SRI LANKA NEWS – DECEMBER 2022 – By Victor Melder
Sri Lanka owed Chinese lenders $7.4 billion – nearly a fifth of its public external debt – by the end of last year, calculations by the China Africa Research Initiative (CARI) showed, an estimate higher than many others. The figure was above the “often-quoted 10 to 15 percent figures,” the study said, adding a “significant portion” of the country’s debt to China had been recorded under lending to state-owned enterprises rather than central government. Crisis-hit Sri Lanka is in the midst of a debt restructuring after years of economic mismanagement combined with the COVID-19 pandemic saw the country plunge into the worst economic crisis since independence from Britain in 1948 and tip into default. Export-Import Bank of China (EximBank) and China Development Bank are the two largest Chinese lenders, accounting for $4.3 billion and $3 billion respectively, according to the data collected by CARI. China is Sri Lanka’s largest bilateral creditor and, with India and Japan, part of official creditor talks to restructure the country’s debt. “China will have to play a major role in Sri Lanka’s debt restructuring process,” CARI researchers Umesh Moramudali and Thilina Panduwawala wrote in the report. The island nation kicked off talks with bilateral creditors in September after securing a staff level agreement of $2.9 billion with the International Monetary Fund. But financing will not flow until the fund’s board approves the deal, a step that requires financial assurances from bilateral lenders. The latest talks initially expected earlier this month were postponed, casting doubt over how fast the debt rework can progress. The island nation’s total external debt is $37.6 billion, according to the report. Adding central bank foreign currency debt, including a $1.6 billion currency swap with China, public external debt rises to $40.6 billion, of which 22% is from Chinese creditors. CARI’s total debt numbers differ from the $46.6 billion tally published by the government in September as it excludes local hard-currency debt and loans to some state-owned enterprises. The CARI study also identified six different loans to the deep water port in Hambantota from EximBank between 2007 and 2013 for around $1.3 billion. The loan agreements have clauses that “submit the loans to Chinese governing law and arbitration before the China International Economic and Trade Arbitration Commission”. (Daily Mirror, 1.12.2022)
Fitch Ratings has further downgraded Sri Lanka’s Long-Term Local-Currency Issuer Default Rating (IDR) to ‘CC’, from ‘CCC’, and has affirmed the Long-Term Foreign-Currency IDR at ‘RD’ (Restricted Default). Fitch typically does not assign Outlooks to ratings of ‘CCC+’ or below. Fitch has also removed the Long-Term Local-Currency IDR from Under Criteria Observation, on which it was placed on 14 July, following the publication of the updated Sovereign Rating Criteria. Fitch shared the key rating drivers as: Challenging Domestic Financing Outlook: Sri Lanka continues to service its local currency debt, but the downgrade of the Long-Term Local-Currency IDR reflects our view that a local-currency debt default is probable, in view of an untenably high domestic interest payment/revenue ratio, high interest costs, tight domestic financing conditions and rising local-currency debt/GDP in the context of high domestic fiscal financing requirements, which authorities forecast at about 8% of GDP in 2022. According to authorities, domestic interest payments in 8M22 were Rs. 718.8 billion, taking the domestic interest/revenue ratio to an estimated 56% in 8M22; the highest among sovereigns rated ‘CCC+’ and below. Reliance on Central Bank financing has increased, as domestic options are limited. Domestic debt rose to about 53% of Government debt by end-July 2022, according to official provisional data. Fitch expects a local debt restructuring would aim to maintain financial system stability, for example, by extending maturities or lowering coupon payments, rather than a reduction in face value. Sri Lanka continues to service its local-currency debt. (Daily Financial Times, 3.12.2022)
The fog or mist seen these days is not natural occurrence as the air quality has reached very unhealthy levels in the Northern part of Sri Lanka. The area is registering over 200 in the air quality index (AQI) due to winds from India carrying polluted air. The public has been advised to wear masks to protect their health. AQI index was 212 in Jaffna, 189 in Gampaha, 170 in Dambulla, 169 Colombo, 161 Kandy, 170 in Negombo, and 157 in Ambalantota. The National Building Research Organization which monitors air pollution confirmed few days ago that quality of air in several parts of the country has diminished. (Daily Mirror, 8.12.2022)
