Colombo (LNW): The Sri Lankan Rupee continues to remain stable against the US Dollar at a number of leading commercial banks, in comparison to the week earlier.
The People’s Bank’s exchange rates reveal the buying rate and the selling rate of the US Dollar remains unchanged at Rs. 303.63 and Rs. 320.97, respectively.
At Commercial Bank, a similar situation follows, as the buying rate and the selling rate of the US Dollar remains unchanged at Rs. 304.84 and Rs. 318, respectively.
At Sampath Bank, the buying and selling rates of the US Dollar remains unchanged at Rs. 306 and Rs. 321, respectively.
Colombo (LNW): The lawsuit filed at a Singaporean court demanding compensation for the eco-damage caused by the destruction of the cargo vessel MV X-Press Pearl is set to be taken up for a second date today (15).
The case was first taken up at the said Singaporean court on May 09, 2023. A Singaporean legal firm will be appearing on behalf of Sri Lanka.
The destruction of the cargo vessel MV X-Press Pearl by fire on May 20, 2021 was reportedly the worst environmental disaster in Sri Lanka in the recent history.
The AG’s Office filed a lawsuit before a Singaporean court demanding compensation for the eco-damage, but concerned parties opined that a trial can be called upon at a Sri Lankan court.
The Marine Environment Protection Authority (MEPA) commented measures have been taken to reassess the damage caused by damage.
01. Deputy Director of Medical Services Dr. G. Wijesuriya says a major increase in the number of dengue cases can be expected in SL; adds the record in 2023 so far is three times higher than that of the corresponding period of the last two years.
02. Ruling Party MP Dhammika Perera says the forex crisis leading to the decline of imports and subsequently the decline of income via customs duty has stemmed the increase of taxes, hence the problems with the current tax system.
03. Former MP P. Harrison announces he will resign from his position as the Vice Chairman of the Samagi Jana Balawegaya and leave the Party to extend his fullest support to President Ranil Wickremesinghe; adds 20 more will join.
04. SJB MP Dr. Harsha De Silva warns against the “potential risks of domestic debt optimisation,” stressing the need for ‘extreme caution’; adds if not managed carefully, domestic debt optimisation could become a burden rather than a relief for the economy: Silva was a strong advocate for the April 2022 ‘debt default’ leading to the subsequent submission to IMF conditions.
05. Many low-lying areas in Galle and Matara districts have severely been affected by flooding caused by the overflowing of Nilwala and Ginganga rivers due to adverse weather conditions: Traffic obstructed: Power outages reported in several areas.
06. Public servants required to resume the scanning of their fingerprints when reporting for duty and leaving the offices from today: The fingerprint scanning system was suspended in January, 2022 due to the Covid pandemic.
07. Sri Lanka’s national carrier SriLankan Airlines says it did not receive any outside funding in the last two years; adds it suffered a forex loss of Rs. 142.6 billion resulting from the re-evaluation of net foreign currency liabilities due to the sudden depreciation of the Sri Lankan Rupee in March 2022.
08. The Hamilton Reserve Bank (HRB) Ltd. and the Government of Sri Lanka submit a joint status letter to the Southern District Court of New York outlining the schedule in response to the April 20 order by US District Judge L. Denise Cote: HRB owns over US$ 250 million in principle amount of the US$ 1 billion ISBs matured on July 25, 2022: HRB alleged SL owes US$ 250.19 million in principle and US$ 7.349 million in accrued interest due to the ‘debt default’: GOSL denies almost all the allegations.
09. The Australian Government announces it will gift a former Royal Australian Air Force Beechcraft KA350 King Air aircraft (registration A32-673) to the Sri Lankan Government: The aircraft to be used to enhance Sri Lanka’s sovereign aerial maritime surveillance capability.
10. The case filed by Sri Lanka at a Singaporean court seeking compensation for the eco damage caused by the MV X-Press Pearl disaster to be taken up again today: A Singaporean law firm to appear for the case representing Sri Lanka: Case was taken up for the first time on May 09, 2023.
Colombo (LNW):Sri Lanka’s ongoing dollar crisis is still persisting even amidst the receiving the US$333 million first tranche of $ 3 billion IMF Extended Fund Facility.
Sri Lanka‘s business tycoon MP Dhammika Perera has charged that the island nation is yet to create a stable path for the inflow of dollars into the country.
Speaking at an event in Middeniya, Hambantota, and the business tycoon attributed the ongoing tax crisis in Sri Lanka to the shortage of dollars.
He explained that owing to the lack of dollars, Sri Lanka’s imports have reduced significantly, thereby directly affecting the income earned through the Customs tariffs and duties.
“In order to earn the money lost from Customs tariffs and duties, other taxes are being increased. The preliminary problem behind this is the lack of dollars.
