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Monday April 22nd, 2024

Sri Lanka wants to ensure absence major power rivalries in Indian Ocean: president

ECONOMYNEXT — President Ranil Wickremesinghe has highlighted Sri Lanka’s dedication to maintaining a strategic position aimed at ensuring the absence of major power rivalries and upholding freedom of navigation in the Indian Ocean.

Speaking at the Pathfinder Indian Ocean Security Conference phase III held in Colombo on Wednesday February 28, Wickremesinghe said Sri Lanka’s commitment to freedom of navigation has prompted the country to engage in operations as “guardians of prosperity” in the Red Sea.

A statement from the president’s office said that that Wickremesinghe had underscored the significance of the Suez Canal which he said was particularly evident during the Six-Day War when its closure for ten years negatively impacted the Colombo port. This highlighted the necessity of ensuring unrestricted navigation, he said.

Emerging issues including security concerns in the undersea domain, prompts a reassessment of approaches, said Wickremesinghe, adding that the future is in the Indian Ocean. Understanding Sri Lanka’s role within the broader Indo-Pacific framework was important, he noted.

The dynamics of the Indo-Pacific, originating from post-World War II arrangements such as the San Francisco system and the Shanghai communiqué, have evolved, leading to questions about the country’s positioning and potential involvement in regional conflicts, President Wickremesinghe said.

According to the statement, the two-day conference will see participation from delegates representing several nations, underscoring the significance of the Indian Ocean and its role in global security and supply chain resilience.

The imperative to reconcile varying viewpoints on the Indo-Pacific, particularly regarding its geographical limits and implications for maritime security was also highlighted by the president. Sri Lanka adamantly opposes the idea of confining the Indo-Pacific to India’s western boundary, stressing its wider territorial concerns that stretch to the African coast, he said. This stance diverges sharply from China’s expansive outlook, prompting scrutiny into the underlying motives and potential repercussions of these contrasting approaches, he added.

The importance of addressing emerging developments in the Indian Ocean amid complex geopolitical dynamics was also highlighted. This includes China’s growing presence, which is bolstered by infrastructure projects like the Friendship Highway in Pakistan and agreements with India concerning connectivity and harbour development, he said. The evolution of economic corridors such as the Mumbai-UAE-Israel-Europe connection, said Wickremesinghe, highlights the changing geopolitical landscape underscores the need for long-term strategic planning.

The interconnectedness of regional dynamics and the potential implications for maritime security and diplomacy, as evidenced by the recent conflict in Gaza, is also important, said Wickremesinghe. He caleld for a nuanced approaches to crisis management, considering geopolitical complexities and cultural sensitivities.

Wickremesinghe also called for cooperation among major powers rather than competition and outlined Sri Lanka’s vision for the region as a hub for economic growth extending beyond India to Africa.

On the resurgence of Asia’s influence, particularly China’s pivot to the Indian Ocean and the Belt and Road Initiative’s impact, Wickremesinghe noted the importance of re-evaluating traditional power structures and alliances. According to the statement, he also addressed Russia’s eastward shift and the evolving dynamics between Iran and Saudi Arabia, which further complicate the geopolitical landscape, calling for nuanced diplomacy and strategic foresight.

Reiterating ri Lanka’s commitment to promoting stability and cooperation in the Indian Ocean region, Wickremesinghe called for maintaining an inclusive approach that respects the historical significance of the Indian Ocean and considers the perspectives of its diverse stakeholders for long-term peace and prosperity. (Colombo/Feb29/2024)

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IMF official: Sri Lanka’s road ahead is challenging, critical to keep up with reform momentum

ECONOMYNEXT –International Monetary Fund’s First Deputy Managing Director Gita Gopinath said Sri Lanka’s future with many reforms are challenging, but it is critical to keep up with the reform momentum.

Gopinath stated this after meeting the island nation’s State Finance Minister Shehan Semasinghe Central Bank Governor Nandalal Weerasinghe, and Treasury Secretary Mahinda Siriwardena on the sideline of the IMF/World Bank Spring Meetings in Washington.

“I commended them on hard-won economic gains in the past year. The road ahead is challenging and it’s critical to keep up with the reform momentum,” Gopinath wrote on her X platform.

Under IMF programme, President Ranil Wickremesinghe has implemented a raft of hard reforms including higher taxes.

Sri Lanka agreed to the IMF programme after it declared bankruptcy with sovereign debt default in April 2022.