The Ministry of Education has declared Friday (09) as a special holiday for all government and government-aided schools due to the prevailing weather conditions in the country. This decision was taken on the basis of the prevailing weather conditions. Meanwhile, following the decision steps have been taken to give a special holiday tomorrow (09) to all island wide Catholic schools as well. Due to a stormy situation in the Bay of Bengal, air containing dust particles from India has reached the upper atmosphere of Sri Lanka, causing a gloomy atmosphere during the day in the entire country. The Health Department announced that the polluted state of the atmosphere has even exceeded the harmful level for the human body. Due to this, respiratory diseases may occur and elderly people including heart patients may be at risk. Therefore, they were told to stay at home. (Colombo Page, 9.12.2022)
Over 160 cows in Kilinochchi have died in the early hours of yesterday, due to the cold weather, residents of the area claim. About 165 milch cows and their calves had died due to the weather, they said. Disaster Management Centre (DMC) at Kilinochchi said that the temperature of the district had plummeted to about 17 degrees celsius for two days. They said that the farmers had started lighting fires near the animal sheds to keep them warm. Farmers say they have suffered heavy losses due to the deaths of the animals. (Daily Island, 10.12.2022)
Sri Lanka workers’ remittances have significantly increased to US$384.4 million in November 2022, the Central Bank said. Accordingly, the cumulative figure for the first eleven months of the year (Jan – Nov) is reported as US$ 3,313.9 million. According to the CBSL statistics, worker remittances had increased to US$355.4 million in October 2022 from US$317.4 in September 2022.(Daily Mirror, 11.12.2022)
Sri Lanka Police Mounted division has lost seven horses due to feed shortage, a police official said, amid import bans. One horse has died from internal injuries that was caused due to lack of feed, while the other horses were suffering from various illnesses amid lower nutrition level, Police Media Spokesman Nihal Thalduwa said. “The deaths occurred in February, April, October and November,” he said. Each horse under the mounted division is worth around 35,000 US dollars and currently there are around 50 horses that are being maintained, he said. “According to the doctor’s report, only one horse has died because of internal injuries occurred due to lack of feed,” Sri Lanka has banned many imports including processed animal feed and raw materials for feeds due to a forex shortage that later turned into an economic and political crisis. The local production of feed was further affected by the import ban on fertilizer, resulting in a drop in agricultural products. After the rupee collapsed in early 2022, animal feed importers have been struggling. The ban was later lifted partially. The import ban led commercial banks to refuse to open letters of credit. The available foreign reserves were allocated to import fuel and medicine to the country. “According to the reports, other horses have been suffering from illnesses which caused the deaths,” Thalduwa said. However, the Police-Mounted division will be investigating what causes the illnesses, he said. “They are going to do some research because all the horses are from Europe or Australia and they need to find out what are the reasons for the deaths of the horses. Sometimes European horses tend to be ill with the climate change,” Thalduwa said. “And May be because these horses fell ill, they may have reduced the amount of food they take,” he said. However, the division has said an indepth investigation will be carried out to identify the reasons. According to Thalduwa, even though there is a medicine shortage in the country, there is enough medicine for horses and doctors are also available in the division. (Sunday Island, 11.12.2022)
From January to December 01 this year, 395 elephant deaths have been reported in Sri Lanka. It is an increase of 20 elephant deaths compared to last year. This year 127 people have also been killed due to elephant-human conflicts. According to wildlife officials, 38 elephants have died in 2022 due to electrocution alone. A 30-year-old wild elephant was killed on December 8th in Rotawewa area of Sigiriya Inamaluwa due to the electrocution by illegally laid electric wires. According to a senior officer of the Sigiriya Police, the farmers pull electrical wires from their houses to the cultivated fields to protect their agricultural crops from the elephants as the electric fence in Rotawewa area was not functioning despite residents informing the Sigiriya Wildlife Office on many occasions. The post-mortem of the dead elephant was done by the wildlife officers of Giritale and they said that they have recorded statements from the land owner and will take legal action in the future. (Colombo Page, 11.12.2022)
