The Evening Wrap: Sri Lanka opts for pre-emptive debt default to combat economic crisis

Sri Lanka on Tuesday announced a pre-emptive default on all its foreign debt totalling $51 billion as a “last resort” while the island nation struggles to cope with a grave economic crisis. The Government is taking the “emergency measures”, pending full discussions with the International Monetary Fund (IMF) from whom it has sought help, only to prevent a further deterioration of the country’s financial position, the Finance Ministry said. A comprehensive debt restructuring programme was now “inescapable”, it noted in a statement. The decision comes on the heels of two other key policy changes. Sri Lanka floated the rupee early March, allowing for a stark depreciation of its value — it was nearly 320 against a US dollar on Tuesday. More recently, the Central Bank increased interest rates by 7 percentage points in a bid to tighten monetary policy, apparently in preparation of an IMF package that the government wants to “expedite”. “The question now is how ISB holders view this decision,” opposition lawmaker and economist Harsha De Silva told The Hindu. He was referring to International Sovereign Bonds or market borrowings that form the biggest chunk, or nearly half, of Sri Lanka’s foreign debt. “The government should have ideally sought their consent instead of going in for a unilateral, hard default like this. They have really run out of money,” he said. The opposition United National Party has called for “a full explanation” in Parliament, of what led to “this situation” when the legislature convenes on April 19. Commenting on Tuesday’s default announcement, economist Anush Wijesinha said in a tweet: “While this is in effect a form of default, it is better than a scenario where GoSL simply fails to make a particular coupon or bond payment coming due (several coming in the next weeks and months); MoF has taken a “policy stance” applicable for all; and attempts to build goodwill.” Ahilan Kadirgamar, political economist at the University of Jaffna, said the government resorting to a default even before commencing negotiations with the IMF meant that “Sri Lanka has completely lost its bargaining power” with the international lender. From the time the government reluctantly agreed to go in for an IMF programme, some in Sri Lanka have been flagging the potential impact of IMF conditionalities on ordinary people, including possible tax hikes across the board, austerity-driven cuts in state spending, and a push towards privatising loss-making State-owned enterprises. “This IMF programme is likely to be as consequential as in 1977-78, when Sri Lanka went through an IMF structural adjustment programme, as it became the first country to liberalise its economy in South Asia. It could mean a full-blown assault on what remains of our social welfare system, dispossessing our working people and jeopardising our legacy of high levels of human development,” Kadirgamar contended. At 2+2 ministerial dialogue, India and U.S. call for immediate cessation of hostilities in Ukraine In a review of the mutual efforts to respond to the worsening humanitarian crisis in Ukraine and make an assessment of its broader implications at the 2+2 ministerial dialogue in Washington on Monday, India and the U.S. urged for an immediate cessation of hostilities. The two sides also announced several measures to further expand the defence cooperation, one of which is India joining the Bahrain-based multilateral partnership, Combined Maritime Force (CMF), as an Associate Partner. “The Ministers unequivocally condemned civilian deaths. They underscored that the contemporary global order has been built on the UN Charter, respect for international law, and the sovereignty and territorial integrity of all states,” a joint statement issued after the 2+2 ministerial dialogue between the Defence and Foreign Ministers said on Ukraine. The Dialogue was preceded by a virtual meeting between Prime Minister Narendra Modi and U.S. President Joseph Biden. India joining the CMF “will strengthen the cooperation in regional security in the western Indian Ocean,” Defence Minister Rajnath Singh said in the joint press statement after the dialogue. The CMF currently has 34 member nations and is not bound by a fixed political or military mandate and exists to “uphold the rules-based international order” by countering illicit non-state actors on the high seas and promoting security, stability, and prosperity in the international waters. Retail inflation shoots to 6.95% in March 2022 Retail inflation shot up to 6.95% in March 2022, the third month in a row above the 6% mark, with food price inflation faced by consumers hitting 7.68% from 5.85% in February. Consumers in rural India faced a higher inflation than urban citizens, with overall rural inflation rising 7.66% and the rural food price index jumping past 8% to hit 8.04% in March from 5.81% in February. Among the States, West Bengal recorded the highest retail inflation at 8.85%, while Uttar Pradesh and Assam clocked 8.19% inflation, followed by Madhya Pradesh (7.89%), Telangana (7.66%), and Maharashtra (7.62%). The inflation rate stood between 7.4% and 7.6% for several regions, including Bihar, Jammu & Kashmir, Haryana, Jharkhand