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Tuesday June 25th, 2024

Sri Lanka’s ruling SLPP, president’s UNP team up for local govt elections

ECONOMYNEXT – The ruling Sri Lanka Podujana Peramuna (SLPP) and the formerly rival centre-right United National Party (UNP), the party headed by President Ranil Wickremesinghe, will join forces to contest the local government elections that may or may not take place in March this year.

UNP general secretary Palitha Range Bandara told reporters following a discussion between UNP and SLPP representatives Monday January 10 that the two parties will contest the election together under the SLPP’s Pohottuwa (lotus bud) symbol for some of the local bodies, the UNP’s elephant symbol for some and a common symbol for the others.

Consensus has already been reached to contest the Colombo Municipal Council (CMC), traditionally a UNP stronghold, the Kandy Municipal Council and the Puttalam Urban Council under the elephant symbol, the former parliamentarian said.

District leaders of both parties had taken part in Monday’s discussion, and agreement had reached for five districts – Kandy, Kurunegala, Puttalam, Kalutara and Ratnapura – on which symbol to contest for which local authority and how to divide up nominations. Discussions for other districts will continue in due course, said Bandara.

The two parties have yet to work out a common symbol which will be decided later upon further discussion, he added.

Asked if the local government election will go ahead as announced, Bandara said the chairman of the election commission has been summoned for a discussion and he will work accordingly.

Despite the election commission announcing January 18 to 21 as dates for accepting nominations for the local polls, there is a cloud of uncertainty over the widely anticipated election. Opposition parties continue to accuse the government of resorting to various underhand tactics to delay the election while the election commission itself is reportedly divided on whether it should go ahead with the polls.

A number of government ministers have said the cash-strapped country cannot afford to hold elections at present, while some analysts warn that an election at this juncture could derail or at least slow down Sri Lanka’s recovery process. President Wickremesinghe, though he has said he will not participate in the UNP’s election campaign, is also reportedly decidedly not in favour of an election at present, choosing instead to prioritise his mandate to bring Sri Lanka out of its worst currency crisis in decades.


Sri Lanka’s LG polls may derail President’s reform agenda, delay IMF loan – analysts

Asked if the government has the funds for an election, Range Bandara said: “Both you and I know the economic situation of the country, but if there is an election we will face it. However, the economy is in dire straits.”

The SLPP is allied with 13 other parties, while 54 parties and organisations are affiliated with the UNP, despite the latter’s unprecedented electoral misfortunes at the 2020 parliamentary polls. The UNP general secretary said all allies of the party have agreed to work together.

The party stalwart scoffed at suggestions by reporters that newly formed or forming alliances such as the Uttara Lanka Sabhagaya pose a challenge to the UNP.

“The only challenge at the moment is the economy. Nothing else is a challenge.”

He is also unconcerned about the threat posed by the main opposition, the Samagi Jana Balawegaya (SJB), which will likely do well in if not sweep the polls if they’re held at a time when the government’s popularity is once again at a low in light of increased taxes and cost-reflective utility tariffs.

“[The SJB] may prove a challenge in a bus race, but not in an election,” said Bandara, in an apparent swipe at the SJB leader who was recently recorded driving a bus at an SJB event. (Colombo/Jan10/2023)

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  1. sacre blieu says:

    From the frying pan into the fire. That is what our politics and politicians are taking us. Quo vadis?

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  1. sacre blieu says:

    From the frying pan into the fire. That is what our politics and politicians are taking us. Quo vadis?

Sri Lanka to sign Paris Club debt deals as fresh ISB talks to also start

ECONOMYNEXT – Sri Lanka will sign agreements on restructured debt with Paris Club creditors Wednesday, Cabinet spokesman Minister Bandula Gunawardana said as sources said talks with private creditors are also due to start later in the week.

The relevant senior officials and State Minister Shehan Semasinghe has already left the country to sign the agreements, Minister Gunawardana said.

Sri Lanka has held detailed negotiations with bilateral creditors ever since a sovereign default in 2022 and President Ranil Wickremesinghe has personally met leaders of friendly countries to expedite the restructuring, he said.