The extreme cold weather that swept the North Eastern Provinces in the recent days, as many as 1660 cows, buffaloes and goats reported to have died in the northern and eastern provinces in the recent days. The Livestock division that functions under the Agriculture Ministry’s has released the latest figures of the animals that have died. Accordingly, 691 cows and buffaloes and 296 goats had died in the Northern Province among the animal deaths, also 329 cattle were reported sick and 182 of them were cows and 147 goats. 511 cows, 44 buffaloes, and 108 goats have died in the Eastern Province. 15 cows and a buffalo were found sick. Two days before, some 1,096 animals had died in the Eastern Province. Agriculture Minister Mahinda Amaraweera instructed the Ministry Secretary to conduct post-mortem examinations and to submit a report to ascertain the cause of these deaths. The minister also said it is necessary to provide extensive training to the farmers who are engaged in livestock farming to manage the situation during cold weather conditions. The Ministry Secretary has also been instructed to prepare an appropriate work schedule to deal with such sudden change of weather conditions in the near future. (Daily Mirror, 12.12.2022)
The Disaster Management Centre (DMC), on Monday, announced that three persons had died and 21,644 others were facing health issues due to adverse weather conditions, caused by Cyclone Mandous. They belonged to 6,113 families in 16 districts. Nineteen have also been injured, the DMC said. More than 5,639 houses, in different parts of the country, had been damaged, the DMC said. DMC Deputy Director Pradeep Kodippili told the media yesterday that they had already started assessing the damages and the victims would be compensated. (Daily Island, 13.12.2022)
The economic output of Sri Lanka as measured by Gross Domestic Product (GDP) for the third quarter (Q3) of 2022 recorded as 11.8 percent of negative growth percent year-on-year, the data released by the Census and Statistics Department Thursday showed. The Department of Census and Statistics (DCS) Sri Lanka, has released the estimated Gross Domestic Product (GDP) at current price and at constant (2015) price in Production approach and the other macroeconomic indicators for the third quarter (July 01st to September 30th) of 2022. The Gross Domestic Product for Sri Lanka for the third quarter of 2022 at constant price (2015) has declined up to Rs. 2,884,018 million from Rs. 3,269,510 million recorded in the third quarter of 2021. In addition, the Gross Domestic Product for the 3Q 2022 at current price has increased up to Rs. 6,417,031 million from Rs. 4,418,108 million which recorded in the same quarter in 2021 registering 45.2 percent of positive change in the current price GDP. This expansion of the GDP at current prices clearly indicates the influence of the high inflation prevailed throughout this quarter, the Department of Census and Statistics reported. The three major economic activities of the economy; ‘Agriculture’, ‘Industry’ and ‘Services’ have contributed their share to the GDP at current prices by 8.7 percent, 34.5 percent and 54.1 percent respectively, while ‘Taxes less subsidies on products’ component has contributed 2.7 percent of share to the GDP in the third quarter of year 2022.During this quarter, all three major economic activities; Agricultural, Industrial and Services activities have recorded negative growth rates of 8.7 percent, 21.2 percent and 2.6 percent respectively. While the influence of the Covid-19 pandemic was comparatively low on the quarter under review in this year, several other factors were highly affected for the functioning of the economy of the country, the Department said. “The factors such as high inflation, energy crisis prevailed during the early stages of this quarter, high interest rates, shortage of inputs required for the manufacturing activities, high prices of inputs, shortage of cement, high prices of construction materials, problems associated with fertilizer usage and agrochemical sectors, increase of the transport cost, difficulties in distributing goods, decrease in the demand of essential and non-essential goods and services due to the reduction of the real income of the people have directed the economy towards this decline,” the DCS said in its report. (Colombo Page, 16.12.2022)
