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Uncertainty clouds loom over Sri Lanka’s economic outlook – Biz Survey

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By: Staff Writer

February 13, Colombo (LNW): “Businesses enter February with a sense of trepidation, uncertain about what the near term holds. This uncertainty is reflected in the latest LMD-PEPPERCUBE Business Confidence Index (BCI) survey,” business magazine LMD notes, in its February edition.

It explains that a quarter of BCI survey participants “express optimism about the economy ‘improving’ in the next 12 months,” marking a four-point increase from December (21%),” and 19% anticipate the economy to ‘stay the same,’ reflecting a 3% point reduction from the previous month.

But a majority of 56% anticipate the economic situation to ‘get worse,’ which is a 1% drop from December, LMD adds.

The magazine also reports that in relation to sales volumes, there’s a sense of optimism about the next 12 months’ outlook with 29% of respondents expecting sales to ‘get better,’ which reflects a two-point increment compared to the preceding month.

Looking ahead to the next three months, LMD reports that there’s pessimism regarding sales volumes ‘getting better’ with 22% saying so – that’s a marginal decline from the 26% recorded in the previous month.

“On the other hand, over a quarter (28%) believe that sales volumes will ‘stay the same,’ which represents an increase of 3% points from December,” it adds, noting also that “overall sentiment remains subdued with half (50%) of those polled expecting their sales to ‘get worse’ in the next three months.”

LMD’s publisher, Media Services, says the latest edition of the magazine has been released. And its digital edition has been shared on WhatsApp and the publisher’s social media platforms.

The magazine’s Cover Story features the ADB’s Sri Lanka Country Director Takafumi Kadono, who says: “I take this opportunity to reaffirm our support for Sri Lanka.” The full story has been uploaded on LMD’s website (www.LMD.lk).

In 2023, Sri Lanka faced significant economic and political challenges including a contraction in GDP and a rise in taxes, yet improvements were noted later in the year including reduced inflation, currency appreciation and increased remittances.

Politically, the country dealt with a decline in civil liberties, allegations against former presidents,an elusiveness of popular support for the current president and a pivotal upcoming election in 2024.

The World Bank later revised its forecasts, noting Sri Lanka’s progress in reducing inflation and benefits accruing from tourism revenue and currency appreciation.

 The Bank now expects a 1.7 per cent economic expansion in 2024, up from its earlier 1 per cent forecast. In the last six months of 2023, Sri Lanka experienced reduced inflation, a 12 per cent currency appreciation, improved foreign reserves and increased remittances.

Sri Lanka Original Narrative Summary: 13/02

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  1. President Ranil Wickremesinghe congratulates Indian PM Narendra for the grand opening ceremony of the Ram Temple held in Ayodhya last month: underscores the long historical relations between the two nations on the economic and cultural front.
  2. Opposition Leader Sajith Premadasa says the Samagi Jana Balawegaya follows the policy of the abolishment of the executive presidential system, through which the rights of the citizens are violated, but disagrees with the government’s attempt of delaying the presidential election in the guise of abolishing it: laments the government violates the voting rights of the people by not holding the elections: stresses any move to abolish the executive presidency must follow the assurance of the voting rights of the people first.
  3. Janatha Vimukthi Peramuna executive member Samantha Vidyaratne asserts that India has recognised the growing influence of the National Peoples Power and anticipates its future role in the governance of the country: emphasises that this acknowledgment led to an invitation extended to Party Leader Anura Dissanayake for a visit to India, predating his presidential candidacy.
  4. Ex President Mahinda Rajapaksa says the Uma Oya project was the only major infrastructure project to which the ‘anti-establishment’ Janatha Vimukthi Peramuna contributed positively: adds the Uma Oya project’s 120 MW hydropower plant is set to commence operations this month, positioning it among Sri Lanka’s largest hydropower facilities alongside the Victoria, Kotmale, and Upper-Kotmale power stations.
  5. UNP ex MP Ashu Marasinghe says President Ranil Wickremesinghe is likened to former Singapore Prime Minister Lee Kuan Yew, former Malaysian Prime Minister Mahathir Mohamad, and Russian President Vladimir Putin: asserts Sri Lanka currently has a leader who consists of the personalities of prominent world leaders.
  6. 72 health sector trade unions launch a strike today, demanding a Disturbance, Availability, and Transport (DAT) allowance similar to that of doctors: seek parity with the recently doubled allowance for doctors: The strike involves various health professionals and will include a protest in Colombo tomorrow.
  7. The TRCSL issues a directive urging all mobile phone users to ensure the correct registration of their SIM cards: asserts customers should verify the registration status of their SIM cards with their service providers, particularly if they were provided by former employers: The Commission’s Director (Compliance) emphasises that there are risks associated with unregistered or illegally obtained SIM cards, and advises to promptly disconnect any such cards to prevent potential misuse for illicit activities.
  8. The Central Bank’s trend of purchasing foreign exchange from domestic banks continued in January, with a notable acquisition of US $245.3 million and no sales: This builds on the record-setting purchases of US $1,895.87 million throughout 2023: These acquisitions lead to the reaching of US $4.4 billion reserves by the end of the year.
  9. All Island Dairy Association (AIDA) urges the government to reconsider its decision to raise the VAT, warning of detrimental effects on both the sector and public health: highlights the potential impact on dairy production, emphasising the sector’s vital role in the country’s economy and rural livelihoods: laments that the proposed hike could exacerbate the sector’s challenges, including rising production costs and retail prices: proposes gradual implementation of the VAT increase with support measures to mitigate adverse effects, including promoting value-added products and facilitating imports of feed ingredients.
  10. Sri Lanka Cricket Selection Committee selects 16-member squad led by Wanindu Hasaranga to take part in the T20I series against Afghanistan which will commence from February 17 at Rangiri Dambulla International Cricket Stadium under lights commencing from 7 pm.