There is still no proper way through which we can earn dollars”, he said in this regard adding that.he has laid out a 12- point Dollar earning strategy for crisis-hit Sri Lanka.
The Sri Lanka businessman turned MP says his action plan is aimed at generating an additional inflow of US$8 billion per annum from 12 key strategies.
Dhammika Perera further said the government will not incur any additional capital investment by implementing the suggested 12 strategies.
The action plan of Dhammika Perera which was proposed some time ago is now receiving attention, as he has now joined the government in a possible bid to implement his strategies.
Sri Lanka’s foreign reserves grew 2.2 percent to 2,755 million US dollar in April 2023 from 2,694 million US dollars in March, central bank data showed.
Sri Lanka’s rupee appreciated from around 360 to the US dollar to 320 and has since been at that level.
Sri Lanka has to increase net international reserves by 710 million US dollars by June 2023 under an International Monetary Fund deal.By April gross reserves have risen by around 859 million dollars.
To buy reserves from inflows (central bank has to take in deposits in dollars against rupee) Sri Lanka has to keep interest rates high enough so that that the rupees are not invested or spent and can be mopped up (domestic investment has to be curtailed).
Sri Lanka in the first quarter had liquidity shortages to absorb the rupee and prevent their loaning by banks.However the liquidity shortages are easing, through private credit demand is negative
Sri Lanka’s remittances from official channels rose to 454 million US dollars in April 2023, up 82.9 percent from a year earlier, as more expatriates use formal banking networks to send their earnings, the central bank revealed.
Sri Lanka’s monthly remittances coming through official channels ranged between 500 to 600 million US dollars a month
The remittances in the first four months of 2023 also jumped 81 percent to 1,867.2 million US dollars compared to 1,031.5 million in the same period last year.
Colombo (LNW): Sri Lanka’s apparel sector, once thriving as a foreign exchange spinner for the country, begins its downfall amidst the current economic crisis.
Apparel export earnings are set to slump by US $1 billion this year, a top industry expert said, as slowing global demand hits the crisis-hit South Asian country.
Apparel is Sri Lanka’s largest industrial export and earned $5.95 billion in 2022, helping the country as it weathered its worst financial crisis since independence in 1948, triggered by a record reduction in foreign exchange reserves.
But the industry’s first-quarter performance in 2023 has struggled with textiles and garment exports dropping 13.8% to $1.3 billion, data from Sri Lanka’s central bank showed.
Exports in March marked the lowest in three years, said Yohan Lawrence, Secretary General of the Joint Apparel Association Forum (JAAF), which is the industry’s apex body.
Sri Lanka’s garment sector made up almost half its export revenue last year, after remaining resilient even through the pandemic and the country’s debilitating economic crisis.
But shocks in the international market have led to a plunge in demand, prompting factories to lay off hundreds of employees.
Apparel is one of the biggest export earners in Sri Lanka, an industry that produces goods for major global retailers such as Marks & Spencer, Victoria’s Secret and Nike, among other brands.
Last year, the sector accounted for some 46 per cent of Sri Lankan export revenues, or US$5.93 billion.
But amid a challenging global economy, year-on-year export volumes shrank about 11 per cent by March this year, industry statistics showed.
Softening market conditions in the United States, European Union and Britain; fears of a global recession; and the Russia-Ukraine war accounted for a sharp contraction in demand, said Yohan Lawrence, head of the Joint Apparel Association Forum of Sri Lanka.
But the industry has bigger worries. Data suggests Sri Lanka is losing market share to neighbouring Bangladesh, Lawrence said.
From 2021 to 2022, Sri Lanka’s export revenue rose by 10 per cent, from some US$5.07 billion to US$5.59 billion, while that of Bangladesh grew by 28 per cent, from US$35 billion to US$45 billion.
The fact Bangladesh’s growth accounted for almost double of Sri Lanka’s entire market share was deeply worrying. “If that does not frighten [the country], I don’t know what does,” Lawrence said.
Trade agreements are at the core of this dynamic, since Bangladesh as a least developed country (LCD) holds more preferential trade terms, and could export apparel free of duty to the EU and the UK under the “Everything but Arms (EBA)” trade agreements.
Sri Lanka, however, trades under the Generalized System of Preferences, which comes with conditions based on the rules of origin.
As a result, apparel made in Sri Lanka is less price-competitive than that of Bangladesh.“[Sri Lanka] has to lobby for better trading terms,” Lawrence said.
Colombo (LNW): A number of low-lying areas in the Matara and Galle districts have severely been affected by flooding caused by the overflowing of Nilwala and Gingganga rivers due to adverse weather conditions yesterday (14).
Low-lying areas of Thawalama, Neluwa, Morawaka, Akuressa, Athuraliya, Pitabeddara and Kotapola have been inundated by the flooding, correspondents said.