Restrictions on imports and the depreciation of rupee against the US dollar are weighing on Christmas sales, traders say. The rupee is one of the world’s worst performing currencies. The president of Pettah Textile and Merchants Association, Mohomad Yaseen Haja Najimudeen said that prices of imported textile products have doubled. “Compared with the years before the pandemic, we make only 25% of sales now. Even during the pandemic we had better sales.’’ Mr Najimudeen said merchants have had to increase the salaries of employees and provide them with lunch, in addition to paying more for electricity, water, and rent. “Even though the official (US) dollar rate in Sri Lanka is around 371 to 372 (rupees), merchants buy at Rs 400 per dollar. So, clothes bought for dollars have to be sold at high prices to cover costs,” he said. Electrical items are also expensive and sales have declined. An owner of an electrical shop, Ranjith Wijesiri Saranga said that very few people come to buy switches, electrical fittings, and wiring. He said sales of industrial electrical items have greatly reduced as construction projects have stopped. “I have to pay the salaries of three employees. If this continues, I will close my shop,” he said. Mr Saranga who maintains an electrical items installation team of 15 employees said that he only calls them to work if customers make requests. Sales of toys are not a cause of cheer for traders, either. Mohomad Sameer, manager of a toy shop at Wellawatta, said: “Our expectations of more sales have been shattered. Prices of toys have increased and import restrictions have created a shortage of electric toys and some plastic and rubber toys.’’ Only a few customers have turned up in the past three weeks. Sri Lankans say many do not have money to celebrate Christmas. The usual year-end family trips, shopping sprees of mothers and daughters are not planned this year. State employee, Chethana Sanjeewa Perera, a bread winner of his family, said the Rs 6,000 plus price tag of a pair of shoes for men, was a surprise. He said that even the pair of shorts for his three year old son cost between Rs 1,500 and Rs 1,700. His wife had looked at three dresses, but could only afford one. “I came to buy clothes for my wife and son, but I could not shop as I wished because the expenses exceeded our budget.’’ Up and coming singer Sadeepa Diddeniya said that the prices of shoes, dresses, perfume and cosmetics have increased. She said prices of textiles and shoes range between Rs 3,000 and 5,000 while a perfume bottle costs Rs 2,000. “Everything is expensive these days, it’s not easy choosing what to buy.’’ (Sunday Times, 18.12.2022)
CBSL had to settle nearly Rs. 160 billion as principal payments as well as interest payments on 15 December. But the T-bond auction failed to raise the entire Rs. 160 billion and managed to sell Rs. 124 billion. CBSL has printed an additional Rs. 64 billion on the settlement date. Domestic debts are being settled via money printing in the recent period as no other funding sources are available. (Daily Financial Times, 20.12.2022)
Sri Lanka tea production for November 2022 totaled 20.24 M/Kgs, showing a marginal increase of 0.18 M/Kgs vis-à-vis 20.06 M/Kgs of November 2021. High and Low Grown elevations have shown a gain, whilst the Medium Growns have shown a decline over the corresponding month of 2021. However January-November 2022 cumulative production totaled 231.86 M/Kgs, recording a significant decrease of 47.10 M/Kgs vis-à-vis 278.96 M/Kgs of January-November 2021. This would be the lowest recorded for the period under review since 1995 where it recorded approximately 225.70 M/Kgs. On a cumulative basis, all elevations have shown a decline over the corresponding period of 2021. (Daily News, 20.12.2022)
The District Disaster Management Center says that two people have died following an earth slip in Akurana, Kandy due to the heavy rains that fell in many areas of the Central Province and many cities including the Kandy city and roads in the district have been flooded. Kandy District Secretary Mr. Chandana Tennakoon says that two youths have died after a rock fell on a house in Dunuwila, Akurana. A family of five, the mother, father and three children were at the house at the time of the incident. A brother and a sister aged 16 and 18 died in the incident while another brother sustained serious injuries. It is reported that many places in Kandy and Akurana are under water due to the heavy rain. Reports say Kandy railway station is under seven feet of water. Meanwhile, due to the inundation of the Kandy Railway Station, the operation of the upcountry railway has been disrupted. Accordingly, the train from Colombo to Kandy has been restricted to Pilimathalawa only. Many roads have been blocked due to earth slips. The A-9 nine road in Akurana Matale has been submerged causing severe disruption to traffic. Meanwhile, the Department of Meteorology said the depression over Southwest Bay of Bengal has entered through the east coast of Sri Lanka and it is moving across the country. It is likely to move to the western sea area of Sri Lanka by tomorrow (26). Accordingly, showers or thunder showers will occur at times over Western, Sabaragamuwa, Central, Southern, North-Western and Northern provinces. Heavy showers above 100mm can be expected at some places in the above areas. The Naval and fishing communities are advised not to venture into the deep and shallow sea areas off the coast extending from Galle to Pottuvil via Colombo, Puttalam, Mannar, Kankesanthurai, Trincomalee & Batticaloa, and Southwest Bay of Bengal (06N – 14N, 78E – 85E), until further notice. Fishing and naval community are requested to be attentive to future forecasts issued by the Department of Meteorology in this regard. (Colombo Page, 26.12.2022)
