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Tuesday December 5th, 2023

Sri Lanka ministers defends decision to pay millions to Chinese fertilizer company

ECONOMYNEXT – Senior government ministers in cash-strapped Sri Lanka on Sunday (19) defended a decision to pay 6.7 million US dollars to a Chinese fertilizer company over a deal that had gone awry, as opposition lawmakers decried the move.

Minister of Highways Johnston Fernando told reporters that antagonising a nation as powerful as China will not be in Sri Lanka’s interest in the long run.

“This issue must be resolved amicably. It’s easy for people to say we paid money for a ship of faeces. But antagonising a powerful country could prove more disadvantageous for us in the long term,” he said.

“[Losing] 6 million dollars is not like losing 1.6 billion dollars. China is a country that gave us money when we needed it,” he said.

Sri Lanka’s cabinet of ministers has decided to pay the 6.7 million dollars to the China’s Qingdao Seawin Biotech Group Co Ltd, whose organic fertilizer was rejected by the island nation.

Sri Lanka’s National Plant Quarantine Service (NPQS) had claimed that samples of the fertilizer contained harmful bacteria, prompting the Chinese company to demand 8 million US dollars from the agency in early November.

Related: Chinese fertilizer firm demands US$8mn in damages from Sri Lanka testing agency

The shipment was rejected by Sri Lanka while en route to the island, with the authorities denying entry to what opposition lawmakers and other critics had called a ship of faeces.

Sri Lanka’s scientific findings were roundly rejected by the Chinese company, with the Chinese embassy in Colombo going as far as to blacklist the state-run People’s Bank for not making the payment owed to the company.

The Chinese company subsequently sought arbitration in Singapore, and Sri Lanka later decided to settle the matter by paying 6.7 million dollars to the fertilizer company, on terms purportedly agreeable to both parties.

Asked if Sri Lanka can afford to pay such a colossal sum at a time when the country is facing its worst economic crisis since Independence amid a worsening foreign reserves shortage, Minister Fernando told reporters that the money simply had to be paid.

“The cabinet has decided to pay the amount. It must be paid,” he said.

Education Minister Dinesh Gunawardena, speaking to reporters after an event in Colombo said the matter needs to be resolve amicably.

“China is a friendly nation to us, as is India. These matters can be resolved amicably, and the president has instilled confidence in the country that this can be done. That’s what’s important,” said Gunawardena.

“If there are certain shortcomings meanwhile, steps  must be taken to correct them,” he added.

The opposition is crying foul.

Main opposition Samagi Jana Balavegaya (SJB) MP Ashoka Abeysinghe told reporters: “These funds are being charged for turning the ship away. The fertilizer must be paid for separately. Some ministers are saying countries cannot be antagonised. What is this government?”

SJB MP Nalin Bandara addressing a gathering said: “This isn’t money from Medamulana (the ancestral home of the ruling Rajapaksa family; not the money in the American bank accounts of Gotabaya or Basil Rajapaksa. It’s your money.”

“It’s 1.4 billion rupees collected from your sugar, lentils purchases, from the reloads bought by young people, to pay for this faeces. Who ever thought Sri Lanka would have to pay for faeces?”

Meanwhile, Environment Minister Mahinda Amaraweera, who represents the Sri Lanka Freedom Party (SLFP), was also critical. The SLFP is a constituent party of the government coalition that is increasingly at odds with the ruling Sri Lanka Podujana Peramuna (SLPP).

“No, we have no such hope on China. I don’t see China saving us or helping us contrary to claims. There is a risk of a coming food crisis. We must prepare for it.  We must launch a massive food production campaign, an agricultural operation.  Or we’ll be in big trouble,” he said. (Colombo/Dec20/2021)

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Sri Lanka finding ways to clear 1.1mn pending cases: Justice Minister

ECONOMYNEXT – Sri Lanka is taking a series of steps to speed up 1.1 million pending court cases and encourage alternative dispute solving mechanisms, Justice Minister Wijedasa Rajapakshe said.

“The delay in court cases is a serious problem,” Minister Rajapakshe told a briefing at the President’s Media Centre.

“We have already taken several steps to expedite cases.”

There were 5,680 cases in Supreme Court, 4,054 in the Court of Appeal, 6,168 in the High Court of Civil Appeal, 8,363 in the Commercial High Court, 28,000 in the High Court, 254,000 in District Courts and 791,000 in Magistrates Courts.

In 2015, only 49 percent of complaints to mediation boards were resolved. Following reforms, the ratio has been increased to 70 percent.

The value of disputes going to mediation board has been raised to one million rupees from 500,000 rupees.

To solve land problems in the post-war period, special mediation boards on property was set up in the North and the East.

Mediation boards on property will be set up in another 16 districts.

Commercial High Courts were increased to four from three.

Another Commercial High Court will be set up in the future. The consideration of cases that can go to a High Court was raised from 4 million rupees to 10 million rupees.

A commercial dispute resolution law will be introduced next January.

A small claims court has been established.

Case involving disputes below 2 million rupees can be directed to small claims court.

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Sri Lanka stocks close up as some investor interest returns

ECONOMYNEXT – The Colombo Stock Exchange closed up on Monday, CSE data showed.

The All Share Price Index was up 0.22 percent, or 23.33 points, at 10,743.59.

The S&P SL20 index was up 0.68 percent, or 20.60 points, at 3,067.73.

Turnover was at 708 million. The banks sector contributed 189 million, while the food, beverage and tobacco sector contributed 176 million of this.

Sri Lanka’s stock market has seen some investor interest return after last week’s news that the country had managed an agreement on a debt restructuring deal with an official creditor committee, and foreign funds for some development projects resumed.

Top positive contributors to the ASPI in the day were Sampath Bank Plc (up at 71.50), LOLC Holdings Plc (up at 379.00), and Commercial Bank of Ceylon Plc, (up at 90.90).

There was a net foreign outflow of 52 million.

Citrus Leisure Plc, which announced that its banquet hall and revolving restaurant at the Lotus Tower would launch on or around Dec 9, saw its share price rise to 6.20 rupees. (Colombo/Dec4/2023).

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Sri Lanka rupee closes broadly steady at 328.10/30 to the US dollar

ECONOMYNEXT – Sri Lanka’s rupee closed at 328.10/30 to the US dollar on Monday, from 328.00/10 on Friday, dealers said.

Bond yields were stable.

A bond maturing on 01.06.2025 closed at 13.70/14.00 percent from 13.70/95 percent.

A bond maturing on 01.08.2026 closed at 13.90/14.10 percent from 13.90/14.05 percent.

A bond maturing on 15.01.2027 closed at 14.00/14.10 percent from 14.05/10 percent.

A bond maturing on 01.07.2028 closed at 14.20/35 percent from 14.15/25 percent.

A bond maturing on 15.05.2030 closed at 14.25/45 percent, from 14.20/45 percent.

A bond maturing on 01.07.2032 closed at 14.05/40 percent, from 14.00/45 percent. (Colombo/Dec4/2023)

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