SRI LANKA NEWS (MARCH 2020) – Compiled by Victor Melder.

Sri Lanka’s national carrier SriLankan Airlines is expected to lose 130 million US dollars (about 26 billion rupees) in the year to March 2020, officials said, taking total losses under full state ownership and management to 232 billion rupees. The airline would also need a 300 million dollar capital injection to reduce a spiral of debt, officials said. “We estimate that by this March we will lose about 130 million US dollars,” newly appointed SriLankan Airlines Chairman Ashok Pathirage told the parliament’s Committee on Public Enterprises. The Easter Sunday bombings had hurt the airline and it the ongoing Coronavirus epidemic was also negative with flight to China being cut. However in 2021, the Airline was expecting to cut losses to about 30 million dollars, he said. The Airlines started to lose money under state management, from 2008. Losses would total of 232 billion rupees by March 2020, including 115 million dollars paid to cancel a controversial Airbus deal. Sri Lankan needs a 300 million US dollar (about 54.6 billion rupees) capital injection to reduce gearing, Pathirage said. The airline is undercapitalized due to past losses. Earlier capital injections from the tax-payer had been burned in losses. As of March 2019, SriLankan had a 168 billion rupee gap in its balance sheet. SriLankan Airlines was making losses when it was managed by Emirates, who owned 40 percent of the stock. SriLankan is looking at acquiring 4-5 year old Airbus A330 aircraft and resuming flights to Frankfurt, Pathirage said. It is also looking to start flights to Sydney in Australia. Chief Executive Vipula Gunatilleke said leasing second hand aircraft was much cheaper than getting brand new aircraft. Sri Lankan Airlines is paying above market lease installments for seven Airbus A330 CEOs it had acquired as part of a controversial deal in which is subject to a corruption probe. SriLankan is one of several state enterprises that has pushed up national debt, and has worsened the country’s debt profile. Losses at SriLankan were also hurting other state enterprises, a phenomenon known as circular debt. (Sunday Island, 1.3.2020)

By end of 2020, Sri Lanka’s central government debt was about 83 percent of gross domestic product, publicly guaranteed debt was about 5.2 percent and state enterprise debt was 14.6 percent, taking the total up to 99.4 percent of debt. SriLankan Airlines debt obligations by end 2018 was 250 billion rupees or about 1.7 percent of gross domestic product and a part of its debt was also directly guarantee by the Treasury about to 32 billion rupees or 0.2 percent of GDP, according to the International Monetary Fund estimate. SriLankan is also contributing to losses and debt at state-run Ceylon Petroleum Corporation, which had debt of 612 billion rupees or 4.2 percent of GDP and was indirectly financing SriLankan. In 2018, the CPC lost 80 billion rupees by borrowing unhedged dollars, despite having a price formula that brought in cash. Pathirage said SriLankan bought about 14 million US dollars of fuel a month from CPC, and it was only settling about6 million US dollars. But it has now been increase to 8 million dollars. He said his intention was to eventually settle all current purchases from CPC on time, though accumulated arrears will have to be settled separately. (Sunday Island, 1.3.2020)

Sri Lanka’s inflation accelerated to 6.2 percent for the 12-months to February 2020, from 5.7 percent in January as the credit system recovered from a currency collapse in and the central bank cut rates. Food prices eased from unusual highs in January, but non-foods continued to edge up, date from the state statistics office showed. The Colombo Consumer Price Index, the most widely watched indicator was flat at 134.6 points in February, with the food index up 0.2 percent and non-foods down 0.2 percent data from the state statistics office said. Analysts had warned that inflation would pick as weak domestic demand from measures to pullout the country from a currency crisis in 2018 ended, and the price structure of the country adjusted to the fall in the rupee with a gradual recovery in credit and consumption. The 6.2 percent inflation in February 2020, is the highest since the 7.1 percent seen in December 2018 when the country was recovering from a 2015/2016 currency collapse. Sri Lanka’s food prices spiked unusually in over December and January, amid excess liquidity in money markets which drives demand and some disruptions in supply, mimicking conditions seen in January 2015, as the country recovered from a currency collapse in 2018. Sri Lanka’s central bank cut policy rates in January, despite a pick-up expected in private credit and the budget deficit set to expand to 7.5-7.9 percent in 2020, after value added tax was slashed in January to give effect to an election promise and inflation was spiking. Under Sri Lanka’s so-called ‘flexible’ inflation targeting, operated with a soft-peg, rates can be cut when inflation is going up or down. However involuntary hikes then follow after liquidity injections trigger a currency crisis or a so-called skewed DCM (disorderly market conditions rule, where the peg is left undefended after liquidity injections) triggers panic undermining the credibility of the soft-peg. (Sunday Island, 1.3.2020)

