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Thursday June 8th, 2023

Sri Lanka police minister denies Easter attack allegations; opposition doubles down

ECONOMYNEXT – Sri Lanka’s Public Security Minister on Thursday (11) vehemently denied allegations levelled by opposition MPs over the 2019 Easter Sunday carnage, though the MPs maintained that the minister had failed to answer the questions asked.

Public Security Minister Sarath Weerasekera’s strong denial came two days after main opposition Samagi Jana Balavegaya legislators Harin Fernando and Manusha Nanayakkara asked a series of questions which they claimed had not been satisfactorily answered by the minister.

Fernando on Tuesday (09) told parliament that police had nabbed two lorries on April 4, 2019 – just weeks before the attack – at the Southern Expressway’s Galanigama interchange but subsequently released them because a top police officer had ordered their release.

“What was in those lorries? Who was the police big shot that ordered their release? Who owned those two vehicles? We urge Minister Weerasekera to at least reveal this,” Fernando told parliament.

“This police high up was at the Malu Malu hotel in Pasikuda when the April 21 attack took place. Who paid his bill? On whose voucher did he go there?” he asked.

“I urge [the minister] to reveal this. These are some things that never came to light in the Easter Sunday Presidential Commission of Inquiry (PCoI) probe.”

Fernando further said the wife of Zahran Hashim, the ring leader of the Islamist extremists who carried out the attack, had given a statement that there were days her husband had met Sri Lankan military intelligence officials at his house.

SJB MP Nanayakkara, meanwhile, asked about Puslathini Sara, the wife of another terrorist – the one who had attacked St Sebastian’s church in Katuwapitiya, Negombo.

“We asked where Sara was, and they tried to prove she was dead. Let us and the people know if Sara is being held in a military detention camp or if she died or  if she was sent to India,” Nanayakkara told parliament.

“Also reveal the contents of those undisclosed volumes of the [PCoI] report. Why are you afraid to do so?” he said referring to 22 volumes of the report which have yet to be released to the public. Only one report has been released to the public so far.

Nanayakkara claimed the top police officer alleged to have released the two lorries as mentioned by Fernando has now been given a security posting at Sri Lanka Cricket (SLC). The MP also claimed the lorries the police officer had released had transported “explosives”.

Three groups of local Islamic extremists led by Zahran Hashim were identified as the terrorists behind the Easter Sunday suicide attack that targeted three churches across the country and four high-end tourist hotels in the commercial capital Colombo. The attack killed at least 269 people and injured over 500.

Finding the invisible mastermind behind the attack and their purported true motives were some of the key pledges of the ruling Sri Lanka Podujana Peremuna (SLPP) in the run-up to the 2019 presidential poll. Two years after the election, Catholic church leaders have raised questions about the government’s sincerity in its investigations into the matter.

The head of Sri Lanka’s Catholic church Malcom Cardinal Ranjith recently told a forum that President Gotabaya Rajapaksa had told him that he would become unpopular if he were to implement all the recommendations made in the PCoI report.

“Don’t Play with National Security”

Minister Weerasekera responding to the allegations on Thursday told parliament that the claims by both opposition MPs were misleading and false.

“They are making these claims and hiding behind parliamentary privilege,” he told the House.

Weerasekara said Zahran’s wife Sadia had been questioned on five occasions – twice before the attack and three times after the attack.

“Nowhere had she mentioned that any intelligence personnel met Zahran at their home,’ he said, adding that the police officer failed to investigate properly before the attack as Sara, the wife of another suicide bomber, had been at Zahran’s house when Sadia was questioned.

He also said the two lorries in question had been transporting ornamental fish imported from China to a company called Rajagiriya Tropical Fish International via a China Southern Airline flight when it was stopped at the Galigamuwa interchange.

Weerasekera also said no police officer was at the Malu Malu hotel and nobody has been deployed to Sri Lanka Cricket as claimed by the opposition members.

“Don’t play with national security. Whenever you come to power, you weaken the intelligence and make them ineffective and demotivate them,” he said.

“If you continue this, you will have to take responsibility for it,” he added.

Oposition allegations over the Easter attack have become cause of concern for the government, even as a visibly agitated Cardinal Ranjith continues to bemoan the government’s delay in finding what he says is the grand conspiracy behind the bombings.

Some security experts have opined that the attack was staged with the backing of some international powers. However, this has not been proven yet and remains to be a conspiracy theory so far.

The opposition MPs, however, raised their doubts after Weerasekera spoke in parliament on Thursday.

“He did not answer the questions we asked. We asked about the owners of the lorries and the name of the police officer who had released the lorries,” Fernando told parliament.

