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Monday March 4th, 2024

Sri Lanka JVP’s official visit triggers political, religious leaders to raise anti-Indian sentiment

ECONOMYNEXT – The visit of Sri Lanka’s Marxist Janatha Vimukthi Peramuna (JVP) leader to India on an official invitation has led to a new wave of anti-Indian sentiment with political and religious leaders raising concerns over the aim of the New Delhi ahead of the island nation’s presidential elections.

Prime Minister Narendra Modi’s Indian government in an unprecedented invited JVP leader Anura Kumara Dissanayaka for a five-day official visit which included meetings with Indian External Affairs Minister S. Jaishankar, National Security Adviser Ajit Doval, and Foreign Secretary Vinay Mohan among many others.

The JVP was involved in two armed uprisings against the Sri Lankan government in 1971 and 1987-89. The motive for both uprisings was to establish a socialist state. However, both insurgencies were defeated with annihilation of Marxists youth.

The party, which earlier had trained militants, is currently led by 55-year-old Dissanayaka who has been in the parliament for more than 23 years and once held cabinet minister portfolios for 14 months in 2004/5 period.

The JVP has strongly protested an Indian agreement with Sri Lanka and many Indian projects citing they are part of Indian expansionism and will lead to deprive opportunity for Sri Lankans.

“We feel there is some deal,” Walahahengunawewe Dhammaratana Thera, Chief Incumbent of Mihintale Raja Maha Viharaya told reporters on Wednesday.

“We ask Anura (JVP leader) if you questioned the Indian leaders over Sri Lanka being included in the Indian map as part of India, if you spoke against the power deals violating Sri Lanka’s sovereignty,” he questioned.

The JVP-led protests have halted many Indian investments in Sri Lanka while it has questioned India after securing lands, not using all the oil tanks in Sri Lanka’s strategic Trincomalee tanks farm which was once planned to be the oil hub of South Asia with the Indian help.

India has been increasingly investing in Sri Lanka’s energy sector. It has proposed direct oil and gas pipeline connectivity between the two countries while buying excess electricity if generated with the Indian renewable energy projects in Sri Lanka.

“What is the stance your party took over India keeping Trincomalee oil tanks?” Dhammaratana Thera questioned the JVP leader.

“What is the deal with Ajih Dowal who made Gotabaya Rajapaksa and Indian secret service puppets? Did you take or give an election bribe of $10 million from Indian businessmen? What did you speak about Adani’s renewable energy project which is looting?  What is the role played by the US ambassador on getting Indian money or backing for your next election?”

AHEAD OF POLLS

Anura Kumara Dissanayaka’s visit comes as Sri Lankan President Ranil Wickremesinghe has signaled to hold presidential polls in October this year and Parliamentary polls in early 2025.

Though the island nation does not have accurate surveys on the popularity of political parties, informal surveys show people may elect a JVP-led government. The JVP has been a populour party in the past Sri Lankan elections as well, but it failed to capitalize it to win the poll, analysts say.

Anil Hewaththa Neththikumara, a ruling Sri Lanka Podujana Peramuna trade unionist at the state-run Sri Lanka Telecom said the Indian invitation is ahead of a possible Indian deal with Sri Lanka Telecom.

Sri Lanka has chosen Jio Platforms Ltd of India and Gortune International Investment Holding Ltd of Amsterdam as the two pre-qualified bidders for Sri Lanka Telecom under the State Owned Enterprises Structuring programme.

“All know that JVP is the radical outfit which organizes protest campaigns.  An Indian firm is going to buy the Sri Lanka Telecom in the near future and this is just to make sure there is consensus over the deal and there are protests against that,” Neththikumara told reporters on Wednesday.

Analysts say Sri Lanka’s nationalist and leftist politicians have used anti-Indian sentiment to win votes when they face elections. Some of such moves have strained diplomatic relations with India in the past.
However, India helped when the island nation faced its worst ever economic crisis with a sovereign debt default in 2022.

Nationalist politician Udaya Gammanpila, leader of Pivithuru Hela Urumaya, welcomed the JVP move.

“JVP banned all Indian products except the Buddhism in the past. We appreciate the JVP’s change,” he said.

Wimal Weerawansa, another nationalist politician and leader of a JVP-breakaway party said the latest Indian invitation to the Marxist party is to sign the Economic and Technology Co-operation Agreement (ETCA) deal which is opposed by the majority of Sri Lankans. “As per information we have got, India is to sign an ETCA deal with Sri Lanka very soon. ETCA means opening both the Sri Lankan trade and labour market to India. That means depriving the opportunity for Sri Lankans,” Weerawansa told reporters.

“When they (India) want to make this (country) as a colony, they want to control all the political parties like kittens,” he said.