A special gazette declaring the dissolution of Parliament was signed by President Gotabaya Rajapaksa, last evening. As per the gazette, Parliament stands dissolved with effect from midnight yesterday(02). The general election will be held on April 25. The process of accepting nominations for the general election would commence, on March 12, and end on March 19, the Government Printer said. She said that new Parliament would meet on May 14. Under the 19th Amendment to Constitution, the President is empowered to dissolve Parliament after the expiration of four and a half years of its term. The five-year term of the 8th Parliament began on Sept 1, 2015, following the parliamentary elections held on Aug17, 2015, and is due to expire in August this year. (Daily Island, 3.3.2020)

The Wildlife Department has taken steps to sterilise female monkeys in most areas where human-monkey conflicts is on the rise, a senior government official said, though it was going to be an uphill task as catching monkeys was not easy. Wijesinghe said that two machines had been brought down by the Department of Wildlife for the project and they were being tested. He said the Wildlife Department records showed an increase in conflicts between humans and monkeys during the last decade. (Daily Island, 5.3.2020)

The Government is in the midst of negotiating a new loan from China, which could be as much as $2 billion and is likely to be finalised over the next few weeks, a top official said yesterday. Senior Deputy Governor Dr. Nandalal Weerasinghe told reporters that the Government is in the middle of negotiating a loan from the Chinese Development Bank that, at least in part, could be used for refinancing requirements this year. Sri Lanka has to repay a total of $4.8 billion this year, with the next large payment of $1 billion due in September.  “The Government has a clear borrowing plan for the year, and under that they are already working on a loan from China Development Bank, and we understand that has made good progress and that may materialise in a couple of weeks. After the elections and the Budget is presented, there will be a borrowing plan for next year and even for the second half of this year. The indication is that the Chinese loan could be between $1-2 billion, but the final number has not been finalised. This is within the borrowing limit set out in the Vote on Account,” Dr. Weerasinghe said.  (Daily Financial Times, 6.3.2020)

With the coronavirus (COVID-19) slowing down the global economy, foreigners have rushed to encash Treasury Bonds and Bills held by them in Sri Lanka, resulting in an outflow of Rs 19.6 billion in two weeks, the Central Bank said. According to Central Bank statistics, Rs 8.23 billion of foreign outflow was recorded this week by Friday while last week Rs 11.42 billion government securities were encashed. Monthly Monetary Policy Review issued by the Central Bank of Sri Lanka (CBSL) said this week that the escalation of the coronavirus (COVID-19) outbreak to a ‘global health emergency’ was likely to affect Sri Lanka’s economic performance. “Sri Lanka’s economic links with China could be directly affected as significant volumes of consumer goods, intermediate goods and investment goods are imported from China. The likely slowdown of the global economy and disruptions to the supply chain could affect Sri Lanka’s merchandise and service exports as well as related logistics,” the CBSL Policy Review said while stressing that the slowdown in global tourist movements would affect Sri Lanka’s tourism sector, in addition to the direct impact of lower arrivals from China. The CBSL Policy Review also warned that the spread of the virus to countries with a significant number of Sri Lankan migrant workers could affect remittance inflows also. Development Banking and Loan Schemes State Minister Shehan Semasinghe told the Sunday Times that even though the current slowing down of the global economy due to the coronavirus would have an impact on small nations such as Sri Lanka, the government had taken adequate measures to ensure a stabilized economy. “With the government setting paddy buying price at Rs 50, it will have a positive impact on agrarian based rural economy in addition to money circulation among the people. We believe this would reflect in the other sectors of the country’s overall economy, he said. In a new study this week, the Asian Development Bank (ADB) said Sri Lanka could experience a negative growth of (-0.18%) on the Gross Domestic Product (GDP) this year considering the significant economic impact of COVID19 on Asia through numerous channels, including sharp declines in domestic consumption, lower tourism and business travel, trade and production linkages, supply disruptions, and health. A Colombo-based firm’s market analyst said if the foreign outflow was to increase in future, it would cause further depreciation of the rupee against the US dollar. According to CBSL data, during the period up to March 6 this year, the Sri Lanka rupee depreciated against the US dollar by 0.2 percent. Ceylon Chamber of Commerce Chief Economist Shiran Fernando said,” The outflows are not Sri Lanka specific as we are seeing similar outflows in other emerging and frontier market countries with  foreign portfolio investors returning to safe haven assets like gold and US Treasury Bills. “It is yet to apply a significant depreciating pressure on the currency but will need to be monitored.” (Sunday Times, 8.3.2020)