Semasinghe after the meeting tanks Gopinath for acknowledging Sri Lanka’s economic progress.

“Our discussion was insightful and productive, and we appreciate the opportunity to delve into the challenges and opportunities ahead,” the State Finance minister said in his X platform.

“We remain steadfast in our commitment to our reform agenda and eagerly anticipate continued collaboration with the IMF to advance our shared goals.”

Sri Lanka was compelled to go for IMF after the unprecedented economic crisis which was followed by a political crisis that ousted former president Gotabaya Rajapaksa and his government who were legitimately elected.

The IMF programme has included reforms in state-owned enterprises, fiscal sector and financial sectors to ensure debt sustainability.

The global lender also has pledged its support to speed up the island nation’s lingering debt restructuring process with private creditors including sovereign bond holders. (Colombo/April 22/2021)

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Sri Lanka motor racing crash claims 7 lives, 4 critical

ECONOMYNEXT – A deadly accident at motor Race Sri Lanka’s hill country town of Diyathalawa has claimed at least 7 lives police said, after a racing vehicle, in the seasonal Fox Hill Super Cross ploughed in to spectators after running off the track.

Another 21 spectators were injured Sunday, and hospitalized and at least four were critical, police said.

Thousands of people come to watch the Fox Hill Super Cross race, which is usually held in April, as large numbers of people head to the cooler climes in the hills.

According to footage taken by spectators one car overturned on the side of the track.

Sri Lanka’s Newsfirst television said Marshalls were waving flags to caution other vehicles, when another car went off the track and crashed into spectators. (Colombo/April21/2024)

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Widespread support for Sri Lanka debt workout, reform progress at IMF/WB meet: Minister

ECONOMYNEXT – There was widespread support for Sri Lanka’s debt restructuring and acknowledgement of progress made under an International Monetary Fund program, at meeting of the fund and World Bank, State Minister for Finance Shehan Semasinghe said.

“The strides made in our economic recovery and financial stability have been acknowledged as significant advancements towards our country’s prosperity by our stakeholders and international partners,” Minister Semasinghe said in an x.com (twitter) post after attending the meetings.

“Further, it was heartening to note the widespread appreciation and support for Sri Lanka’s debt restructuring process.

“We remain steadfast in our commitment to reaching the restructuring targets and confident of smooth progress in the continued good-faith engagements for a speedy debt resolution that will ensure debt sustainability and comparability of debt treatment.”

Sri Lanka ended a first round of talks with sovereign bondholders in March without striking a deal but some agreement on the basis for a deal.

An initial deal with bilateral creditors have been reached, but they may be awaiting a deal with private creditors to sign formal agreements.

International partners have appreciated reforms made under President Ranil Wickremesinghe, Minister Semasinghe said.

“It was great to engage in productive bilateral discussions with all of whom appreciated the recent economic developments, progress in debt restructuring, strengthening of tax administration, and ongoing governance reforms,” he said.

Sri Lanka’s rupee has been allowed to re-appreciate by the central bank amid deflationary monetary policy, bringing tangible benefits to people in the form of lower energy and food prices, unlike in past IMF programs.

Electricity prices were cut as a strengthening currency helped reduce the cost of coal imports.

Related Sri Lanka central bank mainly responsible for electricity price cut

The currency appreciation has also allowed losses to the Employment Provident Fund imposed to be partially recouped, helping old workers near retirement, as well as raising disposable incomes of current wage earners on fixed salaries.

Related Sri Lanka EPF gets US$1.85bn in value back as central bank strengthens rupee

The IMF, which was set up after World War II to end devaluations seen in the 1930s after the Fed’s policy rate infected other key central banks, started to actively encourage depreciation after a change to its founding articles in 1978 (the Second Amendment).

The usefulness of money as a store of value, or a denominator of current and future values then decline, leading to loss of real savings, real wages and increases in social unrest.

Before that, members who devalued more than 10 percent after printing money for growth or any other reason, faced the threat of suspension from the organization as punishment.

Sri Lanka’s rupee has appreciated to around 300 to the US dollar now from 370 after a surrender rule was lifted in March 2023.

But there is no transparency on the basis that economic bureaucrats are allowing the currency to gain against the US dollar (the intervention currency of the central bank).

The rupee is currently under pressure, despite broadly prudent monetary policy, due to an ‘oversold position’ in the market after recent appreciation made importers and banks to run negative open positions as the usefulness of the currency as a denominator of future value declined with sudden strenghtening. (Colombo/Apr21/2024)

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