“I am not talking only about Anura Kumara Dissanayaka’s invitation. The next will be the Samagi Jana Balawegaya, the main opposition. What India wants is to give is a leg massage and keep (Sri Lanka) people happy and say don’t interfere on what they do.” (Colombo/Feb 08/2024)

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Sri Lanka’s CEB reports Rs61bn profit for 2023 with Dec quarter gains

ECONOMYNEXT – Sri Lanka’s state-run Ceylon Electricity Bord has reported a profit of 61.2 billion rupees for the year to December 2023, turning around from a loss of 298 billion last year, with all the profits coming in the last year amid heavy rain and price hike, interim accounts show.

The CEB reported profits of 77.9 billion rupees for the December quarter, compared to a loss of 182 billion rupees last year.

About 94 billion rupees in losses were forex losses, coming from the central bank, which printed money to suppress rates and triggered a steep currency collapse in a failed float with a surrender rule.

CEB revenues rose 55 percent to 156 billion rupees in the December quarter, cost of sales fell 45 percent to 78 billion rupees amid heavy rains, giving a gross profit of 78.2 billion rupees for the quarter.

In the year to December, CEB revenues were 606.6 billion rupees, up 96 percent from 308 billion rupees, while cost of sales rose from 444 billion rupees to 506 billion rupees. Gross profits were 99.6 billion rupees.

At group level, which includes LTL Holdings, profits were 75 billion rupees for the year, with income taxes of 6.3 billion rupees, provided.

CEB consolidated profits were 68.4 billion rupees, with other shareholders of subsidiaries accounting for 7.2 billion rupees.

Equity was 498 billion rupees at company level by December 31, with 126 billion rupee capital contribution as well as profits earned in the last quarter. (Colombo/Mar05/2024)

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Sri Lanka rupee opens at 308.20/50 to the US dollar

Sri Lanka stocks reversed its falling trend and gained for the first time in six sessions on Tuesday closed stronger on Tuesday (21).

ECONOMYNEXT – Sri Lanka’s rupee opened at 308.20/50 to the US dollar Monday, from 308.80/90 on Friday, dealers said.

Bond yields were broadly steady.

A bond maturing on 01.08.2026 was quoted stable at 10.90/11.00 percent.

A bond maturing on 15.09.2027 was quoted at 11.90/12.00 percent from 11.90/12.05 percent.

A bond maturing on 01.07.2028 was quoted at 12.20/30 percent from 12.15/35 percent.

The Colombo Stock Exchange opened up; The All Share was up 0.60 percent at 10,755, and the S&P SL20 was up 1.24 percent at 3,077. (Colombo/Mar4/2024)

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Sri Lanka central bank swaps top $3.2bn by December

ECONOMYNEXT – Sri Lanka’s central bank borrowed US dollars from various counterparties through swap transactions, which had topped 3.2 billion US dollars by December 2024, official data show.

The net short position, including swaps disclosed by the central bank, grew by over almost 1.28 billion US dollars from December 2022 to 3,280 million dollars.

The gross position grew from 2,263 million dollars to 3,280 million US dollars over the year.

The central bank supported some state banks with dollars to cover their dollar exposures, which had since been paid back.

By December reported gross reserves of the central bank was 4,491 million US dollars, against swaps of 3,280 billion US dollars.

Swaps of around 1500 related to the People Bank of China.

Swaps allow a central bank to increase gross reserves, without raising domestic interest rates.

Swaps with domestic counterparties lead to liquidity being injected into money markets, which can be mopped if domestic credit growth is moderate.

At the moment many private banks have large dollar positions invested outside the country, which cannot be used for transactions domestically because of a money monopoly given to macro-economists. (Sri Lanka repays debt or collects reserves of U$5bn via banking system since rate correction)

However unwinding swaps after private credit has picked, or engaging in swaps after private credit has picked up, may lead to money being injected to maintain the policy rate, leading to excess credit by banks and balance of payments deficits and or currency collapses, analysts say.

Central bank swaps in the third quarter of 2018 led to a collapse of the currency under the ‘exchange rate as the first line of defence’ policy peddled to Sri Lanka, critics have said earlier.

Domestic currency proceeds of swaps were the primary ammunition to bust East Asian currencies in 1997-98.

Any depreciation after the swap proceeds have been used for imports (effectively mis-targeting rates) a central bank will run a forex loss.

The PBOC however had put a rule, preventing the use of the swap after gross reserves fell below 3 – months of imports, preventing Sri Lanka from getting into further trouble through the use of official reserves for private imports.

Sri Lanka’s central bank also used borrowings from the Reserve Bank of India, via the Asian Clearing Union to run BOP deficits.

Losses from exposed dollar positions of central banks which have gained ‘independence’ from fiscal rules and parliaments and engaged in macro-economic policy, including the Fed, have led to taxpayers bearing the losses in the end.

Swaps were invented by the Fed in the early 1960s, as it deployed macro-economic policy (printed money for growth) threatening its gold reserves and the Bretton Woods system.

Sri Lanka has other borrowings also, including from the IMF, which has made net foreign assets of the central bank negative. (Colombo/Mar05/2024)

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