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CoPF decides on Parate Law

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The Committee on Public Finance (CoPF) has approved, subject to conditions, the Recovery of Loans by Banks (Special Provisions) (Amendment) Bill which was amended to facilitate legal provisions for the suspension of Parate Law until December 15 2024. 

Accordingly, the banks’ practice of acquiring properties of whose loans are yet to be paid off will be suspended until December 15 and the Recovery of Loans by Banks (Special Provisions) Act No. 4 of 1990 will be amended to facilitate the necessary legal provisions.
The approval was given when the Committee on Public Finance met in Parliament recently (30) under the chairmanship of Member of Parliament Dr. Harsha De Silva.

Officials representing the Ministry of Finance said that they hope to provide temporary relief to the creditors. Accordingly, the committee questioned the officials what action will be taken in this regard after December 15. Thus, the officials present failed to give a clear answer in this regard and the committee recommended to provide a road map for the actions to be taken after December 15 to those subject to Parate Law.

Also, the committee recommended that all the parties who have done business with the banks subject to Parate Law should be given a fair opportunity to negotiate with the banks.

The committee also questioned the officials about the distribution of loans under the Parate Law. The chair of the committee inquired about the manner in which the micro, small scale and medium scale enterprises in particular have received loans under this law and the criteria under which they are classified. The officials did not have the correct data about this and the chair of the committee instructed the officials to provide that data to the committee.

The committee also inquired the percentage of the sectors that were most affected. Furthermore, the committee asked the officials to provide data on the implementation of the Parate Law in other periods compared to the specific period in which there was an economic recession due to the impact of the corona virus in 2020, 2021 and 2022. The officials present mentioned that the data on this matter this will be presented to the committee in the future.

Meanwhile, the committee has also given its approval for the orders under the Foreign Exchange Act No. 12 of 2017 and the regulations under the Sri Lanka Securities and Exchange Commission Act No. 19 of 2021. Also, the committee approved the regulations under the Import and Export (Control) Act No. 1 of 1969.

State Minister Dr. Suren Raghavan, Members of Parliament Premnath C. Dolawatta and Madhura Withanage participated in this committee.

Also, officials representing several government institutions including the Ministry of Finance, Economic Stabilization and National Policy, the Auditor General’s Department, the Central Bank of Sri Lanka, and Sri Lanka Customs were present in this committee.

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SL – Indonesia pledge stronger bilateral ties

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In a significant bilateral meeting during the 10th World Water Summit, President Ranil Wickremesinghe and Indonesian President Joko Widodo reaffirmed their commitment to strengthening the longstanding relationship between their nations. The discussions, which covered a wide range of regional and international issues, underscored the importance of collaboration in addressing global challenges.

President Wickremesinghe, in his opening remarks, highlighted the historical ties between Sri Lanka and Indonesia, dating back to their joint participation in the 1956 Bandung Conference. He expressed appreciation for President Widodo’s leadership in regional, international, and bilateral matters, noting the importance of such summits in fostering global cooperation.

A major topic of discussion was the critical issue of water management. President Wickremesinghe emphasized the importance of the World Water Summit and expressed Sri Lanka’s willingness to participate in the Global Blended Financial Alliance, an initiative aimed at addressing common financial challenges faced by countries in managing water resources. He commended Indonesia for establishing a Secretariat for the Alliance, recognizing its significance for Sri Lanka.

President Widodo, in his remarks, focused on the economic cooperation between the two countries. He stressed the need to finalize the Preferential Trade Agreement (PTA) by the first quarter of 2025 to enhance economic ties. Additionally, he highlighted Indonesia’s interest in entering the Sri Lankan vaccine market through Indonesian pharmaceutical companies, and called for the lifting of import restrictions on Indonesian palm oil and related products.

The Indonesian President also showcased Indonesia’s advancements in renewable energy, specifically the country’s largest floating solar power project. He emphasized the importance of hydro diplomacy and political leadership in achieving sustainable water management and development goals. Furthermore, he welcomed Sri Lanka’s leadership in the Indian Ocean Rim Association and its aspirations to become a sectoral dialogue partner.

President Wickremesinghe reiterated the importance of completing the PTA by early 2025, noting Sri Lanka’s existing free trade agreements with India, Singapore, and ongoing negotiations with Thailand, Bangladesh, and Malaysia. He emphasized the potential benefits of joining the Regional Comprehensive Economic Partnership (RCEP), suggesting that Sri Lanka’s inclusion could encourage other South Asian countries to follow suit. 