The government has decided to suspend visa on arrival facility until further notice as an early precautionary measure to control the Coronavirus pandemic within the counrty, Government Information Department said.  

The move came in the wake of a Sri Lankan tour guide confirmed to be having Coronavirus has been admitted to the IDH hospital today. The Health Ministry today insisted that all those coming from South Korea, Italy and Iran will undergo the mandatory 14-day quarantine period at the designated quarantine facilities. (Times online, 11.3.2020) 

The Department of Meteorology today issued hot weather advisories to 11 districts including the Western, Sabaragamuwa, North-Western and Southern Provinces and the Moneragala District warning people to be extremely cautious. It asked people to take plenty of fluids, take breaks and remain in the shade as often as possible and advised those caring for the elderly and the sick who are indoors to take extra precautions and not leave children unattended. The advisory identified Puttalam, Kurunegala, Gampaha, Kegalle, Colombo, Kalutara, Ratnapura, Galle, Matara, Hambantota and Monaragala as regions where people need to remain extremely cautious during the hot weather. Meanwhile, Mannar, Vavuniya, Anuradhapura, Polonnaruwa and Ampara mentioned remaining caution during the hot weather. According to the heat index, the extreme caution level has recorded temperatures between 32 and 41 degrees centigrade. The department warned that those living in these areas should avoid venturing outside too much in the next few days, particularly in the morning hours as heat strokes, cramps and heat exhaustion were some of the after-effects that could occur if precautions were not taken. The Kilinochchi, Jaffna, Trincomalee, Polonnaruwa, Matale, Batticaloa, Ampara, Galle and Matara districts recorded temperatures between 27 and 32 degrees centigrade. While issuing a general weather forecast for next 36 hours the Meteorology Department today said showers and thundershowers may occur in Ratnapura in the Sabaragamuwa Province after 2.00 p.m. Mainly fair weather would prevail in Anuradhapura, Batticoloa, Colombo, Galle, Jaffna, Kandy, Nuwara-Eliya, Trincomalee and Mannar Misty conditions could be expected at some places in the Sabaragamuwa Province and Nuwara-Eliya district in the morning, the Department added. While issuing a situation report, the Disaster Management Centre today said 2,98,115 people from 74,792 families had been affected due to prevailing drought situation at four provinces in Sabaragamuwa, Central, Western and North Western. People in Kegalle (12,814 people), Ratnapura (30,497 people), Kandy (1,213 people), Kalutara (2,15,525 people), Gampaha (6, 566) and Puttalam (31,425 people) affected with drought, but no deaths have been reported. (Daily Mirror online, 10.3.2020)

The Balangoda Magistrate’s Court yesterday imposed a fine of Rs. 30,000 each on eight men arrested recently for setting fire to a section of the Hakgala Nature Reserve. The convicts are residents of Hendala and Wattala and said to have been under the influence of liquor at the time they set fire to the forest. During the past month or so, a series of fires were reported from the Rambukkana and Alagalla mountain areas. Around 10 acres were destroyed by those fires. The fires were doused with the help of Police, Army and Navy personnel and residents in the area. Forest fires have become a serious problem in some regions in Sri Lanka, especially in areas like Beragala, Haputale of the Badulla District. According to the Disaster Management Center, Sri Lanka experiences nearly 50 to 200 cases of forest fires every year. Nearly 675 forest fires were reported in the years between 2016 and 2019. According to the Department of Forest Conservation, 5,619 hectares of land had been destroyed due to fires, according to the latest statistics. Environmentalist Sajeewa Chamikara believes that it is of utmost importance to take measures to eradicate these forest fires through a coordinated process within the community and the state apparatus. (Daily Island, 11.3.2020)