Senior SL civil servants commence special capacity building programme in India

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February 13, Colombo (LNW): Yesterday (Feb 12) marked the inauguration of the inaugural executive batch of the special capacity-building programme for senior civil servants of Sri Lanka, organised by the National Centre for Good Governance (NCGG) of India, at New Delhi, India’s Press Information Bureau said in a statement.

Scheduled from February 12 to February 17, 2024, the programme convenes fourteen senior civil servant officers from Sri Lanka, encompassing roles such as Secretary to the Prime Minister, Deputy Solicitor General, Directors, and Executive Director, among others.

The NCGG, an autonomous institution under the Department of Administrative Reforms and Public Grievances, Ministry of Personnel, Public Grievances, and Pensions, Government of India, is dedicated to action research, studies, and capacity building in public policy and governance on both national and international fronts.

Aligned with the principles of ‘Vasudeva Kutumbakam’ and the ‘neighbourhoods first’ policy advocated by Prime Minister of India Narendra Modi, the programme aims to foster collaboration and knowledge exchange among civil servants, particularly from neighbouring nations.

Focused on Digital Governance, Anti-Corruption Strategies, and Public Policy Institutions, the programme aims to equip participants with invaluable skills and knowledge.

Drawing from India’s best practices, participants will be empowered to drive positive change, enhance transparency, and fortify governance in Sri Lanka, thereby contributing significantly to the country’s progress and the welfare of its citizens.

Shri V Srinivas, Director General of National Centre for Good Governance (NCGG) and Secretary of Department of Administration Reforms and Public Grievances (DARPG), acquainted the participating officers with Administrative Reforms in India and Effective Redressal of Public Grievances, outlining the organisation’s progress, plans, and initiatives in recent years.

The programme will feature thematic sessions on various topics including Digital Public Infrastructure, Government Procurement Transparency, Healthcare Initiatives, and Capacity Building Initiatives, facilitated by senior bureaucrats from relevant ministries and sectors.

Additionally, cultural visits to landmarks such as the National Museum and Taj Mahal have been arranged to provide participants with insights into India’s rich history and heritage.

Supervised by the training team of the NCGG, this capacity-building initiative holds promise in fostering deeper collaboration and enhancing the skill sets of senior civil servants from Sri Lanka, ultimately contributing to the advancement of governance practices in the region.

IMF MD optimistic about global economy, anticipates interest rate adjustment

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February 13, Colombo (LNW): During the World Government Summit in Dubai, Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF), expressed high confidence in the global economy’s trajectory towards a soft landing, Reuters reported.

Georgieva remarked on Monday (12) that following significant interest rate increases in recent times, the world economy is now on track for the long-awaited stabilisation.

“We are very confident that the world economy is now poised for this soft landing we have been dreaming for,” Georgieva asserted, acknowledging the impact of some of the most substantial interest rate hikes witnessed in decades.

Addressing the potential adjustment of interest rates in major economies such as the United States, Georgieva noted, “I expect to see by mid-year interest rates going in the direction inflation has been going on for the last year.”

