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The Government has taken a decision to halt the emergency procurement of medicinal drugs.

The decision was announced by Minister of Health Keheliya Rambukwella during a press briefing held today (Oct 02).

Accordingly, a decision has been taken to halt the emergency procurement of medicinal drugs with immediate effect.

Minister Keheliya Rambukwella further said that a Medicinal Management and Strategizing Committee (MMSC) has been appointed to overlook, evaluate, and regulate the purchasing processes within the ministry.

Taking to ‘X’, the Health Minister said that decisions have been taken to regulate, standardize, and further quicken the process of drug procurement for Sri Lanka.

“To date, it has largely been a singular effort because of the pressing need and lack of funds. This will ensure greater efficiency of delivery,” he added.

President Ranil Wickremesinghe held Bilateral Talks with German Chancellor Mr. Olaf Scholz in Berlin, Thursday (28) during his official visit to participate in ‘Berlin Global Dialogue’.

The President was accompanied by High-Level Delegation including Senior Advisor to the President on National Security & Chief of Staff to the President Mr. Sagala Ratnayaka, President’s Senior Advisor on Economic Affairs Dr. R.H.S Samarathunga, Secretary to the Ministry of Foreign Affairs Ms. Aruni Wijewardhena and Private Secretary to the President Ms. Sandra Perera.

SINOPEC has announced a revision of their fuel prices effective from 6.00 p.m. today (Oct. 01).

Accordingly, the price of 92 Octane Petrol remains unchanged at Rs. 358 per litre, while the price of 95 Octane Petrol has been increased by Rs. 06.

The price of Auto Diesel has been increased by Rs. 10 and Super Diesel by Rs. 61, with effect from 6.00 p.m. today, according to SINOPEC Energy Lanka Pvt Ltd.

Sri Lanka requires USD 26.5 billion by 2030 to make the country’s climate prosperity plan succeed, President Ranil Wickremesinghe said on Thursday (Sep 28).

Addressing the Berlin Global Dialogue in Germany, President Wickremesinghe revealed that the International Monetary Fund (IMF) has predicted that Sri Lanka will have a growth rate of 3.5% if the country is lucky in the next few years.

The President further stated that Sri Lanka needs a new international financial architecture as the existing one makes debt restructuring too complex.

President Wickremesinghe proposed the imposition of sanctions on tax havens, similar to what was imposed on Russia.

“To have a new international financial architecture, constructive dialogue is required between the West and China, US and China as well as between EU and China. Otherwise we will not move forward. This is the stark reality,” he said.

President Ranil Wickremesinghe is currently in Germany attending the Berlin Global Dialogue, which is held today and tomorrow.

According to the President’s Media Division (PMD), the President was scheduled to deliver the opening remarks at the Leaders Dialogue session during the ‘Berlin Global Dialogue’.

President Wickremesinghe will also join a bilateral session with German Chancellor Olaf Scholz and the officials of Germany during his visit.

A pro-China candidate has won presidential elections in the Maldives, defeating an incumbent who had strengthened relations with India.

President Ibrahim Mohamed Solih accepted defeat in the run-off poll, congratulating his rival Mohamed Muizzu who won 54% of the vote.

Mr Muizzu, mayor of the capital Male, campaigned with the slogan "India out".

Mr Solih will serve as caretaker president until his successor is inaugurated on 17 November.

In power since 2018, the 61 year old from the Maldivian Democratic Party (MDP) strengthened relations with India, with which Male has strong cultural and financial ties. He called it an "India-first" policy.

The Maldives have long been under India's sphere of influence. Maintaining its presence there has given Delhi the ability to monitor a key part of the Indian Ocean.

Mr Muizzu, 45, from the Progressive Alliance coalition favours better relations with China.

China, with its rapidly expanding naval forces, wants access to such a strategically important location - something its rival India wants to prevent. Beijing is also keen to protect its energy supplies from the Gulf which pass through the area.