The Treasury has approved the release of Rs 7 billion requested by the Election Commission to hold the Parliamentary Election, State Minister of Development Banking and Loan Schemes Shehan Semasinghe stated.  The funds necessary for the election have been released through the Consolidated Fund which the President is allowed to take moneys for a period of three months after an election is declared.  Meanwhile, the Treasury has also approved the release of a further Rs 1.2 billion that the EC has to pay to cover arrears from the 2019 presidential election. The money will be paid in installments. (Times online, 12.3.2020)

The Parliamentary Election fixed for 25 April has been postponed until further notice, Election Commission Chairman Mahinda Deshapriya said yesterday, as the country grapples with the growing threat of the coronavirus pandemic. “The EC has decided that the election cannot be held under any circumstances on 25 April even if the health authorities and the World Health Organisation (WHO) tell us tomorrow that the threat from COVID-19 has been completely eradicated. Our election calendar has gone haywire in the past few days due to the coronavirus,” Deshapriya told reporters at a press conference last afternoon.The announcement came as nomination for the 2020 Parliamentary Polls closed at noon yesterday and amidst growing calls from political parties and election monitoring groups to postpone the election given the developing situation with COVID-19
The Election Commission will use powers vested in it under the Parliamentary Elections Act No. 1 of 1981 which provides for the postponement of an election, where, “due to any emergency or unforeseen circumstances” the poll for the election in any electoral district cannot be taken on the specified date. The EC is empowered to appoint another day for the taking of such poll but the day so fixed has to be after 14 days after the publication of the Order in the Gazette.
The EC expects to issue the relevant Gazette on 25 March after it issues the Gazette containing the names of the candidates of each recognised political party and independent group whose nominations have been accepted for election as a MP, the approved symbols allotted to each party or group and other such details.“ We believe the Commission will receive the finalised details next week and we should be able to publish that Gazette as well as the Gazette on the postponement of the polls by 25 March,” Deshapriya said. However, the new date for the Parliamentary Elections would depend on how the programs to combat the spread of COVID-19 progress. “The election date will depend on COVID-19, the Task Force appointed for the preventive programs and the citizens of this country,” he said. Deshapriya said the decision to postpone the polls had been take after discussions with health authorities and other stakeholders. “The election date will also be decided after discussions with the task force,” he said. It was pointed out that logistically holding the election on 25 April was impossible given the extra public holidays that were given and the upcoming New Year season. “Postal voting applications are lying at post offices due to the closure and we have to give dates for these. Election officials will also have to work during weekends to sort out the issues,” he added. The nominations handed over by yesterday will stand, Deshapriya said, adding that there was no room for cancellation unless someone goes to Court or it is done by Parliament. But with Parliament dissolved, this seems an unlikely scenario. (Daily Financial Times, 20.3.2020)

Good news that four COVID-19 affected patients, including Patient 1, have recovered and would be ready for discharge after a few more tests, came amid a lockdown of the country through a 60-hour curfew imposed at 6 p.m. on Friday. The National Institute of Infectious Diseases (NIID) is awaiting confirmation that the four patients are free of the virus before sending them home, the Sunday Times learns, while two of the balance patients are in the Intensive Care Unit (ICU). There were altogether 68 confirmed cases at the NIID at the time the newspaper was issued. The number of confirmed patients across the country rose to 76 – including the very first Chinese woman tourist who recovered and went home – by last afternoon, according to the Health Promotion Bureau, with the suspected cases in designated hospitals reaching 245. This was as many health sources urged that the lockdown be extended beyond tomorrow to cover the 14-day incubation period when the virus can spread, after facilitating a way for people who are in urgent need of food and medicine to buy their requirements without crowding such places. “We need to prevent people from gathering for panic buying with crowds rushing to all shops and supermarkets and vehicles queuing up for fuel,” said many experts. Another factor which came to light was how a few people who were ill were walking into hospitals and wilfully withholding information that they were either returnees from high-risk countries, especially Italy, or had come into contact with those returnees, putting everyone else they met in danger. (Sunday Times, 22.3.2020).