He also mentioned the ongoing removal of import restrictions and assured that Sri Lankan health authorities would address the entry of Indonesian pharmaceuticals into the market.

The discussion also touched upon regional security and economic cooperation in the Indian Ocean. President Wickremesinghe supported ASEAN’s Indo-Pacific outlook and stressed the need for closer bilateral and regional cooperation regarding Indian Ocean affairs. He proposed more frequent meetings between heads of government and a specific bilateral agreement with Indonesia to enhance commercial collaboration in the region.

President Widodo thanked Sri Lanka for co-sponsoring the Global Blended Financial Alliance, emphasizing its role in achieving sustainable development goals. He called for continued collaboration between relevant ministries from both countries to support this initiative. Looking ahead, President Widodo mentioned the upcoming presidential transition in Indonesia and expressed hope that the new administration would continue to strengthen ties with Sri Lanka.

In conclusion, President Wickremesinghe expressed his eagerness to work with Indonesia’s new leadership and extended a personal invitation to President Widodo to visit Sri Lanka after his term ends in October. Both leaders reaffirmed their commitment to enhancing bilateral relations and addressing shared global challenges through continued cooperation.

(President’s Media Division)

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Sri Lanka declares tomorrow a day of mourning

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Sri Lanka has declared tomorrow (May 21) as a day of mourning in view of the death of Iranian President Ebrahim Raisi.

The national flag will fly at half mast at all government institutions.

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2 crucial Bills to Parliament on May 22

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Acting Finance Minister Shehan Semasinghe announced plans to introduce two significant bills to Parliament on May 22, aimed at bolstering the country’s economy. 

These bills, the “Economic Transformation Bill” and the “Public Financial Management Bill,” are designed to enhance the management of public finances, thereby safeguarding against future economic downturns. 

Minister Semasinghe made this announcement during a press conference at the Presidential Media Centre today, themed ‘Collective path to a stable country’.

Acting Finance Minister  Shehan Semasinghe, further stated : 

‘The government has scheduled the submission of two significant bills crucial for the country’s economy on May 22. One of these bills is the “Economic Transformation Law,” aimed at preventing future economic collapses. Notably, this legislation stems from the vision of President Ranil Wickremesinghe, rather than being proposed by the International Monetary Fund. The recent stabilization of the economy following previous downturns underscores the importance of preserving this stability going forward.

Additionally, it is necessary to maintain optimal levels of public financial management to avert future economic crises. The “Public Finance Management Bill” is set to be presented to Parliament on the same day, with a focus on enhancing accountability in managing public finances. This legislative initiative aligns with recommendations from a collaborative program with the International Monetary Fund and holds significant importance for the country’s future financial management.

It’s important to underscore the critical significance of both these bills for the country’s future. These drafts contain numerous technical intricacies aimed at bolstering confidence in the economy and maintaining the trajectory of the new economic direction implemented thus far.

Further elaborating on the Economic Transformation Bill, it holds paramount importance for the country’s economic growth. Despite experiencing economic contraction in the second and third quarters of 2023, a notable growth rate of 4.5% was achieved in the fourth quarter. Consequently, the benefits of this economic upturn have started permeating to the grassroots level within the country.

Furthermore, it is imperative to enhance the economic competitiveness of the nation and adapt the economy to confront global challenges while fostering international cooperation and growth. Additionally, this bill addresses necessary changes in various sectors.

Specifically, the legislation encompasses reforms essential for international trade, trade agreements, and climate change mitigation efforts. 

The establishment of a new Economic Commission in Sri Lanka, aimed at attracting investments to enhance competitiveness, fostering a conducive environment for investors, expanding international trade, establishing the National Productivity Commission, and developing export-related institutions, is also outlined in this bill.

Recently, Parliament endorsed the decisions made, particularly regarding economic transformation. In 2022, the public debt ratio stood at 128%, a figure slated to be reduced to less than 95% by 2032. 

Similarly, the fiscal requirement, which was 34.6% of the gross domestic product in 2022, aims to be lowered to below 13% by 2032.

Effective debt servicing is paramount, with efforts focused on establishing Sri Lanka as a debt-sustainable nation capable of meeting its obligations. The aim is to reduce the debt payment ratio from 9.4% in 2022 to below 4.5% by 2027.

A proposed bill will outline specific national goals and actions taken to address economic challenges, providing a roadmap for sustainable economic growth, debt management, agricultural modernization, import-export regulation, and economic governance.

Additionally, considerable attention has been given to the Public Finance Management Bill, aimed at identifying weaknesses in the current legislation and proposing a robust legal framework to meet future needs.

(President’s Media Division)

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