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Tuesday May 30th, 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 cabinet approves President’s proposal to resume Japanese LRT after soared ties 

ECONOMYNEXT – Sri Lanka’s Cabinet of Ministers approved a proposal by President Ranil Wickremesinghe to resume the unilaterally cancelled Japan funded Light Rail Transit (LRT), cabinet spokesman said, as the island nation is in the process of mending ties with Tokyo.

However, any such deals are likely to take place after the debt restructuring and Sri Lanka starts to repay its foreign loans to come out of default, analysts say.

Former President Gotabaya Rajapaksa unilaterally cancelled the 1.5 billion US dollar LRT and East Container Terminal (ECT) projects in 2021. Japan agreed to fund the LRT project while it was one of the tripartite members of the ECT project along with India and Sri Lanka.

The abrupt cancellation hit the diplomatic ties between the two countries and Sri Lankan government officials have said Japan had given the project to Sri Lanka at a very lower financing cost.

President Wickremesinghe returned from Japan late last week after having met top officials of the Japanese government including its prime minister.

“In recent history, due to the stopping of several agreements and proposals suddenly, President Wickremesinghe went to Japan after creating the background to clear some of the worries we have,” Cabinet Spokesman Bandula Gunawardena told the weekly media briefing.

“Before he went, he got the approval from the cabinet to resume the discussion on the light railway project. He got the approval from the cabinet to get parliament approval for bilateral agreements signed or any other investments project. Any change or cancellation of a project could be done only with the approval of the parliament.”

Japan has backed Sri Lanka under Wickremesinghe’s presidency after the island nation declared sovereign debt default. (Colombo/May 30/2023)

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Sri Lanka to tighten grip on television with broadcast law

ECONOMYNEXT – Sri Lanka has formulated a broadcast authority law to regulate electronic media which will be made public soon, Cabinet spokesman Minister Bandula Gunawardana said.

“The draft prepared by a cabinet subcommittee under Justice Minister Wijedasa Rajapaksa has discussed with various parties will be given to all media institutions and broadcast media,” Gunawardana said.

“We do not have to hide or force anyone. A legal framework that can be acceptable to all for all sectors.”

“In a week or two Minister Wijedasa will discuss with state and private stakeholders.”

At the moment Sri Lanka has issued frequencies without conforming to an “international procedures”, he said.

In Sri Lanka television frequencies are issued under a state television act.

Successive administrations in Sri Lanka has since around 1980 mis-used state television duopoly which including for conducting elections according to critics.

Private television as well a raio emerged around the 1990s and has since over shadowed state media.

There have been calls by ruling party politicians from time to time to control private media. There is now calls to control social media.

At a Committee on Public Accounts meeting of the Department of Government Information, ruling coalition legislators called for regulation of television content. (Colombo/May30/2023)

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Sri Lanka rupee at 296.75/297.25 to dollar at open, bond yields steady

ECONOMYNEXT – Sri Lanka’s rupee opened at 297 /297.50 against the US dollar in the spot market on Monday, while bond yields were steady, dealers said.

The rupee closed at 296.75 /297.25 to the US dollar on Monday after opening around 296.50 /297.50 rupees.

A bond maturing on 01.09.2027 was quoted at 26.50/75 percent steady from Friday’s close at 26.50/65 percent.

Sri Lanka’s rupee is appreciating amid negative private credit which has reduced outflows after the central bank hiked rates and stopped printing money. (Colombo/ May 29/2023)

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