The finalizing of the restructure was a ‘great victory’ for Sri Lanka he said.

Details will be revealed to parliament by President Wickremesinghe and an address to the nation on Wednesday he said.

Discussion with private bondholders are also taking place separately, he said.

Face to face talks with bond holders are likely to start Thursday, sources said.

Investors in a steering committee representing key bondholders have halted trading and are in a ‘restricted’ period Bloomberg Newswires reported.

Sri Lanka is attempting to restructure 12.5 billion dollars of sovereign bonds and about 1.7 billion dollars of past due interest following the declaration of an external default in 2022.

Private investors are seeking some so-called macro-linked bonds whose final haircut is linked to dollar GDP as well as some standard or ‘plain vanilla’ bonds with an upfront haircut.

The style of bonds have not been used in sovereign restructurings before. In the latest round of talks more plain vanilla bonds may be discussed, sources aware of the thinking of some bond investors said.

The ISB holders have proposed a 28 percent haircut and a 1.8 percent consent fee. The macro-linked bonds would have principle re-stated up to 92 percent of the original depending on the evolution of gross domestic product.

Sri Lanka is restructuring debt using an IMF debt sustainability model applied to middle income countries with market access as opposed to debt sustainability model used in countries like Ghana applicable to low income countries requiring deeper haircuts on both domestic and foreign debt.

Hair cuts may also depend on the maturity of bonds and the coupon interest.

Ghana has higher levels of commercial debt having started to access capital markets from around 2007.

Ghana also has a bad central bank like Sri Lanka and has gone to the International Monetary Fund 18 times.

The country is also operating flexible inflation targeting (inflation targeting without a clean float), which critics say is the latest spurious monetary regime peddled to hapless unstable countries without a doctrinal foundation in sound money.

Having done broad domestic debt restructuring as well as continued currency volatility both interest rates and inflation remains above 20 percent.

Ghana’s central bank has a worse monetary anchor (8 percent inflation plus 2 percent) compared to 5 percent plus two in Sri Lanka and runs into currency trouble despite being an oil producer like Iran, Venezuela and neighboring Nigeria.

Nigeria has an inflation target of 6-9 percent but ends up with around 20 plus inflation and currency trouble.

Sri Lanka has undershot its inflation target since reaching monetary stability in September 2022 and has appreciated the currency, amid deflationary policy giving a strong foundation for economic activity to resume. (Colombo/June26/2024)

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Sri Lanka to seek investors for 200MW BOOT power plant

EONOMYNEXT – Sri Lanka’s cabinet has given approval to seek investors for a 200 MegaWatt independent power plant on a build-own-operate-and-transfer (BOOT) basis, a government statement said.

The internal combustion power plant will be capable of running on natural gas and is part of the Long-Term Generation Expansion of state-run Ceylon Electricity Board.

The investor will get as 20-year power purchase agreement.

Land next to the ‘Sobhadanavi’ combined cycle plant will be made available for the developer.

According to the generation plan, the 200MW IC plant is expected to come on stream by 2026.

In 2026, a 115 MW gas turbine, a CEB owned diesel plants of 68 MW and 72 MW are due to be retired. (Colombo/June25/2026)

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Sri Lanka rupee closes steady at 305.25/35 to US dollar

ECONOMYNEXT – Sri Lanka’s rupee closed fairly flat at 305.25/35 to the US dollar on Tuesday, down from 305.20/30 to the US dollar on Monday, dealers said, while bond yields up.

A bond maturing on 01.06.2026 closed at 10.75/11.05 percent.

A bond maturing on 15.12.2026 closed at 10.65/11.05 percent, up from 10.45/85 percent.

A bond maturing on 15.10.2027 closed at 10.65/11.10 percent.

A bond maturing on 15.03.2028 closed at 11.20/11.50 percent.

A bond maturing on 15.09.2029 closed at 12.10/15 percent, up from 12.05/17 percent.

A bond maturing on 01.12.2031 closed at 12.10/20 percent, up from 12.08/15 percent.

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