Banking on loans | Print edition
The trio had gathered under the margosa tree and luckily Aldoristhe choon paan baker, had resumed its deliveries, although indicating, “Maman danne ne mata me bisness eka kochchara kal karanna puluwan weida kiyala mei wediwena ganan ekka (I don’t know how long I will be able to continue this activity with rising costs).
He was rushing after selling his breakfast food in the neighborhood, only to join a fuel queue. For the record, the queues are multiplying throughout the countryside, one of the last queues being that of the dhal.
chew a ‘maalu paan’ and sipping tea, Kussi Amma Sera noted: “Mata thava kochchara kal me peya 13 ne light kepillata muhuna denna puluwanda mang danne ne. Meka harima amarui (I just can’t handle those 1pm power outages. It’s so hard).
Added Serapine: “Kema kadawala saha supermarket wala godak kema narak wenna yanne, nethnam generator (A lot of food will be spoiled in restaurants and supermarkets if they operate without generators).
Join the conversation, Mabel Rasthiyadu Noted: “Mata therenne ne, monkey nayakayo me salary hasirenne mokada kiyala. Kisima planak nae ne janathawage prashna wisadanna. Eh gollanta beri nam, us-wenna oney (I don’t know why our leaders are behaving like this. They have no plan to solve the people’s problems. If they can’t manage, they should quit).
“Stop” was on my mind when the phone rang Thursday morning. It was artsy, the money market veteran, and he seemed to be in the mood to discuss constitutional reforms – rather than economics – because everyone seems to be an “expert” in constitutional affairs with the administration of the island “a country like no other” which goes haywire and stridently calls on the government to step aside.
“But how can they do this (the government resigns)? No parliamentary election can be called before the middle or end of 2023,” I said, when artsy started the discussion on constitutional reforms. “Well, the experts have to look for ways to change the constitution. This is a serious situation because there is no recourse in the Constitution for an election after a bankrupt regime has completed three years,” he said.
I then recalled a conversation with a business leader last week where he brought up an interesting point (of course, this requires expert analysis). For example, he says that perhaps there should be a constitutional provision for a referendum to be organized after three years by a government. Such a referendum could ask the people to decide whether or not a parliamentary election should be called and proceed accordingly depending on the outcome.
“While that sounds interesting, there should also be constitutional safeguards to ensure that the opposition does not demand a referendum (just to seek regime change) even if a ruling party is doing good. work,” I told the business manager. , adding that if such a provision is enshrined in the Constitution, it should strike a balance between allowing a referendum, but for a “valid” reason.
He had also suggested that there should be a provision to prohibit a single party or coalition from obtaining a 2/3 majority, a proposal which I said would be difficult to implement.
Back to my conversation with artsy, I asked him how the money markets were doing. “Looks like the dollar will reach Rs. 400 mark soon. No amount of punishment threats against or persuasion from licensed fund dealers will keep the rate low. (unofficial), the rate is between Rs. 350 and Rs. 425,” he said, adding that banks have no money to service letters of credit. Earlier this week, the Central Bank warned that dealers would lose their licenses if they sold dollars at rates above the official market (now close to Rs. 300) and on Thursday a dealer’s license was temporarily suspended.
For all intents and purposes, the economy collapsed with widespread shortages of food and other essentials. Tourist hotels are struggling to meet their diesel needs for their vehicles and generators while running out of stocks of imported alcohol, essential for foreign tourists.
Sri Lanka has survived day to day and Chinese involvement in the country is a classic example. For example, Sri Lanka owes between US$1.5 billion and US$2 billion in debt payments to China this year, with the deadline for those payments set for last week. Later on Monday, Chinese Ambassador to Sri Lanka Qi Zhenhong announced that he was considering a $2.5 billion loan and line of credit to Sri Lanka, which is basically to repay loans taken from China. herself.
The country is deeply in debt and often grateful to India for coming to the country’s rescue as it did by accepting a $1 billion loan and a $500 line of credit for essential imports, including including fuel, at the beginning of last month. This week, coinciding with the visit of Indian External Affairs Minister Dr. S. Jaishankar, India agreed to increase the line of credit from $500 million to $750 million. Sri Lanka is also requesting a $250 million swap facility from Bangladesh in addition to the $250 million previously disbursed by Dhaka.
In terms of foreign income to the country, exports totaled $1,046 million in February 2022, continuing the momentum of earning an average of $1 billion per month, but workers’ remittances continue to fall, February posting a value of $205 million, a sharp drop of $579.7 million in the same month of 2021. For January and February 2022, the drop was more than 60% compared to the same months of 2022.
On another front, the finance ministry is set to appoint an adviser to plan a debt restructuring program ahead of mid-April talks with the International Monetary Fund (IMF), where the country is likely to request a rescue plan of between $3 and $4 billion. In a report released last week after a visit by IMF officials, the IMF said Sri Lanka’s public debt is unsustainable and gross foreign exchange reserves are extremely low and insufficient to meet short-term servicing needs. debt. He recommended increasing tax revenue. The country’s external debt payment this year is $1 billion due in July and another $5 billion at the end of the year.
That much, Kussi Amma Sera walked into the room with another cup of tea saying, “Sir, thava minittu thihakin light yanawa (Sir, the lights will go out in 30 minutes)”. I nodded and pondered the plight of Sri Lankans who are quickly losing patience with an administration that does not know if it is coming or going!
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