While expressing optimism, Georgieva also cautioned against unforeseen circumstances, particularly in the aftermath of the COVID-19 pandemic. She highlighted the potential economic repercussions of prolonged conflicts, citing the ongoing tensions between Israel and Hamas as a significant concern.

“I fear most a longevity of the conflict because (if) it goes on and on the risk of spillovers go up,” Georgieva emphasised.

She further noted the current risk of spillover from incidents like the recent attacks on ships in the Red Sea, particularly mentioning the Suez Canal, and underscored the potential for wider ramifications if conflicts escalate unpredictably.

TRCSL urges proper registration of SIM cards to prevent illegal activities

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February 13, Colombo (LNW): The Telecommunications Regulatory Commission of Sri Lanka (TRCSL) has issued a directive urging all mobile phone users to ensure the correct registration of their SIM cards.

Customers should verify the registration status of their SIM cards with their service providers, particularly if they were provided by former employers, according to Menaka Pathirana, Director (Compliance) of the Commission.

Pathirana emphasised the risks associated with unregistered or illegally obtained SIM cards and advised promptly disconnecting any such cards to prevent potential misuse for illegal activities.

The TRCSL aims to safeguard the telecommunications network’s integrity by proactively disconnecting unauthorised SIM cards linked to individuals’ National Identity Card numbers.

CB expands governing board with two new appointments

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February 13, Colombo (LNW): The Central Bank of Sri Lanka (CBSL) has augmented its Governing Board by appointing two new members, enhancing the composition of the island nation’s monetary regulator.

In an announcement made yesterday (12), the CBSL disclosed the addition of Rajeev Amarasuriya, effective from January 30, and Manil Jayesinghe, effective from February 01, to its Governing Board.

Joining the existing members, the Governing Board is chaired by CBSL Governor Nandalal Weerasinghe and includes A.N. Fonseka, Dr. Ravi Ratnayake, Anushka S. Wijesinha, and Vish Govindasamy.

Rajeev Amarasuriya brings a wealth of legal expertise to the board, having served as the Immediate Past Secretary of the Bar Association of Sri Lanka. His extensive appellate court practice encompasses various branches of civil litigation and public law. Additionally, he holds positions on several state and private sector institutions, contributing significantly to legal education and governance.

Manil Jayesinghe, a seasoned financial expert, is a Fellow Member of multiple prestigious professional bodies and actively engages in various committees related to accounting and finance. With his diverse experience and leadership roles in esteemed organisations, Jayesinghe brings valuable insights to the CBSL Governing Board.

Dairy industry urges government to reconsider VAT hike for sustained growth

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February 13, Colombo (LNW): Sri Lanka’s dairy industry stakeholders are urging the government to reconsider its decision to increase the Value Added Tax (VAT), cautioning that such a move could have severe repercussions on the dairy sector and the nation’s overall health.

The All Island Dairy Association (AIDA) emphasised that the VAT hike, aimed at broadening the tax base, could negatively impact the dairy sector, a crucial contributor to the country’s GDP and rural livelihoods.

AIDA highlighted the precarious situation facing the dairy sector, which saw significant growth in milk production from 2017 to 2021 but now faces profitability threats due to the VAT increase.

Previously, fresh milk production and related products were VAT-exempt, supporting around 300,000 small-scale farmers and over two million dependents.

However, the proposed VAT hike could exacerbate the sector’s vulnerability, leading to declines in production and income losses for farmers, they pointed out.

Over the past decade, the cost of milk production surged by 174 per cent due to rising input costs, with retail prices increasing by 168 per cent.

The additional burden of increased VAT could further strain the affordability of dairy products, potentially affecting public health, particularly among vulnerable groups.

While not entirely against the VAT, AIDA suggests a gradual rollout of the increase with support measures to allow the sector to adjust while ensuring relief for essential inputs.

Recommendations include facilitating the import of feed ingredients to reduce production costs and promoting value-added dairy product production to enhance profitability.

AIDA emphasises proactive monitoring, consumer awareness initiatives, and policy adjustments to mitigate the impact of the VAT hike. The association also calls for the Animal Production and Health Department’s involvement in tracking the VAT’s impact and conducting consumer awareness campaigns.

AIDA’s members play a significant role in Sri Lanka’s dairy sector, contributing to the processing of nearly 60 percent of the nation’s daily milk production.

