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Tuesday April 23rd, 2024

Sri Lanka planning bad-debt authority for parate execution nod: Justice Minister

ECONOMYNEXT – Sri Lanka is planning to to set up an intermediate regulatory authority to determine whether or not a collateral of defaulted should be auctioned under parate execution powers, Justice Minister Wijedasa Rajapsaksa has said.

Under so-called parate execution powers, the Board of a bank decides to auctions assets of defaulted loans, usually after other methods of recovering loans fail.

“We believe that there should be an intermediate regulatory authority,” Minister Rajapaksa said.

“Therefore it is expected to bring an amendment to the parliament relating to this.”

The regulatory authority will give a “certificate” that it was reasonable to sell the pledged assets of a bad loans.

It will be given be examined whether the default was done willfully, or even if the loan could not be repaid, whether it could be restructured and a fresh loan given, and the business allowed to go forward after restructure or reasons like negligence was involved to protect banks.

Under the Mortgage Act, a court order is needed to recover assets, he said.

Bankers have warned that if parate powers are taken away, they will have to tighten rules to protect depositors and access to credit will be more difficult.

Minister Rajapaksa claimed that some banks were mis-using parate powers, without naming them.

The pressure to stop recoveries comes as bad loans in the banking system spiked to around 13 percent, following an economic crisis triggered by inflationary rate cuts enforced with liquidity tools of the central bank, which drove the country to the International Monetary Fund for the 17th time.

Minister Rajapaksa charged that some bankers were not “holy” and that they had other businesses, and they gave loans to competitors that they did not need and could not be paid back, and using parate powers bankrupted them.

He claimed that due to the central banks policy of boosting the balance sheets of banks, agriculture which was 14 percent of the gross domestic product was now down to 8 percent.

“On the other side, the industry which was 37 to 38 percent was down to 32 percent. In our country the services sector has only expanded. Services has grown to 60 percent.”

He claimed that India had similar problems to Sri Lanka in 1991 and had to go to the International Monetary Fund.

“India went to the IMF, but only once,” he said. “They got IMF help and built more than 400 billion dollars of reserves. We have gone to the IMF 16 times and is now going for the 17th time. Why can’t we rescue this small economy. That is because we have expanded the service sector.”

However according to published data India’s service sector which was 37 percent in 1990 has grown to 48.2 percent by 2022 and has been the main driver of growth.

India has also gone to the IMF 7 times until central bank reforms were made in 1991 and shifted to a different anchor. (Colombo/Feb28/2023)

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Iran President to open Sri Lanka $514mn irrigation, hydro power project

MULTIPURPOSE: Uma Oya multipurpose development project is the largest since the end of the Mahaweli projects.

ECONOMYNEXT – Iran President Seyyed Ebrahim Raisi will inaugurate an irrigation and hydropower project that was designed and built by Iranian engineering firm and was also initially financed before international sanctions hit the project.

The Uma Oya (River) project will irrigate 4,500 acres of new agricultural land, generate 290 Gigawatt hours of electricity and also provide drinking water, a government statement said.

Sri Lanka had awarded an engineering, procurement, construction (EPC) to Iran’s FARAB engineering group to design and construct the 514 million dollar multipurpose project in 2010.

The project was funded until 2013 with a million US dollar credit from the Export Development Bank of Iran but international sanctions prevented the country from continuing financing, a government statement said.

The project continued with funding from Sri Lanka. Sri Lanka had since repaid 19.3 million dollars of the credit and 35.2 million remains outstanding.

The Uma Oya project has a 120MW of hydro power generators, which can generate 290 Giga Watt hours of energy.

Each year 145 million cubic metres of water will be taken from Uma Oya to the Kirindi Oya river valley after generating electricity in an underground power station.

It will irrigate 1,500 hectares of existing agricultural and 4,500 hectares of new land in the Moneragala district, where crops can be cultivated in both the Maha and Yala seasons.

About 39 million cubic meters of water will be used for drinking and industrial purposes.

Two reservoirs built at Dyraaba and Puhulpola in Uma Oya basin is connected by a 3.98 kilometre conveyance tunnel and water is taken through a 15.2 kilomtre headrace tunnel to an underground power station. A tailrace tunnel takes water from the power station to the Kirindi Oya basin.

The project was originally expected to be completed in 2015, but due to financing delays and later water leaking into the headrace tunnel and the Covid pandemic had delayed it. The project completion date was extended to March 31, 2024 and defect liability date to March 31, 2025.

(Colombo/April23/2024 – CORRECTED Iran President Seyyed Ebrahim Raisi will inaugurate an irrigation and hydropower project that was designed and built by Iranian engineering firm.)

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Sri Lanka state oligopoly allowed to import some black gram

ECONOMYNEXT – Sri Lanka has allowed the import of some black gram, by three state agencies, according to a gazette notice issued under the hand of President Ranil Wickremesinghe.

Import licenses will be given for 2,000 metric tonnes of the seed classified under HS Code 7312.31.22 and 29.

Sri Lanka State Trading Corporation, National Food Promotion Board and Sri Lanka Hadabima Authority is to be given import licenses.

Traders have resorted to smuggling some types of black gram (ulundu) mis classified as chick peas, to get over high taxes and import restrictions.

Tamil legislators have also protested the import controls, which they go into several key ethnic foods they consume. (Colombo/Apr23/2024)

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Sri Lanka Foreign Ministry consular division shifted to Battaramulla

ECONOMYNEXT – Sri Lanka’s Foreign Ministry said it consular division would be shifted to the Suhurupaya building in Subuthipura, Battaramulla from May 02, 2024.

Document authentication services provided by the Consular Affairs Division in Colombo will be suspended on 29 and 30 April 2024 held transfer the Electronic Document Authentication System (e-DAS) to the new premises at Suhurupaya.

Urgent applications for authentication to the Consular Division in Colombo, or any Regional Consular Offices by 4.15 pm on 26 April 2024, the Foreign Ministry said.

Regional Consular Offices in Jaffna, Trincomalee, Kurunegala, Kandy and Matara will remain open to accept applications.

Authenticated documents will be delivered to the applicants only on Thursday, 02 May 2024.

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