In the last decade, Delhi gave the Maldives two helicopters and a small aircraft. In 2021, the Maldivian defence force said about 75 Indian military personnel were based in the country to operate and maintain the Indian aircraft.

Soon after, the opposition began an "India out" campaign which demanded Indian security personnel leave the Maldives.

Before Mr Solih, Abdulla Yameen from the Progressive Party (PPM) was president from 2013 to 2018. During his term, the Maldives moved closer to China and joined President Xi Jinping's Belt and Road Initiative.

Yameen is currently serving a 11-year prison term for corruption, barring him from contesting this year's vote.

Hundreds of supporters of Mr Muizzu gathered in front of the PPM headquarters to celebrate victory.

Who is Mohamed Muizzu?

Mr Muizzu, born in 1978, holds a PhD in civil engineering from the University of Leeds in the UK. He entered politics in 2012 as minister of housing.

When Yameen came to power, the minister kept his post and signed off on some huge projects, such as a $200m (£164m) bridge that connects Male with the international airport that is situated on a different island.

In 2021, he won mayoral elections in Male, a first for the PPM.

(BBC)

Fitch Ratings has upgraded Sri Lanka’s Long-Term Local-Currency Issuer Default Rating (IDR) to ‘CCC-’ from ‘RD’ (Restricted Default). Fitch typically does not assign Outlooks to sovereigns with a rating of ‘CCC+’ or below. The Long-Term Foreign-Currency IDR has been affirmed at ‘RD’ and the Country Ceiling at ‘B-’.

The Short-Term Local-Currency IDR has been downgraded to ‘RD’ from ‘C’ following the exchange of treasury bills held by the central bank and subsequently upgraded to ‘C’ in line with the Sovereign Rating Criteria, as we believe the local-currency debt exchange has now been completed.

A full list of rating actions is at the end of this rating action commentary.

KEY RATING DRIVERS

Local-Currency Debt Exchange Completed: The upgrade of Sri Lanka’s Long-Term Local-Currency IDR to ‘CCC-’ reflects the completion of the local-currency portion of Sri Lanka’s domestic debt optimisation (DDO) plan, launched in July 2023, following the exchange of the Central Bank of Sri Lanka’s (CBSL) treasury bills and provisional advance into new treasury bonds and bills on 21 September 2023.

We assume the debt restructuring will lower Sri Lanka’s gross financing needs over the medium term, in line with the targets under the IMF’s Extended Fund Facility, and support an improvement in the country’s debt metrics over time. Local-currency restructuring could accelerate progress towards the restructuring of external debt.

Government Debt Remains High: General government debt and the interest costs faced by the government will remain high, despite the debt restructuring. Sri Lanka’s gross general government debt-to-GDP ratio is set to fall only gradually to just above 100% of GDP by 2028, from 128% of GDP in 2022, according to IMF programme forecasts published in March 2023, which incorporated a local- and foreign-currency debt restructuring scenario. The IMF scenario forecast the government interest-to- revenue ratio will decline to 42% by 2028, from over 70% in 2022.

Lower Financing Needs: The authorities expect the completion of the local-currency debt exchange to lower Sri Lanka’s gross government financing needs (GFN)/GDP by about 1.5pp over 2027-2032, according to documents published in July. External debt restructuring, which authorities expect to reduce GFN by an additional 2.6pp, remains critical to achieving the target of reducing GFN below 13% by 2027-2032, from 34% in 2022.

Reduction in Terms: The DDO on the local-currency debt entailed an extension of maturities on certain categories of domestic debt and offered several options, including nominal haircuts, currency redenomination and maturity extensions. Outstanding treasury bills purchased by the CBSL in the primary market were converted into 10 step-down fixed-coupon new treasury bonds and 12 existing treasury bills.

Stronger Revenue Generation Key: We believe IMF programme implementation, in particular fiscal measures, will be central to achieving debt sustainability. The risks remain significant, in our view, as a record of weak revenue generation presents challenges to achieving a faster reduction in the budget deficit and the general government debt-to-GDP ratio.