Today’s (Feb 13) weather: Showers to occur in several districts

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By: Isuru Parakrama

February 13, Colombo (LNW): Several spells of showers will occur in Eastern and Uva provinces and in Polonnaruwa, Matale and Nuwara-Eliya districts, and a few showers may occur in Northern province and in Anuradhapura district, the Department of Meteorology said in its daily weather forecast today (13).

Showers or thundershowers may occur at a few places in Western and Sabaragamuwa provinces and in Galle and Matara districts after 2.00 p.m., the statement added.

Fairly strong winds about (30-40) kmph can be expected at times in eastern slopes of the central hills and in Northern, North-Central, Southern,North-western, Uvaand Eastern provinces.

Misty conditions can be expected at some places in Western and Sabaragamuwa provinces and in Galle and Matara districts during the morning.

Marine Weather:

Condition of Rain:
Showers may occur at a few places in the sea areas off the coast extending from Trincomalee to Pottuvil via Batticaloa. Showers or thundershowers may occur at a few places in the sea areas from Colombo to Matara via Galle in the evening or night.
Winds:
Winds will be north-easterly and wind speed will be (30-40)kmph. Wind speed may increase up to (55-60) kmph at times in the sea areas off the coasts extending from Galle to Pottuvil via Hambantota, and from Colombo to Kankasanthurai via Puttalam.
State of Sea:
The sea areas off the coasts from Galle to Pottuvil via Hambantota and from Colombo to Kankasanthurai via Puttalam, can be rough at times. Other sea areas around the island can be moderate.

Minister Tiran Alles to Propose Amendments to Online Safety Act Amid Criticisms

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February 12, Colombo (LNW): In response to objections raised by various factions, Minister of Public Security Tiran Alles has announced plans to submit several amendments to the Online Safety Act to the Cabinet of Ministers.

Acknowledging concerns from multiple parties, including the opposition, Minister Alles stated that the proposed amendments will be presented either on Monday (12) or during the upcoming Cabinet meeting.

Sri Lanka Original Narrative Summary: 12/02

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  1. President Ranil Wickremesinghe visited the ailing former Minister Gamini Jayawickrama Perera at his home in Katugampala, checking on his well-being and engaging in a brief conversation. During the visit, the President also spoke with Jayawickrama Perera’s family to gather information about his health and offering support.
  2. Opposition leader Sajith Premadasa has said that the opposition will not allow to postpone the Presidential Election schedule to be held this year, under the guise of abolishing the Executive Presidency. Added that SJB will not get caught to the mischievous motives of the President to extend his term, in the name of abolishing the Executive Presidency.
  3. The Unified Payment Interface (UPI) services and RuPay card services will be rolled out in Sri Lanka and Mauritius at a virtual ceremony on February 12. The event will be joined by Prime Minister Narendra Modi, Mauritian PM Pravind Jugnauth and Sri Lanka’s President Ranil Wickremesinghe, according to the Ministry of External Affairs (MEA).
  4. Minister of Public Security Tiran Alas says that the Criminal Investigation Department (CID) has arrested a person who spread slander on social media. The concerned suspect had maliciously carried out these smear campaigns with the support of a politician.
  5. President Ranil Wickremesinghe directs financial assistance from the President’s Fund for liver transplant surgeries for young children at the Ragama Teaching Hospital and cochlear implant surgeries at the Sri Jayawardenepura General Hospital.
  6. The Commission to Investigate Allegations of Bribery or Corruption (CIABOC) takes legal action against seven individuals, including five staff members of Motor traffic department for allegedly registered nearly 400 vehicles evading customs, causing significant financial losses.
  7. The National Building Research Organization (NBRO) warns that the quality of air in parts of the island has dropped further to unhealthy levels.
  8. Leader of the Sri Lanka Freedom Party (SLFP) Maithripala Sirisena has assured the party’s support towards a proposal to abolish the Executive Presidency speaking at an SLFP media conference themed ‘We stand for freedom’ (‘Nidahasa Wenuwen Api’)
  9. Minister of Public Security Tiran Alles said several amendments to the Online Safety Act will be submitted to the Cabinet of Ministers, after taking into consideration objections by various factions, at the next Cabinet meeting.
  10. Australia secured their fourth ICC U19 Men’s Cricket World Cup title with a dominant all-round performance against India, posting the highest total in a U19 Men’s CWC final and successfully defending it by dismantling India’s chase to win by 79 runs at Willowmoore Park, Benoni.