Sri Lanka is now maintaining a Rs.5 billion financial backup to meet basic costs in dealing with any eventuality arising from the new coronavirus, official sources said, adding that more funds would be made available as and when the need arose. President Gotabaya Rajapaksa has used his constitutional power in sanctioning the Treasury to allocate this money from the Contingencies Fund to deal with emergency situations, a senior Treasury official told the Business Times. The aim is to improve financial security by allocating funds to meet emergency expenses as well as to reduce the need of using high-interest debt as a final resort. A sum of Rs. 200 million has already been granted from this financial backup to provide basic facilities at quarantine centres for the benefit of persons undergoing quarantine process, he added. 2258 people are currently housed at 16 quarantine centres across the country. In addition a sum of Rs.500 million will be released for corona-virus eradication immediately under the economic stimulus package introduced by the government with the aim of minimising the economic impact, Cabinet spokesman Minister Bandula Gunawardena told the Business Times. He noted that the government is taking every possible precautionary measure for the prevention of the epidemic, maintain services and supplies as well as mitigate the damage caused to tourism, exports, foreign employment, IT and micro, small and medium scale industries. A six month moratorium on loan repayment has been announced with effect from March 20, he said. Minister Gunawrdena added that banks have been directed to grant loans for working capital at 4 per cent interest under this package. Meanwhile for other matters, the country is running on financial allocations amounting to Rs.1224.9 billion made from the Consolidated Fund in accordance with the warrant issued by the President. According to the Financial Reserves Act, a contingencies fund is being maintained for urgent and unforeseen expenditure of the state. If the Minister of Finance is satisfied that there are no funds already allocated to meet the emergency, he may with the consent of the President first obtain and authorise an advance payment to be made from this fund. As soon as possible thereafter, a supplementary estimate has to be presented in Parliament and its approval obtained, to replace the amount so advanced. Without a proper budget, the Treasury has no powers to spend money, raise new taxes or borrow money to meet any shortfall in the revenue as it has to stick to the allocations made from the Consolidated Fund and the Contingencies Fund, the official revealed. (Sunday Times, 22.3.2020)

Higher Education Minister Bandula Gunawardane said Sri Lanka would receive another US$ 700 million in May as  a concessionary loan  from China Development Bank . The Minister who is also the Cabinet spokesman told Daily Mirror this would be in addition to US $ 500 million announced recently. He said the country would receive US $ 1.2 billion in this manner for various needs. “We can use it for infrastructure development, budgetary support and debt servicing ,” he said. He said there would be  a three – year grace period for the repayment of this loan .(Daily Mirror, 22.3.2020)

Sri Lanka reported its first death from COVID-19 at around 8 p.m. yesterday, the victim being a 60-year-old male who had other complications. The patient from Marawila was among three who were on ventilators at the National Institute of Infectious Diseases (NIID), Angoda, and Health Services Director-General Dr. Anil Jasinghe said that this patient who had undergone a kidney transplant a few years ago, was also suffering from diabetes and high blood pressure. The death came as ‘confirmed’ COVID-19 cases rose to 113 yesterday, the number including the patient who has succumbed and those who have recovered. The nine who have recovered include the Chinese tourist. As at last night, 103 patients were in hospital receiving treatment. This week seven COVID-19 patients including the very first Sri Lankan to be affected by the new coronavirus made a full recovery at the NIID, while a critically-ill patient was treated with ‘convalescent plasma’ last morning. These recovered patients included the first tour guide, a 24-year-old female and five males, including the Sri Lankan Airlines pilot, said NIID’s Consultant Physician, Dr. Eranga Narangoda, who is treating around 86 patients with COVID-19. One patient may have also been discharged from the Welikanda Base Hospital, according to unconfirmed reports. There are two critical patients, both males, on ventilators, while three others also males, are under observation in the NIID’s ICU, it is learnt. As of Friday, 1,179 (including two Iranians, two South Koreans and one Italian) left the quarantine centres in Punani, Kandakadu, Diyatalawa and Meeyakulan..(Sunday Times, 29.3.2020)

A 64-year-old COVID-19 infected patient died at the Negombo Hospital this evening, bringing the total number of COVID-19 deaths to two in Sri Lanka, Director General of Health Dr Anil Jasinghe said. He said the victim was a resident of the Kochchikade area. He had been transferred to the Negombo Hospital from a private hospital today. Dr Jasinghe said it was today itself that the patient was tested positive for the virus. The patient had been suffering from a long term lung disease and also suffered a heart attack, Dr Jasinghe said Daily Mirror, 30.3.2020