By Shenal Fernando in The Morning, Mar12, 2023
*Attempts to renegotiate terms with PBoC futile: CBSL
**Sources reveal response from China has not been ‘favourable’
Despite several attempts by the Central Bank of Sri Lanka (CBSL) to renegotiate the conditions of the CNY 10 billion (equivalent to $ 1.5 billion) currency swap with the People’s Bank of China (PBoC), all attempts have proved futile as the response has not been favourable.
Accordingly, the currency swap remains unusable to date, two years after the CBSL and PBoC entered into the agreement.
Speaking to The Sunday Morning Business, a high-ranking source at the CBSL revealed that there had been several conditionalities in the currency swap that had rendered it unusable and while several inquiries had been made previously to amend such conditions, the response had not been favourable. He further revealed that no negotiations were currently ongoing with the PBoC.
In June 2022, President Ranil Wickremesinghe revealed in Parliament that the Yuan 10 billion currency swap with the PBoC required a three-month import cover to draw on the swap and that the CBSL would seek to negotiate the condition with PBoC.
Similar assertions were subsequently made by CBSL Governor Dr. Nandalal Weerasinghe. Despite such announcements, this currency swap, which was signed in March 2021, remains unamended and unusable.
Commenting on the possibility of whether Sri Lanka would be able to utilise the CNY 10 billion currency swap subsequent to the receipt of the first tranche of the Extended Fund Facility (EFF) from the International Monetary Fund (IMF), the source stated: “Our three-month import cover is around $ 3.5 billion and currently we have only around $ 2.5 billion. Therefore, it is unlikely that we will be able to comply with the condition even after we receive the facility. We will still have a shortfall.”
Despite several attempts by The Sunday Morning Business to contact the CBSL and State Minister of Finance Shehan Semasinghe, all such attempts proved futile.
Former Governor of the CBSL Dr. Indrajit Coomaraswamy, speaking at a webinar hosted by the CBSL Centre for Banking Studies (CBS) in June 2022, opined that China would not be willing to alter the conditions that rendered the three-year swap unusable in the near future, as it could then be termed a loan facility and thus Sri Lanka would come under pressure from the IMF and others to include it in the stock of debt to be restructured.
“That would clearly be a disadvantage for China and that is why it is hesitating to remove that condition, which would enable Sri Lanka to use that money,” he stated.
CBSL and PBoC entered into the currency swap agreement for CNY 10 billion in March 2021 with a validity period of three years “with a view to promoting bilateral trade and direct investment for economic development” of the two countries. However, a statement by the CBSL after the swap agreement was signed said that both central banks had agreed to use the swap “for other purposes agreed upon by both parties”.
https://www.themorning.lk/articles/IQDZHfqwwiFI33cD4Tq7
- SRI LANKA SCENE – POLITICS
SLPP falls in line with President’s policies
report in The Sunday Times, Mar 12, 2023
The ruling Sri Lanka Podujana Peramuna (SLPP), which sprung up as a major political grouping surpassing established parties, suffered the worst blow to its image in the aftermath of last year’s mass protests.
Rather than an electoral defeat, such a damaging downfall came, paradoxical enough, due to the actions of the then President Gotabaya Rajapaksa. The strongest blow was to his elder brother, Mahinda Rajapaksa, when he called for his resignation as Prime Minister. That rendered the then Cabinet of Ministers invalid. Other brothers Chamal and Basil found themselves dropped ignominiously. So did Namal, the young and ambitious nephew. No one in the country’s political landscape had been able to paralyze the political activities of the Rajapaksas in just one blow as did brother Gotabaya. If he did think these and other measures, later turning out to be huge blunders, like a bungled economy and an equally bungled security sector as revealed in these columns last week, would hold him in good stead, it was not to be. He left them behind and fled the country.
Nowhere was it felt more than in the SLPP’s founder and ideologue Basil Rajapaksa, who was widely credited for the formation and the rise of the party. Last years’ protests saw him being thrust into a catch-22 situation. It is no secret that both he and his party were strongly opposed to Ranil Wickremesinghe, now President, and his United National Party (UNP). In an unbelievable turn of events, he has now accepted President Wickremesinghe as the leader of the SLPP-led government. Basil Rajapaksa was the principal architect of the 2019 presidential election campaign that led to Gotabaya Rajapaksa’s victory. His biggest dilemma came when Parliament elected Wickremesinghe as President on July 20, last year. That was at the instance of ex-President Gotabaya Rajapaksa. He and his party could no longer fight one of their key political archenemies. It was a case of a grin, embrace and move forward praising what was perceived as good and stomaching what was thought to be against their line of thinking. Of the latter, they only talked in whispers.
Creditably, Wickremesinghe, within days of assuming office, had delivered a morale booster for the SLPP parliamentarians, a single stroke that won him great dividends. It was breaking through a taboo. After mob attacks on their homes and other properties, they had curbed their movements. Even a visit to Parliament was with armed escorts. Both through direct instructions and at meetings of the National Security Council, the President ordered that tough action be taken against protestors who posed a threat. It came as the biggest guarantee for the safety of SLPP members. So much so, on a visit to a funeral house in Tissamaharama, SLPP leader Mahinda Rajapaksa told the household that MPs were able to move around because of the tough stance of President Wickremesinghe. That seemed a great relief not only for them but for him too.