Authorities have taken several tax measures since May 2022 to improve revenue collection, including raising the corporate income tax rate to 30% from 24%, increasing the VAT rate to 15% from 8%, and raising fuel excise taxes. This resulted in revenue collection rising 43% yoy in 1H23. Additional measures in the pipeline include removing product-specific VAT exemptions before 2024 and introducing a property tax before 2025.

External Metrics Improving: Sri Lanka’s foreign-exchange (FX) reserves have been improving, with gross FX reserves rising to USD3.6 billion in August 2023, from USD1.9 billion at end-2022, partly the result of IMF disbursements and suspension of external debt servicing. However, without access to international capital markets, the sovereign remains dependent on official financing sources. We expect a gradual pick-up in exports in 2024-2025 after a contraction in 2023. Overseas worker remittance inflows are also rising. We therefore expect the current account deficit to stabilise at 1.6% of GDP over 2024-2025.

Slow Economic Recovery: GDP contracted by 2.7% yoy in 2Q23, slowing from the 12% contraction in 1Q23. Agriculture and services grew in 2Q23, but industry continued to shrink, although at a slower pace from 1Q23. We expect GDP to contract by 1.4% yoy in 2023 before growing by 3.3% and 3.5% in 2024 and 2025, respectively. Inflation, measured by the Colombo CPI, averaged around 30% yoy until August 2023 but continued the decline from end-2022. The CBSL has cut the standing deposit facility rate by a cumulative 350bp since January 2023. We expect another rate cut before end-2023.

Downside Risks to Banks Easing: The exclusion of banks’ holdings of treasury securities from the DDO has alleviated some of the pressure on their capital positions from weakening loan quality and rupee depreciation as well as any immediate funding and liquidity stresses. We believe any incremental risk to the banks’ capital from foreign-currency debt restructuring is likely to be manageable given their limited exposure to the defaulted sovereign bonds (3.6% of their combined total assets at end-1H23) and high provision coverage.

Foreign-Currency IDR in Default: The sovereign remains in default on foreign-currency obligations and has initiated a debt restructuring with official and private external creditors. The Ministry of Finance’s statement on 12 April 2022 said it had suspended normal debt servicing of several categories of external debt, including bonds issued in international capital markets, foreign currency-denominated loans and credit facilities with commercial banks and institutional lenders.

ESG – Governance: Sri Lanka has an ESG Relevance Score of ‘5’ for Political Stability and Rights as well as for the Rule of Law, Institutional and Regulatory Quality and Control of Corruption. These scores reflect the high weight that the World Bank Governance Indicators (WBGI) have in our proprietary Sovereign Rating Model (SRM). Sri Lanka has a medium WBGI ranking in the 45th percentile, reflecting a recent record of peaceful political transitions, a moderate level of rights for participation in the political process, moderate institutional capacity, established rule of law and a moderate level of corruption.

ESG – Creditor Rights: Sri Lanka has an ESG Relevance Score of ‘5’ for Creditor Rights, as willingness to service and repay debt is highly relevant to the rating and is a key rating driver with a high weight. The affirmation of Sri Lanka’s Long-Term Foreign-Currency IDR at ‘RD’ reflects a default event.

RATING SENSITIVITIES

Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade

– The Local-Currency IDRs would be downgraded if further restructuring or a default on local-currency debt becomes probable due to an unsustainable debt burden or inability to raise revenue.

– The Long-Term Foreign-Currency IDRs are at the lowest level and cannot be downgraded further.

Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade

– A sustained decline in the general government debt-to-GDP ratio that is underpinned by strong implementation of a medium-term fiscal consolidation strategy and improved growth performance.

– Completion of the foreign-currency commercial debt restructuring that Fitch judges to have normalised the relationship with private-sector creditors may result in an upgrade.

In accordance with the rating criteria for ratings in the ‘CCC’ range and below, Fitch’s sovereign rating committee has not used the SRM and QO to explain the ratings, which are instead guided by the agency’s rating definitions.

