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Sunday October 1st, 2023

Sri Lanka’s CPC owes almost billion dollars on India, Iran credit lines

ECONOMYNEXT – Sri Lanka’s state-run Ceylon Petroleum Corporation owed 1,035 million dollars taken after transferring 2.44 billion US dollars borrowed from local banks during periods of monetary instability, official data showed.

The central government had taken over 1.34 billion US dollars of loans from Bank of Ceylon and 1.09 billion US dollars from People’s Bank, a Finance Ministry report said.

Over the years CPC had been forced to borrow from banks after forex shortages emerged from flexible monetary policy (flexible exchange rate/flexible inflation targeting and its peers) involving conflicting money and exchange policies.

The CPC had taken credit from oil suppliers as economists engaged in aggressive open market operations to suppress interest rates, triggering forex shortages in peacetime. The letters of credit had then been converted to loans at state banks.


Shock revelation on how Sri Lanka’s CPC ended up with billions of dollar debt

However more monetary instability borrowings remained.

The CPC owed 251 million US dollars on a loan taken by Sri Lanka from the National Iran Oil Company. The credit was taken decades ago during a forex crisis in the midst of a civil war, when the practice of borrowing excessively during forex shortages began.

The CPC also owed 697 million US dollars to the Treasury on a credit line from India taken during 2022 crisis, which was the worst in the history of the central bank.

Additionally, another 87 million US dollars was owed to the Bank of Ceylon. CPC was also owed money by the Ceylon Electricity Board (CEB) and Sri Lanka Airlines (SLA).

“The treatment of these residual liabilities and cross liabilities between the CEB, SLA, and CPC would be addressed in the Government’s overall strategy for restructuring the balance sheets of key SOEs,” the report said.

As the rupee collapsed the CPC was hit with a loss of 527 billion rupees.

Analysts and classical economist suggested that the power to mis-target rates through aggressive open market operations be taken away from the central bank so that forex shortages and depreciation is eliminated in the future.

A special economic zone at Colombo Port City would be dollarized, eliminating forex shortages from open market operations. (Colombo/June06/2023)

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Sri Lanka National Christian Council opposes Online Safety Bill

ECONOMYNEXT – The National Christian Council of Sri Lanka (NCCSL) in a statement on the Online Safety Bill, said that the existing legal regime is adequate to deal with instances of harmful speech, making it unjustifiable to enact such “stringent laws”.

The Council called upon the government to withdraw the bill immediately.

The body expressed “deep concern” over the proposed bill, detailing its potential to curtail freedom of speech and how, according to the Council, the piece of legislature is inconsistent with the principles of democracy.

“The bill proposes the establishment of an entity named the Online Safety Commission without provisions to guarantee its independence and impartiality,” the statement said.

Chapter 3 imposes restrictions on online communication of certain statements, many of which are vague and overbroad, leaving room for executive control and the curtailing of legitimate criticism and dissent that are basic features of democracy, the statement said.

“The laws granting wide discretion to the executive and its investigative agencies with expansive reach have been misused in the past.”

The Council said that the bill was not drafted with the process of public consultation and discussion, which might have ensured the bill would be less draconian in nature.

“The National Christian Council of Sri Lanka calls upon the government to withdraw this anti-human rights and anti-democratic bill immediately.” (Colombo/Sep30/2023)

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Sri Lanka to implement new vehicle revenue licence issuing system

ECONOMYNEXT – A new system of issuing vehicle licences called eRL 2.0 is to be implemented in 5 provinces, excluding the Western Province, from 3 October onwards.

The new system is to be implemented beginning in the North West, South, North Central, Central and Sabaragamuwa provinces, respectively. The existing vehicle licence issuing system eRL 1.0 will continue to be used in the Western Province.

The issuing of revenue licences islandwide at Department of Motor Traffic head offices and regional branches will be temporarily halted on October 2.

The facility of obtaining vehicle permits online will also be temporarily halted on 6 October till midnight.

The Sri Lanka Information and Communication Technology Agency (ICTA) and the Provincial Motor Traffic Departments are working to modernize the current vehicle revenue license issuance system.

The implementation of the new eRL 2.0 system is expected to be an important step in the digitalisation of Sri Lanka. (Colombo/Sep30/2023)

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Sri Lankan Airlines flights cancelled as aircraft grounded

ECONOMYNEXT – State-run SriLankan Airlines has apologized to passengers who were stranded as multiple aircraft were grounded at the same time.

The airline said it has strict procedures which requires aircraft to be grounded when technical issues are discovered.

“Unfortunately, in this case we suffered a number of groundings at the same time,” the airline said.

“We apologize for the disruption and inconvenience caused and assure all our loyal customers that we are working diligently to minimize such occurrences moving forward.”

The airline said it was booking passengers on other airlines while some have been accommodated at hotels. (Colombo/Sept30/2023)

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