and Rajasthan. The retail inflation rate of 6.95% in March is the highest recorded in 17 months, fuelled largely by these spikes as well as producers passing on higher commodity prices and input costs to consumers. Fuel and Light inflation stood at 7.52% in March, while transport and communication touched 8%. Health costs, Household goods and services as well as Personal care and effects saw escalating inflation at 6.99%, 7.67% and 8.71%, respectively. The industrial output rose 1.7% in February 2022, as per the National Statistical Office, up slightly from the revised estimate of 1.46% recorded in January, even as manufacturing sector output slowed further from 1.3% that month to a mere 0.8% in February. The February numbers are relative to a low base of February 2021 when industrial production contracted 3.2%. UGC to issue guidelines on pursuing two courses simultaneously Undergraduate and postgraduate students will soon be able to pursue two degrees simultaneously under the University Grants Commission’s new guidelines to be made public on Wednesday, said its chairman M Jagadesh Kumar. The move will allow students to pursue two offline courses from the same university or two different universities or choose an offline course with either an online or an open and distance learning course. “We can only admit 3% of students in physical campuses. There have been developments in open and distance learning and online education and many universities are providing these programmes. The Commission has decided to issue guidelines which will enable students to pursue two academic programmes simultaneously,” Kumar said at a virtual press conference. He said that the guidelines will be issued on Wednesday and will come into force during the academic session 2022-2023. A student can pursue two full-time academic programmes in the physical mode provided class timings of the two programmes don’t overlap. Universities will have the flexibility to decide if they want to offer such a scheme. The guidelines will only be applicable to lecture-based courses, including undergraduate, postgraduate, and diploma programmes. MPhil and PhD programmes will not fall under this scheme. The eligibility criteria for different courses as well as admission policies will be determined by each university. Once the guidelines are made public, the UGC will inform educational institutes of the decision, which will have to then approach their statutory bodies that will bring out the academic ordinance to implement the guideline. The move is in line with the National Education Policy (NEP), 2020, of the Ministry of Human Resource Development. “Under the NEP we are trying to provide as much flexibility as possible so that we can ensure wholistic, integrated and learner-centered education. We hope that with the new guidelines the students will be provided with enough opportunities to acquire multi-disciplinary learning across wide variety of disciplines,” said Kumar. The NEP talks about encouraging engineering students to also learn arts and humanities subjects and students of arts to learn science and emphasises on “imaginative and flexible curricular structures” to allow creative combinations of different disciplines and “engaging course options in addition to rigorous specialisation in a subject.” Boris Johnson, Rishi Sunak fined over ‘Partygate’ British Prime Minister Boris Johnson and Finance Minister Rishi Sunak are to be fined for breaching COVID-19 lockdown laws in what has become known as the “Partygate” scandal, prompting calls on Tuesday for their resignation. “The Prime Minister and chancellor of the exchequer have today received notification that the Metropolitan Police intend to issue them with fixed penalty notices,” a Downing Street spokeswoman said on Tuesday. The announcement came after London’s Metropolitan Police said they had issued more than 50 fines over the parties, without disclosing the number or identities of those being fined. The leader of the opposition Labour Party, Keir Starmer, swiftly called for the two most senior members of the government to resign. “Boris Johnson and Rishi Sunak have broken the law and repeatedly lied to the British public,” Starmer tweeted. “They must both resign. The Conservatives are totally unfit to govern. Britain deserves better.” The political storm following the revelations of a swathe of lockdown-busting parties in and around Downing Street now threatens to engulf Johnson once more. He was left fighting for his political survival earlier this year after a number of lawmakers from his ruling Conservative Party withdrew their support for his leadership. Bereaved families of victims of the Covid pandemic also called on Johnson to resign. “It’s now indisputable that whilst bereaved families were unable to be at their loved ones’ sides in their last moments, or stood at their funerals alone, the people responsible for protecting us in Downing Street were partying and rule breaking en masse,” said Matt Fowler, co-founder of Covid-19 Bereaved Families for Justice. “It’s plain as day that there was a culture of boozing and rule breaching at the highest level of government, whilst the British public was making unimaginable sacrifices to protect their loved ones and communities.” London police