He also tabled an official document to prove the top police official’s appointment to the SLC with a monthly salary. (Colombo/Nov11/2021)

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Sri Lanka’s shares slip on profit taking and selling pressure

ECONOMYNEXT – Sri Lanka’s shares closed lower on Wednesday after four consecutive gains in previous sessions spiraled into selling interest and profit taking, an analyst said.

The main All Share Price Index was down 0.28 percent or 24.39 points to 8,722.06, this is the lowest the index has been since May 02, while the most liquid index S&P SL20 was down 0.40 percent or 9.92 points to 2,468.44.

“The market was gaining in the previous sessions and there is selling and profit taking present today, due to continuously being on green,” an analyst said.

In the previous sessions the market was seeing gains, due to lowered policy rates and low inflation stimulating buying interest and driving the sentiment up, an analyst said.

Sri Lanka’s inflation in the 12-months to May 2023 has eased to 25.2 percent from 35.3 percent a month earlier according to a revised Colombo Consumer Price Index calculated by the state statistics office.

The central bank cut the key policy rates by 250 basis points to spur a faltering economic growth as inflation was decelerating faster than it projected.

“There are gradual improvements in the market sentiment, with positive sentiments coming in from lowered policy rates and inflation,” an analyst said.

The market generated foreign inflows of 12 million rupees and received a net foreign inflow of 18 million rupees, due to low share prices and discounted shares followed by a dividend announcement.

The market generated a revenue of 554 million rupees, this is the lowest the turnover has been since May 10, while the daily turnover average was 1 billion rupees. From the total generated revenue, the banking sector contributed 120 million rupees, Diversified Banks contributed 115 million rupees and the Capital Goods Industry generated 78 million rupees.

Top losers during trade were Sampath Bank, Commercial Bank and Aitken Spence. (Colombo/June06/2023)

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Sri Lanka Treasuries yields plunge, 12-month down 318bp

ECONOMYNEXT – Sri Lanka’s Treasuries yields plunged across maturities at Wednesday’s auction with the 12-month yield falling 318 basis points, in one of the biggest one day falls, data from the state debt office showed.

The 3-month yield fell 244 basis points to 23.21 percent.

The 6-mont yield fell 339 basis points to 21.90 percent, along with the 12 months to 19.10 percent.

The short-term yield curve is inverted.

The central bank last week cut its policy rate 250 basis points in a signaling move but is not printing money to enforce the rate cut.

The debt office sold all 140 billion rupees of offered securities. (Colombo/June07/2023)

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Sri Lanka forex reserves rise US$722mn in May 2023

ECONOMYNEXT – Sri Lanka’s foreign reserves grew 722 million US dollars to 3,483 million US dollars in May 2023 from 2,761 million US dollars in April, official data showed as deflationary policy and weak credit reduced ‘above the line’ outflows.

Sri Lanka lost almost all its reserve in over two years as the central bank sold reserves and printed money to keep rates down (sterilized reserves sales) including borrowed dollars from India.

Gross official reserves fell to a low of 1,705 million US dollars in September 2022.

Sri Lanka’s central bank hiked rates in April 2022 to slow credit and also stopped printing money after it ran out of borrowed Asian Clearing Union dollars from India.

Sri Lanka’s gross official reserves are made up of both monetary reserves of the central bank and any balances of the Treasury account from loans or grants it gets.

The central bank’s net foreign reserves are still negative after busting up borrowed reserves to suppress rates. By April (before the collection of reserves in May) the central bank’s net reserves were negative by 3.7 billion US dollars.

In May alone 662 million US dollars were bought from the market, Central Bank Governor Nandalal Weerasinghe said.


No pre-determined level to stop Sri Lanka rupee appreciation: CB Governor

Borrowing dollars through swaps and busting them up, was invented by the US Federal Reserve as it was printing money and breaking the Bretton Woods system in the early 1970s.

Sri Lanka received a 350 million US dollar tranche from the Asian Development Bank and 331 million US dollars from the IMF to the Treasury for budget support.

The loans can be sold to the central bank by the government to generate rupees and spend. However, since credit is weak, not all the inflows go out of the country particularly as the central bank is conducting deflationary open market operations on a net basis.

By allowing the rupee to appreciate unlike in previous episodes of recovery in an IMF program, after a bout of money printing, the central bank is bringing down inflation – in some cases absolute prices – and restoring confidence and easing the ‘pain’ of ‘monetary policy’ or stimulus.


Why is Sri Lanka’s rupee appreciating?

Though exports are falling, tourism revenues are also picking up.

The budget support loans, tourism receipts less the reserve collected will widen the trade deficit. Building foreign reserves involves lending money to the US or other western nations and is similar to repaying foreign debt. (Colombo/June07/2023)

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