Fitch’s SRM is the agency’s proprietary multiple regression rating model that employs 18 variables based on three-year centred averages, including one year of forecasts, to produce a score equivalent to a LT FC IDR. Fitch’s QO is a forward-looking qualitative framework designed to allow for adjustment to the SRM output to assign the final rating, reflecting factors within our criteria that are not fully quantifiable and/or not fully reflected in the SRM

The Country Ceiling for Sri Lanka is ‘B-’. For sovereigns rated ‘CCC+’ or below, Fitch assumes a starting point of ‘CCC+’ for determining the Country Ceiling. Fitch’s Country Ceiling Model produced a starting point uplift of zero notches. Fitch’s rating committee applied a +1 notch qualitative adjustment to this, under the balance of payments restrictions pillar, reflecting that the private sector has not been prevented or significantly impeded from converting local currency into foreign currency and transferring the proceeds to non-resident creditors to service debt payments.

Fitch does not assign Country Ceilings below ‘CCC+’, and only assigns a Country Ceiling of ‘CCC+’ in the event that transfer and convertibility risk has materialised and is affecting the vast majority of economic sectors and asset classes.

REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING

The principal sources of information used in the analysis are described in the Applicable Criteria.

ESG CONSIDERATIONS

Sri Lanka has an ESG Relevance Score of ‘5’ for Political Stability and Rights as WBGI have the highest weight in Fitch’s SRM and are highly relevant to the rating and a key rating driver with a high weight. As Sri Lanka has a percentile rank below 50 for the respective governance indicator, this has a negative impact on the credit profile.

Sri Lanka has an ESG Relevance Score of ‘5’ for Rule of Law, Institutional & Regulatory Quality and Control of Corruption as WBGI have the highest weight in Fitch’s SRM and are therefore highly relevant to the rating and are a key rating driver with a high weight. As Sri Lanka has a percentile rank below 50 for the respective governance indicators, this has a negative impact on the credit profile.

Sri Lanka has an ESG Relevance Score of ‘4’ for Human Rights and Political Freedoms, as the Voice and Accountability pillar of the WBGI is relevant to the rating and a rating driver. As Sri Lanka has a percentile rank below 50 for the respective governance indicator, this has a negative impact on the credit profile.

Sri Lanka has an ESG Relevance Score of ‘5’ for Creditor Rights as willingness to service and repay debt is highly relevant to the rating and is a key rating driver with a high weight. Sri Lanka’s Long-Term Foreign-Currency IDR is ‘RD’ as the sovereign is in default on its foreign-currency debt obligations.

The highest level of ESG credit relevance is a score of ‘3’, unless otherwise disclosed in this section. A score of ‘3’ means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch’s ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. (FITCH)

A ban on the use of single and short-term use plastics comes into effect tomorrow (01), said the Central Environment Authority.

A gazette notification issued on 19 July 2023 has banned any use of nine plastic products.

They are drinking straws and stirrers; single-use plates, cups, spoons, forks, and knives; plastic garlands; and plastic string hopper trays.

Manufacturing, importation for local use, sale, offering for sale, displaying for sale, offering free of charge or exhibiting them will be prohibited accordingly.

CEA chairman Supun S. Pathirage said legal action will be taken against the violators in terms of the provisions of the National Environmental Act, with raids to be conducted from tomorrow.

In a statement, the Environment Ministry said the ban aims to minimize pollution and other issues impacting the environment, to promote environmentally-friendly local alternative products and to save foreign exchange spent on plastic imports.

Sri Lanka Cricket (SLC) is considering lifting the temporary cricket ban imposed on cricketer Danushka Gunathilaka, who was acquitted by an Australian court over sexual assault charges today (28), according to sources.

Sri Lankan cricketer Danushka Gunathilaka was found not guilty of sexual intercourse without consent following an accusation of “stealthing” involving a Tinder date in Sydney.

The 32-year-old was arrested in November while in Australia for the T-20 World Cup, after he went for drinks with a woman near the Opera House. He had chatted online for several days and then had dinner with the woman, who can’t be identified for legal reasons, before being invited back to her eastern suburbs home, the NSW District Court heard.

