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Monday December 11th, 2023

Sri Lanka’s top court allows case against ex-president, top officials over currency crisis

ECONOMYNEXT – Sri Lanka’s Supreme Court has granted leave for Transparency International Sri Lanka (TISL) and three other petitioners to proceed with a fundamental rights case against former president Gotabaya Rajapaksa among many others for being responsible for the country’s worst currency crisis in decades.

The TISL along with activists Chandra Jayaratne, Jehan Canagaretna and Julian Bolling filed the  petition in the public interest calling for action against persons responsible for the prevailing crisis in Sri Lanka.

Former President Rajapakse, former Finance Ministers Mahinda Rajapakse, Basil Rajapakse and Ali Sabry, the then Cabinet of Ministers, the Monetary Board of Sri Lanka, former Governors of the Central Bank W D Lakshman and Ajith Nivard Cabraal, former Secretary to the Treasury S R Attygala, former Secretary to the President P B Jayasundere, and Monetary Board member S S W Kumarasinghe were named as respondents.

The TISL in a statement said the Supreme Court also directed to include current Monetary Board members Sanjeeva Jayawardena and Ranee Jayamaha, who also served before the economic crisis, as respondents in the application.

The TISL said the court has ordered the Auditor General to conduct an audit and submit a report by the November 30 on the decision made by the Monetary Board to set the value of the Sri Lankan rupee at 203 against the US Dollar.

The Supreme Court has also ordered a report on the delay in seeking assistance from the International Monetary Fund (IMF), the settlement of the sovereign bond of 500 million dollars on January 18, 2022, using foreign reserves, and an audit on the loss caused to the Central Bank by such payments.

The Court also has directed incumbent central bank governor Nandalal Weerasinghe to produce copies of all communications and recommendations given to former president Gotabhaya Rajapaksa, former Finance Ministers Mahinda Rajapaksa and Basil Rajapaksa, the Cabinet of Ministers, the Monetary Board of Sri Lanka, Former Governors of the Central Bank W D Lakshman and Ajith Nivard Cabraal, and former Secretary to the treasury S R Attygala.

The Monetary Board has been directed to produce copies of all reports given to former Ministers Mahinda Rajapaksa and Basil Rajapaksa.

Sri Lanka’s economic crisis aggravated after the central bank under Cabraal allowed the rupee to collapse following heavy money printing in trillions of rupees to maintain record low interest rates to boost economic growth during the COVID-19 pandemic.

Cabraal, the former central bank governor, told EconomyNext that he has already submitted an affidavit to the Supreme Court in July this year and it still is valid.

In the affidavit, Cabraal though his lawyers said he had made every effort to enable the Monetary Board to deliver its key objectives of economic and price stability as well as financial system stability in a holistic, practical and legal manner in  very difficult and challenging circumstances and thus he has not breached the fundamental rights of any petitioners. (Colombo/Oct07/2022)

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Sri Lanka rupee opens at 327.00/50 to the US dollar

ECONOMYNEXT – Sri Lanka’s rupee opened at 327.00/50 to the US dollar on Monday, from 327.00/30 Friday, dealers said.

On the Colombo Stock Exchange, both indices opened up: The All Share Price Index 0.28 percent at 10,823, and the S&P SL20 0.35 percent at 3,113.85.

Bond yields were up.

A bond maturing on 01.08.2026 was quoted at 14.05/20 percent from 14.05/15 percent.

A bond maturing on 15.01.2027 was quoted at 14.05/20 percent from 14.10/25 percent.

A bond maturing on 01.07.2028 was quoted at 14.20/50 percent from 14.20/35 percent.

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Sri Lanka promoting Buddhist tourism from Vietnam, ASEAN

ECONOMYNEXT – Sri Lanka is planning to boost Buddhist tourism by linking temples in the country with those in East Asia, Foreign Minister Ali Sabry said after to welcoming a delegation of monks from Vietnam.

President Ranil Wickremesinghe, and Minister Sabry have initiated a temple-to-temple program where 100 Sri Lanka temples will be linked with counterparts in the Association of South East Asian Nations region.

“Tourism development will get a lot of growth with the temple-to-temple program,” Minister Ali Sabry said.

Along with the delegation of monks, five travel agents from Vietnam were also invited.

Under the first phase of the Temple-to-temple programs, several monks from Sri Lanka had received invitations from Indonesia, Malaysia, South Korea and Vietnam the Foreign Ministry said.

The Temple-to-Temple diplomacy program will be extended to Singapore, Japan, Thailand and Cambodia during the second phrase of the program.

Sri Lanka is targeting 2.3 million tourists in 2023, after getting about 1.5 million this year. (Colombo/Dec10/2023)

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ADB $200mn loan for Sri Lanka economic stabilization efforts

ECONOMYNEXT – The Asian Development Bank (ADB) has approved a US 200 million dollar concessional loan to Sri Lanka to help stabilize the country’s finance sector.

The Financial Sector Stability and Reforms Program comprises two subprograms of IS 200 million dollars each, according to a statement by the ADB.

“The program’s overarching development objective is fully aligned with the country’s strategy of maintaining finance sector stability, while ensuring that banks are well-positioned for eventual recovery,” ADB Country Director for Sri Lanka Takafumi Kadono was quoted as saying in the statement.

“The expected development outcome is a stable financial system providing access to affordable finance for businesses in various sectors of the economy.”

The ADB statement continues:

“Subprogram 1 targets short-term stabilization and crisis management measures that were implemented in 2023, while subprogram 2 is planned to be implemented in 2024 and focuses on structural reforms and long-term actions to restore growth in the banking sector.

The program will help strengthen the stability and governance of the country’s banking sector; improve the banking sector’s asset quality; and deepen sustainable and inclusive finance, particularly for women-led micro, small, and medium-sized enterprises.

According to the International Monetary Fund’s (IMF) latest review, Sri Lanka’s economy is showing tentative signs of stabilization, although a full economic recovery is not yet assured.

The program is a follow-on assistance from ADB’s crisis response under the special policy-based loan that was approved for Sri Lanka in May 2023.

It is aligned with the fourth pillar of the IMF’s Extended Fund Facility provided to Sri Lanka to help the country regain financial stability.

It is also in line with the government’s reform agenda, including strengthening the operational independence of the Central Bank of Sri Lanka (CBSL) and its designation as the country’s macroprudential authority.

In designing this subprogram 1 loan, ADB has maintained close coordination and collaboration with the IMF to design targeted regulatory reforms for the banking sector—including the asset quality review—and with the World Bank on strengthening the deposit insurance scheme.

“The loan is accompanied by a $1 million grant from ADB’s Technical Assistance Special Fund to provide advisory, knowledge, and institutional capacity building for Sri Lanka’s Ministry of Finance and CBSL.”

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