are investigating claims that Johnson and government officials organised and attended at least a dozen boozy events in 2020 and 2021 that violated Britain’s then-strict virus curbs. “The investigation into allegations of breaches of COVID-19 regulations in Whitehall and Downing Street continues to progress,” the Met said in a statement on Tuesday. “We are making every effort to progress this investigation at speed. This includes continuing to assess significant amounts of investigative material,” it added. Johnson has already apologised for the parties, which included Christmas celebrations and a drink-fuelled gathering the evening before Prince Philip’s funeral. The Prime Minister, who initially denied any rule-breaking events had occurred in the complex where he lives and works, has consistently rejected personal wrongdoing. But his opponents accused him of misleading parliament by insisting the Downing Street events were work-related and within the rules. And the 57-year-old now faces renewed calls to explain why he attended social gatherings when his government was telling the public that they were illegal. His office confirmed in February that Johnson had submitted his response to a police questionnaire on the matter but sources said he has not been interviewed in person by investigating officers. In Brief: The Calcutta High Court on Tuesday directed a court-monitored investigation in four rape cases brought before it in the past one month. Special Commissioner of the Kolkata Police Damyanti Sen will head the probe. A Division Bench of Justices Prakash Shrivastava and Rajarshi Bharadwaj directed the investigation in the cases of rape at Deganga, Matia, Englishbazar and Bansdoni, which were brought before the court in form of public interest litigations. Evening Wrap will return tomorrow [logo] The Evening Wrap 12 APRIL 2022 [The Hindu logo] Welcome to the Evening Wrap newsletter, your guide to the day’s biggest stories with concise analysis from The Hindu. [[Arrow]Open in browser]( [[Mail icon]More newsletters]( Sri Lanka opts for pre-emptive debt default to combat economic crisis Sri Lanka on Tuesday [announced a pre-emptive default on all its foreign debt]( totalling $51 billion as a “last resort” while the island nation struggles to cope with a grave economic crisis. The Government is taking the “emergency measures”, pending full discussions with the International Monetary Fund (IMF) from whom it has sought help, only to prevent a further deterioration of the country’s financial position, the Finance Ministry said. A comprehensive debt restructuring programme was now “inescapable”, it noted in a statement. The decision comes on the heels of two other key policy changes. Sri Lanka floated the rupee early March, allowing for a stark depreciation of its value — it was nearly 320 against a US dollar on Tuesday. More recently, the Central Bank increased interest rates by 7 percentage points in a bid to tighten monetary policy, apparently in preparation of an IMF package that the government wants to “expedite”. [Sri Lankans queue up near a fuel station to buy kerosene in Colombo on April 12, 2022. Sri Lanka is suspending its repayment of foreign debt, including bonds and government-to-government borrowings, pending the completion of a loan restructuring programme with the International Monetary Fund to deal with the island nation’s worst economic crisis in decades, the government said on April 12, 2022. ] “The question now is how ISB holders view this decision,” opposition lawmaker and economist Harsha De Silva told The Hindu. He was referring to International Sovereign Bonds or market borrowings that form the biggest chunk, or nearly half, of Sri Lanka’s foreign debt. “The government should have ideally sought their consent instead of going in for a unilateral, hard default like this. They have really run out of money,” he said. The opposition United National Party has called for “a full explanation” in Parliament, of what led to “this situation” when the legislature convenes on April 19. Commenting on Tuesday’s default announcement, economist Anush Wijesinha said in a tweet: “While this is in effect a form of default, it is better than a scenario where GoSL simply fails to make a particular coupon or bond payment coming due (several coming in the next weeks and months); MoF has taken a “policy stance” applicable for all; and attempts to build goodwill.” Ahilan Kadirgamar, political economist at the University of Jaffna, said the government resorting to a default even before commencing negotiations with the IMF meant that “Sri Lanka has completely lost its bargaining power” with the international lender. From the time the government reluctantly agreed to go in for an IMF programme, some in Sri Lanka have been flagging the potential impact of IMF conditionalities on ordinary people, including possible tax hikes across the board, austerity-driven cuts in state spending, and a push towards privatising loss-making State-owned enterprises. “This IMF programme is likely to be as consequential as in 1977-78, when Sri Lanka went through an IMF structural adjustment programme, as it became the first country to liberalise its economy in South Asia. It could mean a full-blown assault on what remains of our social