Outside court, Gunathilaka said the verdict “says everything” and that his reputation had been restored.

He thanked his lawyers, manager, as well as friends and family back in Sri Lanka, saying “everyone believed me, so that means a lot to me”.

“I’m happy that my life is normal again, so I can’t wait to go back and play cricket,” he said.

The Sri Lankan cricketer said the last eleven months have been “really hard”, particularly being in Australia without his parents.

www.adaderana.lk

The Lawyers’ Collective has raised concerns over the sudden resignation of Mullaitivu District Judge T. Saravanarajah.

Issuing a statement, the Collective said that in his letter of resignation addressed to the Judicial Service Commission, Justice Saravanarajah alleges that there were threats to his life.

The Collective said that it is imperative, given the serious implications it has for matters pertaining to the independence of the judiciary and the rule of law, that the matter be fully investigated with measures to assure independence and impartiality.

“We believe that transparency is key, and that the general public must be informed of measures taken and the outcome of such inquiry without delay,” the Collective added.

Meanwhile, the Young Lawyers Association of Sri Lanka has also demanded an impartial investigation into the resignation of Mullaitivu District Judge T. Saravanarajah.

Issuing a statement, the Association said Justice Saravanarajah’s resignation letter claims that he tendered his resignation due to ‘threat’ to his life and due to ‘a lot of stress’.

Thereafter, a whatsapp message was circulated which contains allegations on Member of Parliament Sarath Weerasekara, the Government and the Attorney General for directly threatening him regarding his orders on the Kurunthur Malai case.

If these allegations are true it raises serious concerns regarding the executive’s interference in independent judicial functions, the Association claimed.

The Association demands that the Judicial Service Commission conducts an impartial inquiry into the allegations against the Government and the Attorney General which has been circulated in the media.

Concerns have been raised after Justice Saravanarajah tendered his resignation citing threats to his life due to the court order delivered related to the Kurunthur Malai temple, which is an ancient Hindu Temple.

It is reported that the Justice had issued an order preventing the construction of a Buddhist Temple in the premises of the Kurunthur Malai temple.

Several Acting Ministers have been appointed by President Ranil Wickremesinghe to oversee ministries under his purview during his official visit to Germany.

According to the President’s Media Division (PMD), the President left for Germany early this morning (Sep 27).

During his absence, the responsibilities of the ministries under his purview have been temporarily entrusted to the respective state ministers;

State Minister Premitha Bandara Tennakoon – Acting Minister of Defence

State Minister Shehan Semasinghe – Acting Minister of Finance

State Minister Kanaka Herath – Acting Minister of Technology

State Minister Anupa Pasqual – Acting Minister for Women, Children Affairs and Social Empowerment

State Minister Ranjith Siyambalapitiya – Acting Minister for Investment Promotion.

President Ranil Wickremesinghe left for Germany to deliver the opening remarks at the Leaders Dialogue session during the ‘Berlin Global Dialogue’ on September 28-29.

The PMD stated that subsequently, he will join a bilateral session with German Chancellor Olaf Scholz and the officials of the Federal Republic of Germany.

Former President of the Football Federation of Sri Lanka (FFSL) Jaswar Umar was re-elected to the post, at the election for office bearers held on Friday (29 Sep.).

Umar polled 45 votes, more than twice as many as those of his competitor’s, Thilanga Dakshitha, who honed a total of 20 votes.

The election was held at 03:00 p.m. today at the Sri Lanka Foundation Institute’s Auditorium, under the scrutiny of both the Federation Internationale de Football Association (FIFA) and the Asian Football Confederation (AFC).

In a circular to member associations, FIFA Secretary General Fatma Samoura stated that as a result of the decision taken by the Bureau of the FIFA Council on 21 January 2023, the FFSL had been suspended until further notice in accordance with article 16 of the FIFA Statutes, due to government interference.

Thereby, the FFSL lost all of its membership rights, as defined in Article 13 of the FIFA Statutes, until further notice.

