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4th February 2001

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A soldier from the Sri Lanka Army band
practises a sousaphone during rehearsals
yesterday for today's 53rd Independence Day
anniversary celebrations.
Pic By M.A..Pushpakumara

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Forex market stable but hit by new rule

Sri Lanka's foreign exchange markets stabilised last week with the US dollar trading at 88-89 rupee-levels but as far as exporters and importers are concerned their future is still uncertain, trade sources said. Exporters say the 90-day limit for bringing back export proceeds is

"killing" them particularly on forward contracts and deals made earlier while Pettah-based importers were unable to get access to government ministers for a dialogue on the crisis.

"We had sought a meeting with three ministers to assure them that we would be reasonable in our price increases and not indulge in speculation and to ensure that the consumer does not suffer. Yet some ministers were not available to give them this assurance," said Sunderam Palaniyandy, president of the Old Moor Street Traders' Association.

The exporters' plight was raised at a meeting trade chamber leaders had with Treasury Secretary P. B. Jayasundara last week.

"We told the Treasury Secretary that exporters, particularly those dealing with West Asia and Russian tea markets, were facing difficulties as buyers there normally trade on a 180-day credit basis," said Chamber of Commerce chairman Chandra Jayaratne, who was also present at the meeting.

He said tea producers, mainly smallholders, were suffering as the new rule had driven market prices down. The Treasury Secretary had promised to look into this matter, Mr. Jayaratne said.

But many commercial banks said the rule had affected exporters across the board. "We are fielding many inquiries from exporters who had earlier before the new ruling agreed and finalised contracts with buyers on credit facilities beyond the 90-day limit placed by the Central Bank," a bank official said.

He said the government needed to seriously review this ruling and at least provide relief on a case-by-case basis.

News of an IMF bailout to replenish Sri Lanka's low foreign exchange reserves also appeared to fizzle out at the end of the week. Traders said the forex and stockmarkets saw the IMF facility of between $400-500 million to revive a plunging dollar, as an added boost to reassure jittery markets.

The visit of an IMF team, when the free float was announced, gave some credibility to reports that the IMF had persuaded the government to float the dollar in return for a rescue package on the promise of tighter economic reforms.

But some government officials said there was little progress in this direction.

MF facilities were available, and have always been available, only if Sri Lanka's economic fundamentals such as low budget deficits, lower war spending and doing away with subsidies, were put right, officials said.

Mr. Palaniyandy, of the Pettah Traders' Association, said some traders were planning to close shop next week due to the crisis arising out of the free float situation and other connected problems.

He said his association, numbering 500 members, had joined with other Pettah traders and called a meeting with Industrial Development Minister G.L. Peiris , Trade Minister Rauf Hakeem and Food and Marketing Minister Reggie Ranatunga for late January. But the meeting was cancelled at the last minute as one of the ministers wanted the venue changed, after all preparations had been made.

"We are concerned about the consumer and some of us feel obliged to ensure there is no crisis in the country. But sadly, there is no one to listen to us. But everyone blames us for rising prices," he said adding that they were planning to write to President Kumaratunga seeking a meeting.

The Pettah traders who import the bulk of the country's requirements of dhal, cowpea, potatoes, onions and sugar among other items, say new strict Customs and shipping rules are further affecting their business.


Erik Solheim's MOU anomalous

Norway's special envoy Erik Solheim is proposing a memorandum of understanding between the government and the LTTE to pave the way for direct talks.

The crux of the MOU, ironically, is for both sides to agree to two anomalous positions.

The MOU has raised queries in political circles. Influential circles are asking whether by proposing an MOU, Mr. Solheim had exceeded his mandate as a facilitator. They are equally worried that by agreeing to talk about the MOU, the Government is also unwittingly shifting its position to accepting Norway as a fully fledged mediator

The government originally rejected third party mediation, facilitation or involvement in any manner or form, only to accept Norwegian "facilitation" last year.

When the Government accepted Norway to play the role of facilitator, it strenuously explained its position saying the Norwegians would not engage themselves in any mediation.

The LTTE expects the Government to lift what it calls the economic embargo to "alleviate the suffering of civilians" in areas dominated by it. But the government has consistently held that there is no economic embargo and insisted that food supplies have been reaching the areas without let or hindrance.

In return, the LTTE has offered to desist from offensive military action or attacks in provinces other than the violence-hit north and east.

Officially the position, like the demand for the lifting of the economic embargo, is anomalous.

On the record the LTTE has never admitted to carrying out such attacks though evidence of its involvement in many such instances has clearly surfaced.