welfare system, dispossessing our working people and jeopardising our legacy of high levels of human development,” Kadirgamar contended. At 2+2 ministerial dialogue, India and U.S. call for immediate cessation of hostilities in Ukraine In a review of the mutual efforts to respond to the worsening humanitarian crisis in Ukraine and make an assessment of its broader implications at the 2+2 ministerial dialogue in Washington on Monday, [India and the U.S. urged for an immediate cessation of hostilities](. The two sides also announced several measures to further expand the defence cooperation, one of which is India joining the Bahrain-based multilateral partnership, Combined Maritime Force (CMF), as an Associate Partner. [(From left) Defence Minister Rajnath Singh, External Affairs Minister S. Jaishankar, U.S. Secretary of State Antony Blinken and Defense Secretary Lloyd Austin hold a news conference during the fourth U.S.-India 2+2 Ministerial Dialogue at the State Department in Washington on April 11, 2022. ] “The Ministers unequivocally condemned civilian deaths. They underscored that the contemporary global order has been built on the UN Charter, respect for international law, and the sovereignty and territorial integrity of all states,” a joint statement issued after the 2+2 ministerial dialogue between the Defence and Foreign Ministers said on Ukraine. The Dialogue was preceded by a virtual meeting between Prime Minister Narendra Modi and U.S. President Joseph Biden. India joining the CMF “will strengthen the cooperation in regional security in the western Indian Ocean,” Defence Minister Rajnath Singh said in the joint press statement after the dialogue. The CMF currently has 34 member nations and is not bound by a fixed political or military mandate and exists to “uphold the rules-based international order” by countering illicit non-state actors on the high seas and promoting security, stability, and prosperity in the international waters. Retail inflation shoots to 6.95% in March 2022 [Retail inflation shot up to 6.95% in March 2022]( the third month in a row above the 6% mark, with food price inflation faced by consumers hitting 7.68% from 5.85% in February. Consumers in rural India faced a higher inflation than urban citizens, with overall rural inflation rising 7.66% and the rural food price index jumping past 8% to hit 8.04% in March from 5.81% in February. Among the States, West Bengal recorded the highest retail inflation at 8.85%, while Uttar Pradesh and Assam clocked 8.19% inflation, followed by Madhya Pradesh (7.89%), Telangana (7.66%), and Maharashtra (7.62%). The inflation rate stood between 7.4% and 7.6% for several regions, including Bihar, Jammu & Kashmir, Haryana, Jharkhand and Rajasthan. The retail inflation rate of 6.95% in March is the highest recorded in 17 months, fuelled largely by these spikes as well as producers passing on higher commodity prices and input costs to consumers. Fuel and Light inflation stood at 7.52% in March, while transport and communication touched 8%. Health costs, Household goods and services as well as Personal care and effects saw escalating inflation at 6.99%, 7.67% and 8.71%, respectively. The industrial output rose 1.7% in February 2022, as per the National Statistical Office, up slightly from the revised estimate of 1.46% recorded in January, even as manufacturing sector output slowed further from 1.3% that month to a mere 0.8% in February. The February numbers are relative to a low base of February 2021 when industrial production contracted 3.2%. UGC to issue guidelines on pursuing two courses simultaneously Undergraduate and postgraduate [students will soon be able to pursue two degrees simultaneously]( under the University Grants Commission’s new guidelines to be made public on Wednesday, said its chairman M Jagadesh Kumar. The move will allow students to pursue two offline courses from the same university or two different universities or choose an offline course with either an online or an open and distance learning course. “We can only admit 3% of students in physical campuses. There have been developments in open and distance learning and online education and many universities are providing these programmes. The Commission has decided to issue guidelines which will enable students to pursue two academic programmes simultaneously,” Kumar said at a virtual press conference. He said that the guidelines will be issued on Wednesday and will come into force during the academic session 2022-2023. A student can pursue two full-time academic programmes in the physical mode provided class timings of the two programmes don’t overlap. Universities will have the flexibility to decide if they want to offer such a scheme. The guidelines will only be applicable to lecture-based courses, including undergraduate, postgraduate, and diploma programmes. MPhil and PhD programmes will not fall under this scheme. The eligibility criteria for different courses as well as admission policies will be determined by each university. Once the guidelines are made public, the UGC will inform educational institutes of the decision, which will have to then approach their statutory bodies that will bring out the academic ordinance to implement the guideline. The move is in line