On December 25 2022, FIFA had issued a red notice to Sri Lankan Football authorities, raising concerns over the Electoral roadmap of the Football Federation of Sri Lanka.

However, the suspension imposed on the FFSL was lifted on 28 August, following which both FIF and the AFC continued to monitor the situation until the election was held.

Against this backdrop, the FIFA and the AFC approved and included “Sri Lanka” in the official World Cup draw on the strict conditional basis that the FFSL election be conducted at least 10 days prior to the World Cup match.

A three-member committee was appointed by Minister of Sports and Youth Affairs Roshan Ranasinghe on 25 July, to call for, and hold the FFSL elections.

Some members on the committee of Sri Lanka’s official creditors are pushing to reach a deal to restructure the nation’s debt without the participation of China, Bloomberg News reported on Wednesday citing people familiar with the matter.

The members want the group of major creditors, including the US, Japan and India, to sign a memorandum of understanding with Sri Lanka around the time of the International Monetary Fund and World Bank meetings scheduled for next month in Marrakesh, Morocco, said the people, who asked not to be identified as the discussions are private. China, which held about 10% of Sri Lanka’s external debt as of the end of last year, isn’t a part of the group and is pursuing separate bilateral talks.

Before the Marrakesh gathering, key debt holders excluding China are planning on putting together the draft outline and getting Sri Lanka’s consent, the people said, adding that some discord remains within the group.

An official at the Paris Club, one of the largest debt holders, said a timeline for the agreement could not be confirmed. Representatives at the IMF’s Colombo office weren’t immediately available for response.

“All creditors are engaging positively with us,” Shehan Semasinghe, Sri Lanka’s junior finance minister, said by phone when asked about the development.

It remains unclear whether the creditors have lost patience with China or if the move is a negotiating tactic to pressure Beijing to get on board. Although Sri Lanka is a relatively small economy, its debt restructuring is seen as a test case for Chinese participation in sovereign debt overhauls.

Proceeding without China — the world’s largest sovereign creditor — would mark a setback for global efforts to get President Xi Jinping’s government to join a new international system to provide relief to indebted countries that have already dragged on for almost two years. A combination of the debt hangover from the pandemic, a rising dollar and soaring US interest rates has left a growing number of poor countries without the means to pay off what they owe and in need of international help.

How China will react to the deal remains to be seen. In the past China has quietly negotiated its own opaque restructurings with its debtors, often without providing any meaningful long-term relief.

“I would re-emphasize that China supports domestic financial institutions to negotiate a settlement agreement with Sri Lanka,” Chinese Ministry of Foreign Affairs spokesman Wang Wenbin said in Beijing on Tuesday.

Sri Lanka stands to benefit from any deal with creditors, even if China is excluded. The IMF’s first on-site review of the country’s $3 billion bailout program ends Wednesday, and an agreement on debt restructuring would give hope that the South Asian nation’s recovery from an unprecedented economic crisis will get a boost before the multilateral lender gives its conclusion later this year.

Among the creditors, Paris Club members accounted for $4.8 billion, or more than 10% of Sri Lanka’s external debt, according to IMF data as of year end. That’s slightly higher than China, which stands at $4.5 billion, while India is owed $1.8 billion.

The Paris Club is an informal group of official creditors that help coordinate repayments for struggling debtor nations, and is currently comprised of 22 members including France, Japan, the UK and the US.

Depending on how talks with official creditors progress, Sri Lanka could also make headway in its negotiations with private lenders. In July, Foreign Minister Ali Sabry said private creditors had “almost agreed” to a 30% haircut.

A successful restructuring will assist Sri Lanka in regaining a measure of investor confidence after the nation fell into default for the first time in its history last year. It would also help the island nation make its debt more sustainable as envisaged in the IMF bailout secured in March, and enable a flow of funding.

If the IMF’s review is favorable, it should pave the way toward Sri Lanka getting $330 million of disbursement from the IMF, the second installment from the bailout agreement.

Source: Bloomberg

--Agencies