In the recent past, such incidents have included the bomb explosion at Sri Dalada Maligawa, the assassinations of TULF MP Neelan Tiruchelvam and Minister, C.V. Gooneratne and the assassination attempt on President Chandrika Kumaratunga.

The proposed MOU is learnt to have been one of the focal point of discussion during Mr. Solheim's talks with President Kumaratunga.

No details of how it proceeded and the government's response were immediately available. Mr. Solheim left Colombo yesterday.


CEB in dilemma over coal plant

By Shelani de Silva

The Government is desperate to establish a coal powered plant which is expected to bring down the soaring cost of electricity generation but the Ceylon Electricity Board is in a quandary over finding a proper location.

The CEB wants the project to be located at Norochcholai near Kalpitya, but unable to go ahead because President Chandrika Kumaratunga had assured the Bishop of Chilaw during the election campaign in October that the plant would not be located there.

The President later asked the CEB to look for an alternative location. CEB Chairman Arjun Deraniyagala on Wednesday told journalists that shifting the location was not possible because a large sum had been spent on the feasibility study and the site had been selected after several studies.

He said finding an alternate site would take at least another three years and this poses the danger of the funds being withdrawn by Japan which wanted the project to be started within this year.

"We have to decide within this year or else the Japanese grant, the biggest grant the CEB had ever received, will be withdrawn," Dr. Deraniyagala said. The Norochcholai coal power plant ran into storm following opposition from residents and the Catholic clergy.

Last week, the CEB announcing the 25% surcharge on electricity bills said the failure to implement the Coal power plant in Norochcholai contributed to the increase. Power and Energy Deputy Minister Felix Perera last week sought an appointment with Chilaw Bishop Frank Marcus Fernando, but it was turned down, indicating that the Catholic Church had not changed its position. The Bishop told The Sunday Times that the Catholic Church's stand would not change. "We have no objections in having the coal power project in a different location. We have protested against the present site due to two reasons firstly the threat on the Shrine and the security threat," the Bishop said.


Susil Moonasinghe recalled

Sri Lanka's Ambassador-designate to Iran, Susil Moonesinghe, has been asked to appear before the Parliament Select Committee on High Posts for a second time following allegations that he had made a false declaration before it.

Mr. Moonesinghe, a one-time Western Province chief minister and UNP MP but now with the PA, has been accused by UNP MPs in the Committee of making an inaccurate declaration about his children.

PA MPs in the Committee did not object to Mr. Moonesinghe being summoned back for further grilling next Thursday. Mr. Moonesinghe, who crossed over to the PA from the UNP last year lost his seat at the general elections in October 2000.


International press body blacklists Lanka

Sri Lanka along with Russia and Venezuela will be on a 'watch-list' for press freedom by the Vienna-based international Press Institute.

The decision to take these countries on the watch list was taken at an IPI board meeting in New Delhi on Monday.

"In Sri Lanka, authorities continue to curtail reporting by various means," the IPI said in a statement.

The IPI Watch List is a mechanism to detect and record regressive tendencies in countries that appear to be moving towards suppressing or restricting press freedom.

The main objective of the "IPI Watch List" is to focus global media attention on the offending country and bring pressure to bear on the government to reverse the trend towards repression. The executive board evaluates each country's status twice yearly.

Developments in the above-mentioned countries are closely monitored by the IPI secretariat and the executive board reviews the position the following year.

Referring to reasons on putting Sri Lanka on the watch list, the IPI said: "For example, in early December the Sri Lanka Court of Appeal decided to dismiss the appeal of editor Sinha Ratnatunga against criminal defamation charges. In 1997, Mr. Ratnatunga was fined and given a prison sentence, suspended for seven years, for defaming the president. Journalists have also been subject to physical attacks."

Regarding Russia, the board agreed that a number of incidents have occurred which had reinforced the view that instead of improving, the climate for the press in Russia is still deteriorating, IPI said.

In the case of Venezuela, the IPI said: "Relations between President Hugo Chavez's government and the largely pro-opposition press have not improved. Venezuela's journalists complain about Chavez's hostile attitude towards the media and his frequent verbal attacks on the press," the release said.

On the positive side, the IPI decided to remove Peru from the watch list.


Exclusive!!

An Israeli built Kfir intercepter jet rolls out from the Sri Lanka Air Force No 10 Jet Squadron at Katunayake for a take off from the runway at Bandaranaike International Airport.image

Together with two Russian built MiG-23 ground attack aircraft they were on a mission last Thursday, to attack an LTTE target in the North. The Sunday Times Defence Correspondent, Iqbal Athas was on hand to see the display of the advanced air superiority of the SLAF, which marks its 50th anniversary next month. His exclusive accounts appear in the situation Report and in the Plus section.

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