on Friday July 01 that the investigation was launched on the day of the incident, and that the HRCSL officers and Regional Coordinator from Anuradhapura had visited the facility on Thursday June 31.

“We will give our recommendations based on our independent investigation,” said Liyanage.

The Police Media Division said around 600 escapees were arrested by Thursday (30) June. The rehabilitation centre  houses 998 detainees at the time, police sources confirmed.

The escape took place during an investigation by the Welikanda police regarding the suspicious death of one of the inmates.

The Centre is guarded by the Sri Lankan Army, a media release from the police stated.

Footage aired on  the privately owned NewsFirst network showed escapees begging not to be sent back to the Centre.

“We are suffering, send us to prison. If the family hadn’t called, they would have killed us,” an alleged victim featured in the footage said.

“We were sent here to be reformed. But they are not treating us. They are killing us,” another man was heard saying.

The video also showed a man claiming to have been assaulted at the centre and was then denied medical attention.

“They told me to go home and get medicine.”

The escape and the video footage regarding it has renewed conversation surrounding Sri Lanka’s handling of people with substance abuse issues, a marginalised community who activists say do not receive the support necessary to overcome their addictions and reintegrate into society.

Former Human Rights Commissioner Ambika Satkunanathan said in a tweet on Wednesday June 29 that the video validates her findings from a year ago.

“They beg to even be sent to prison but not back to Kandakadu. Imagine the conditions if they’re begging to be sent to prison,” she said.

The centre faces criticism from activists for its military involvement, alleged mistreatment of detainees and compulsory rehab concept, which is regarded as a Human Rights violation by organisations like the United Nations.

The UN called for closure of compulsory rehab centres as far back as 2012. Activists say that the “military style” treatment of the patients in such centres are not backed by medical evidence.

Rehabilitation Centres like Kandakadu fall under the purview of the Bureau of the Commissioner General of Rehabilitation in Sri Lanka. The top officials of the Bureau are all Army officials, and activists are calling for systemic demilitarisation of treatment institutions.

The International Standards for Drug Abuse Disorders published by the World Health Organisation and the United Nations Office on Drugs and Crime states that treatment for substance abuse disorders must be based on respect for human rights and dignity, avoiding “punitive, humiliating or degrading interventions.”

Satkunanathan tweeted that laws allowing compulsory rehabilitation should be repealed and any treatment should be voluntary, health, human rights and community based and also include post-treatment support.

“Another [example] of corrosive impact of militarisation that reiterates urgent need for demilitarisation,” she said.

Police Media said on Thursday that the postmortem of the deceased detainee had not yet been conducted.

According to a media release, Welikanda police are collaborating with the Sri Lanka Army to arrest the remaining escapees. (Colombo/Jun30/2022)

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Sri Lanka bank bad loan expansion slows in June quarter

ECONOMYNEXT – Bad loans at Sri Lanka’s banks, measured as ‘Stage 03’ loans to total loans and advances expanded by 0.5 percent to 13.7 percent in the second quarter of 2023, central bank data shows, which is a slower pace than the previous three quarters.

Bad loans went up 1.9 percent in the September 2022 quarter, and 1.0 percent in the December quarter and 1.3 percent in the March quarter, as debt moratoria also ran out.

In Sri Lanka and other countries, large spikes in bad loans are usually ‘hangover’ of macro-economic policy deployed target growth.

Amid a stabilization effort, credit can also contract, making the bad loans bigger.

Sri Lanka’s bad loans usually spike after period of credit growth re-financed by printed money (reverse repo injections made to artificially target a call money rate), and not real deposits, which then trigger balance of payment deficits which require steep spikes in rates to restore monetary stability.

Sri Lanka economic bureaucrats cut rates with the printed money in the belief that there is a growth shortcut by cutting rates to target real GDP, which has led to external crises since a central bank was set up in 1950.

However, policy worsened after 2015 when the International Monetary Fund taught the country to calculate potential out and dangled the number in front of a central bank which had taken the country to the agency multiple times after running down reserves.

In December 2019, inflationists also cut taxes on top of rate cuts, deploying the most extreme Cambridge-Saltwater macro-economic policy ‘barber boom’ style with predictable results.

When rates are hiked to restore monetary stability, bad loans rise and a currency collapse destroys purchasing power of the consumers and sales of firms which had taken loans.

When central banks cut rates with liquidity injections bad loans also go up in floating rate regimes (the housing bubble), but balance of payments are crises are absent. (Colombo/Sept29/2023)

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Sri Lanka expects restructuring decisions from all creditors: Minister

ECONOMYNEXT – Sri Lanka is engaging positively with all foreign creditors State Minister for Finance Shehan Semasinghe said this week as an International Monetary Fund review hangs in the balance on restructuring.