The Wildlife Conservation Department has initiated a program to protect leopards in the mountains. A senior official of the Department yesterday said that they had tested a new protective net on Saturday (23) at the Nuwara Eliya Galway’s land National Park. The trial of this safety net took place with the participation of the Agriculture, Wildlife and Forest Resources Conservation Minister Mahinda Amaraweera. The official said a large number of leopards had perished in traps set by villagers. About six leopards in the mountains have died in traps so far this year. Wildlife officials were able to save the lives of five others. Between 2001 and 2021, 145 leopards were killed in Sri Lanka, and 72 percent of the incidents were reported from the Central hills. About 17 leopards have been killed from 2020 to 2021.According to reports, the leopard population in Sri Lanka is about over 600. About71 percent of all leopard kills so far have been caused by traps. (Daily Island, 26.12.2022)
According to the reports of the Police Department, in the first 11 months of this year, there have been 3,556 kidnappings and 1,466 vehicle thefts, Professor Wasantha Athukorala of Peradeniya University’s Department of Economics and Statistics says. He said that 799 kidnappings have been reported in 2020 and 835 in 2021 and there is a clear increase in the data this year. Motorcycles and three wheelers are the most stolen vehicles. Professor Athukorala stated that 39% of the stolen vehicles were reported from the Western Province, 14% from the North Western Province and 13% from the Southern Province. He said that 29,330 violent crimes have been reported in the first 11 months of this year. He said that police department reports show that 31098 violent crimes have been reported in 2020 and 35434 in 2021. According to reports, 29,330 crimes against children have been reported in the first 11 months of this year. Professor Athukorala said that police department reports show that 31,098 crimes against children have been reported in 2020 and 35,434 in 2021. The reports show that 10,879 of the reported crimes against children this year have been reported from the Western Province and it is 37% compared to the total number. When taken as police divisions, the highest number of crimes against children were reported from Kelaniya police division and the number is 2287. Prof. Athukorala says that 2,056 juvenile crimes have been reported from Anuradhapura Division. In the first 11 months of this year, 497 murders have been reported, of which 223 were due to shootings and assaults. Police department reports show that 6,208 house break-ins and 2,159 robberies have been reported so far this year. (Colombo Page, 27.12.2022)
Sri Lanka was ranked 7th among the 10 countries with the highest food price inflation in the world, the latest World Bank assessment said. According to the report, Zimbabwe, Lebanon, Venezuela, Turkey, Argentina and Iran ranked among the first six countries in the assessment while Rwanda, Suriname and Hungary ranked behind Sri Lanka. The World Bank said that domestic food price inflation remained high around the world. Information between August to November 2022 showed high inflation in almost all low-income and middle-income countries; 88.2% of low-income countries, 90.7% of lower-middle-income countries, and 93% of upper-middle-income countries had seen inflation levels above 5%, with many experiencing double-digit inflation. The share of high-income countries with high food price inflation had risen to 81.8%. The countries affected most are in Africa, North America, Latin America, South Asia, Europe, and Central Asia. (Daily Mirror, 28.12.2022)
The human-elephant conflict has left 132 humans and 412 elephants dead so far this year. About 405 elephants died in 2019. Biodiversity Conservation and Research Circle, Convener Supun Lahiru Prakash said that there was no hope for a sustainable solution, even next year. Prakash also dismissed claims made by Agriculture, Wildlife and Forest Resources Conservation Minister, Mahinda Amaraweera, that 16 elephant corridors would be reopened to reduce he Human-Elephant conflict in Sri Lanka by 50% in the coming year. (Daily Island, 28.12.2022)