with the National Education Policy (NEP), 2020, of the Ministry of Human Resource Development. “Under the NEP we are trying to provide as much flexibility as possible so that we can ensure wholistic, integrated and learner-centered education. We hope that with the new guidelines the students will be provided with enough opportunities to acquire multi-disciplinary learning across wide variety of disciplines,” said Kumar. The NEP talks about encouraging engineering students to also learn arts and humanities subjects and students of arts to learn science and emphasises on “imaginative and flexible curricular structures” to allow creative combinations of different disciplines and “engaging course options in addition to rigorous specialisation in a subject.” Boris Johnson, Rishi Sunak fined over ‘Partygate’ British Prime Minister Boris Johnson and Finance Minister Rishi Sunak are to be [fined for breaching COVID-19 lockdown laws]( in what has become known as the “Partygate” scandal, prompting calls on Tuesday for their resignation. “The Prime Minister and chancellor of the exchequer have today received notification that the Metropolitan Police intend to issue them with fixed penalty notices,” a Downing Street spokeswoman said on Tuesday. The announcement came after London’s Metropolitan Police said they had issued more than 50 fines over the parties, without disclosing the number or identities of those being fined. The leader of the opposition Labour Party, Keir Starmer, swiftly called for the two most senior members of the government to resign. “Boris Johnson and Rishi Sunak have broken the law and repeatedly lied to the British public,” Starmer tweeted. “They must both resign. The Conservatives are totally unfit to govern. Britain deserves better.” The political storm following the revelations of a swathe of lockdown-busting parties in and around Downing Street now threatens to engulf Johnson once more. He was left fighting for his political survival earlier this year after a number of lawmakers from his ruling Conservative Party withdrew their support for his leadership. Bereaved families of victims of the Covid pandemic also called on Johnson to resign. “It’s now indisputable that whilst bereaved families were unable to be at their loved ones’ sides in their last moments, or stood at their funerals alone, the people responsible for protecting us in Downing Street were partying and rule breaking en masse,” said Matt Fowler, co-founder of Covid-19 Bereaved Families for Justice. “It’s plain as day that there was a culture of boozing and rule breaching at the highest level of government, whilst the British public was making unimaginable sacrifices to protect their loved ones and communities.” London police are investigating claims that Johnson and government officials organised and attended at least a dozen boozy events in 2020 and 2021 that violated Britain’s then-strict virus curbs. “The investigation into allegations of breaches of COVID-19 regulations in Whitehall and Downing Street continues to progress,” the Met said in a statement on Tuesday. “We are making every effort to progress this investigation at speed. This includes continuing to assess significant amounts of investigative material,” it added. Johnson has already apologised for the parties, which included Christmas celebrations and a drink-fuelled gathering the evening before Prince Philip’s funeral. The Prime Minister, who initially denied any rule-breaking events had occurred in the complex where he lives and works, has consistently rejected personal wrongdoing. But his opponents accused him of misleading parliament by insisting the Downing Street events were work-related and within the rules. And the 57-year-old now faces renewed calls to explain why he attended social gatherings when his government was telling the public that they were illegal. His office confirmed in February that Johnson had submitted his response to a police questionnaire on the matter but sources said he has not been interviewed in person by investigating officers. In Brief: The Calcutta High Court on Tuesday [directed a court-monitored investigation in four rape cases]( brought before it in the past one month. Special Commissioner of the Kolkata Police Damyanti Sen will head the probe. A Division Bench of Justices Prakash Shrivastava and Rajarshi Bharadwaj directed the investigation in the cases of rape at Deganga, Matia, Englishbazar and Bansdoni, which were brought before the court in form of public interest litigations. Evening Wrap will return tomorrow  Today‘s Top Picks [[Private agency Skymet forecasts ‘normal’ monsoon] Private agency Skymet forecasts ‘normal’ monsoon]( [[‘Occupy Galle Face’: A tent city of resistance beside Colombo’s seat of power] ‘Occupy Galle Face’: A tent city of resistance beside Colombo’s seat of power]( [[Rare butterfly Palmking spotted for the first time in Tamil Nadu] Rare butterfly Palmking spotted for the first time in Tamil Nadu]( [[Explained | How will cardless cash withdrawal system at ATMs work?] Explained | How will cardless cash withdrawal system at ATMs work?]( Copyright @ 2021, THG PUBLISHING PVT LTD. If you are facing any trouble in viewing this newsletter, please [try here]( If you do not wish to receive such emails [go here](