“All creditors are engaging positively with us,” Minister Semasinghe said. “We expect decisions from all our creditors. For us earlier the better.”

Sri Lanka is negotiating with Paris Club creditors and several non-Paris Club creditors like India and Saudi Arabia together and China separately. China is an observer in the Paris Club meeting.

The Paris Club held a meeting on Sri Lanka on September 22 with China as an observer.

Though Paris Club creditors have a well-oiled mechanism to give a quick decision on countries that default, the entry of China which had earlier not been willing to restructure debt, but was willing to give fresh loans to repay instalments, have complicated matters.

“Let me say again that we support Chinese financial institutions in actively working out the debt treatment with Sri Lanka,” China’s Foreign Ministry spokesman Wang Wenbin told reporters on September 26.

“We are ready to work with relevant countries and international financial institutions to jointly play a positive role in helping Sri Lanka navigate the situation, ease its debt burden and achieve sustainable development.”

There are expectations that Sri Lanka may be able to wrap up a preliminary deal with official creditors as early as October 2023 around the time IMF’s annual sessions take place in Morocco.

Sri Lanka President Ranil Wickremesinghe is to make an official visit to China October.

Sri Lanka is expected to finalize a refinery deal in Hambantota among other investments during the visit, according to reports.

Completing Sri Lanka’s external debt restricting is key to completing the first review of the island’s reform and stabilization program with the International Monetary Fund, which is expected in October or November.

Without completing a review Sri Lanka will not have formal IMF economic targets for December, and no disbursement of the second tranche.

World Bank and IMF with the G20 group, which include India and China has formed Global Sovereign Debt Roundtable has been trying to fine tune debt restructuring going beyond the Paris Club.

IMF’s Senior Mission Chief for Sri Lanka Peter Breuer said Sri Lanka’s debt is ‘spread around quite a bit’ to a question whether an IMF review could progress without China, possibly indicating that the lender would prefer to have the country on board.

“This is a process that we have that applies in the case of Sri Lanka to both official creditors, meaning other countries that have lent to Sri Lanka on a bilateral basis as well as commercial creditors, for example, bond holders,” Breuer told reporters in Colombo.

“And as you know, the government is in discussions with all of these groups. In Sri Lanka’s case, the debt is spread around quite a bit externally and domestically.”

READ MORE Sri Lanka’s external debt restructure ‘progress’ decision by IMF exec board

Out of Sri Lanka’s 36.59 billion US dollars of central government debt, multilaterals held 29.8 percent or 10.9 billion US dollars which will not be restructured.

Bilaterals held another 29.9 percent of which Paris Club was 12.1 percent and China 12.7 percent.

Of the commercial debt which was 40.3 percent, China Development Bank held another 6 percent, relating to a monetary instability loan it has given as a bailout without asking for rate hikes to stop output gap targeting.

China without AIIB held 6,850 million US dollars or 18.7 percent of central government external debt. (Colombo/Sept29/2023)

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Sri Lanka can build strong tourism ‘eco-brand’: UN official

ECONOMYNEXT – Sri Lanka can build an ‘eco-brand’ catering especially to younger tourists who feel strongly about the environment, United Nations Resident Representative to Sri Lanka, Azusa Kobota said.

About 70 percent of global travellers prioritise sustainability in their holiday choices, marking a ten percent increase from 2021, while around 30 percent of travellers feel guilty about flying, due to carbon emissions, she said.

“As the world embraces green thinking during this time of economic recovery efforts, the objective of the tourism sector cannot simply be about increasing the number of inbound tourists,” Kobota said at an event marking World Tourism Day in Colombo.

“It has to be about enhancing their experience through green lenses, by implementing a responsible, eco-conscious paradigm for the sector and building a stronger eco-brand around the sustainable agenda for Sri Lanka,”

“This is no longer about reducing the trade offs between growing the industry and protecting the environment.

“We must see nature as our asset and solutions to be obtained for the exponential growth for our future generations.”

The sustainable tourism market is estimated to have earned 195 billion US dollars in 2022, and is expected to reach about 656 billion US dollars in 2032, she said.

“Tourists, particularly the younger generations from gen X,Y,Z are deeply, deeply conscious about the long term choices of their actions, and the adverse impact of tourists on the environment.

“Statistics show that a significant proportion of global travellers, about 30 percent, feel guilty about flying due to the environmental impact and 22 percent say they actively prefer public transport and bicycle rental options, over renting a car.”

Sri Lanka welcomed one million tourists by September 26 and is expecting more that 1.5 million tourists by the end of the year. (Colombo/Sept29/2023)

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