Thus, the cohabitation machinery moved with President Wickremesinge winning the support of SLPP parliamentarians who became the best fans, even better than those in the dormant UNP. Policy as well as differences in opinion took second place. Thus, a predominantly SLPP cabinet of ministers endorsed many a proposal that was the brainchild of President Wickremesinghe. This included even the demands placed by the International Monetary Fund (IMF) for the Extended Fund Facility of US$ 2.9 billion including the upward revision of taxes and a second increase in electricity tariffs. They have stood by the President as he ordered a crackdown on protestors who included trade union and student union members.
The SLPP-led government has just approved three important pieces of draft legislation. One is to amend the Chief of Defence Staff Act. Another seeks to give legal status to the country’s intelligence services. A third will provide legal basis for the National Security Council, which now remains an informal entity where not even minutes are recorded.
Behind the scenes, without the glare of publicity, Basil Rajapaksa did his best to convince the government’s political leadership to conduct the local council elections. However, President Wickremesinghe was not in favour and argued that the revival of the economy should be given high priority. This is why SLPP leader Mahinda Rajapaksa spoke in support of the President. Even General Secretary Sagara Kariyawasam, a staunch Basil Rajapaksa loyalist, declared that the party was for the conduct of the elections. However, he did say if economic revitalisation was the priority that should be clearly explained to the public.
President Wickremesinghe who declared in Parliament that local council elections were not possible until there was an economic recovery also hinted about other polls. During an informal conversation with confidants, he spoke of the likelihood of the presidential and parliamentary general elections, in that order, being held in 2024. It is not clear whether he is basing his thoughts on the belief that the economic situation would have improved considerably by that time. However, despite the hemming and hawing that is going on, it became clear that the local council elections would not be held on March 9 as announced by the Election Commission. The EC has said it has re-scheduled the polls for April 25. The move is viewed as administrative and is for the information of Returning Officers in the various electoral districts. However, the Commission also declared that postal voting would take place from March 28 to March 31. Here again, such votes cannot be counted until the poll is completed.
In new developments this week, moves are afoot to resurrect the SLPP. Basil Rajapaksa was back in the exercise. He was the only guest to be present at a dinner hosted by SLPP leader and twice President, Mahinda Rajapaksa for government MPs. This was at his newly renovated residence cum office complex at Wijerama Mawatha. It was the first occasion the government parliamentary group was meeting there. This residence has been assigned to Mahinda Rajapaksa as former President. Unlike the days when it was occupied by Foreign Minister Lakshman Kadirgamar and former President Maithripala Sirisena, the premises has assumed a completely new look. One of the waiting rooms for visitors, replete with antiques, contains a collection of replicas. Other than two that project Lotus flowers (the symbol of the SLPP) in glass cages, the rest are all elephants and contain the names of people or organisations that gifted them.
A total of 62 SLPP parliamentarians met first at the office complex where there was enough space to accommodate more. Chefs assigned to the residence had turned out a buffet meal. Playing hosts were onetime first lady Shiranthi Rajapaksa and Limini Rajapaksa, wife of Namal Rajapaksa MP.
During the three-and-half-hour event, Basil Rajapaksa explained the state of the SLPP. It was agreed that the SLPP should conduct a major rally in Colombo for May Day and ensure that large crowds attended. Branch organisations countrywide are to be asked to send participants. District-level leaders of the party thereafter briefed those present on the status of the party structure and support base in their areas. Speakers were upbeat and said the SLPP still commanded support at the grassroots level. One of them cautioned that it would be a mistake to neglect this aspect. He criticised the new Freedom People’s Alliance formed under the leadership of Wimal Weerawansa with a helicopter as the symbol. He likened the new party to the Bodu Bala Sena and said he believed it would not be able to win seats at an election. He said he also believed that some members of the new party would even join the SLPP.
The discussion on revitalising the party took considerable time. District-level SLPP leaders have been told to take steps to strengthen party branches in the electorates and launch a membership drive. District-level public meetings are also to be held. The first such meeting will take place in Moneragala today under the leadership of Mahinda Rajapaksa. Thereafter, the parliamentarians focused on the conduct of the local council elections. A formidable section was in favour of holding the polls arguing that it was necessary to ensure that the party remained active at the grassroots level. There were a few others who held the view that a poll at this juncture was not necessary.
Moves to strengthen the SLPP come at a time when most major political parties are in disarray. An exception would be the National People’s Power (NPP) led by the Janatha Vimukthi Peramuna (JVP), which had, citing its own surveys, forecast a major victory for it if local council elections were held. This, according to its projections, would push even the main opposition Samagi Jana Balavegaya (SJB) to second place.
This notwithstanding, the SJB’s own stature has declined considerably in most areas. Some seniors in the party blame it on their leader, Sajith Premadasa, not being active enough. Others said added to that reason was the front’s failure to generate considerable public support over unpopular measures adopted by the government.
The SLPP’s revival, if it goes according to plans, could affect the UNP and the Sri Lanka Freedom Party (SLFP) the most. The internal bickering in the SLFP has heightened in recent weeks……
https://www.sundaytimes.lk/230312/columns/slpp-falls-in-line-with-presidents-policies-514523.html