Traffic was disrupted on the Deniyaya – Akuressa route due to the collapse of several mounds, and bus services were also temporarily suspended.
A similar situation followed in Alapaladeniya of Neluwa – Morawala route, disrupting traffic.
The Akuressa – Thawalama main road was inundated in Thangalla area.
Meanwhile, traffic was disrupted in Mapalagama – Malamura route due to the flooding caused by the overflowing of Gingganga river.
In the backdrop, electricity was also disrupted in a number of areas including Thawalama, Neluwa, Morawaka, Opatha and Weerapana.
Colombo (LNW): The foreign exchange crisis leading to the decline of imports and subsequently the decline of income via customs duty has stemmed the increase of taxes, hence the problems with the current tax system, said MP Dhammika Perera, speaking to reporters after the opening ceremony of the “DP Coding School and Robotics Campus” at Sri Sumangala Piriven in Middeniya yesterday (14).
“Why is there a situation with Sri Lanka’s tax system? With the dollar shortage, the imports have dropped. Subsequent to the decline of imports, income by customs duty has also dropped. Taxes have increase to cover the lost income. This is the main reason. The prime concern is the shortage of dollars, isn’t it? So far, there is no programme evident to recover dollar,” he said.
PMD: The Australian Government has announced that it will gift a former Royal Australian Air Force Beechcraft KA350 King Air aircraft (registration A32-673) to the Sri Lankan Government. The aircraft will be used to enhance Sri Lanka’s sovereign aerial maritime surveillance capability.
This was conveyed to President Ranil Wickremesinghe when an Australian delegation led by the Australian High Commissioner HE Paul Stephens met the President at the Presidential Secretariat May(12).
The gift of the aircraft is part of the Australian Government’s commitment to strengthening and enhancing the cooperation and collaboration that is the foundation of the strong bilateral relationship between Australia and Sri Lanka. A key focus of this relationship remains the continued cooperation on countering all forms of transnational crime, including drug smuggling, as well as strengthening border management through intelligence sharing and the deterrence, disruption, interception and return of maritime people smuggling ventures under the border security operation known as Operation Sovereign Borders.
The Australian Government greatly values this cooperation, which has led to the disruption of a significant number of maritime people smuggling ventures, and has protected the lives and livelihoods of vulnerable people by preventing criminal exploitation, dangerous sea voyages and loss of life at sea.
Following the Australian Minister for Home Affairs’ visit to Sri Lanka in June last year, the Department of Home Affairs has driven forward a number of new initiatives in these areas, in partnership with a number of Sri Lankan Government departments. In pursuing these initiatives, Australia has emphasised the importance of supporting Sri Lanka to develop sovereign capabilities.
As part of the gift of the aircraft, the Australian Government will also provide sustainment support for a period of 12 months, after which sustainment will become the sole responsibility of the Sri Lanka Government.
The Australian Government is confident that this gift will further strengthen the strong bilateral relationship between Australia and Sri Lanka, and will help to enhance Sri Lanka’s ability to counter transnational crime and protect its borders.
Deputy High Commissioner Ms Lalita Kapur, First Secretary Mr Brett Zehnder and Defence Advisor Captain Ian Cain were also present at this meeting.
During a recent press conference, Opposition MP Harsha de Silva warned against the potential risks of domestic debt optimization, stressing the need for extreme caution. De Silva cautioned that if not managed carefully, domestic debt optimization could become a burden rather than a relief for the economy.
Citing the net debt relief Laffer curve, de Silva stated that the more we increase the haircut on banks, the more likely we are to hit the curve’s negative impact zone, where debt restructuring becomes counterproductive, thus leading to a negative impact on the economy. Harsha provided another example of this phenomenon: taxes on wine and spirits. High taxation has resulted in a drop in consumption, which, in turn, has substantially reduced the expected revenue for the Excise Department. Therefore, de Silva emphasized that the risk of capital adequacy in banks could result from debt optimization, which is when a bank’s capital falls below the recommended levels, raising questions about its stability.
Harsha emphasized the need for discussions on this complex issue to occur in the Committee on Public Finance. By summoning relevant officials and utilizing data to work the numbers, the committee could help avoid potential blame down the road.
Furthermore, Harsha proposed the establishment of a Financial Sector Support Fund to ensure macro-stability. He suggested that multilateral organizations like the World Bank and ADB would lend money to establish this fund, as over 1 billion dollars would be needed.
Another issue raised by Harsha concerns the Employees Provident Fund (EPF), where hard-earned people’s pension money lies. Harsha questioned whether the EPF, established to provide positive real interest rates, as envisioned by Minister Illangaratne when bringing in the act, had fulfilled its mandate. Harsha believes that people ought to get a positive interest rate that has been adjusted for inflation, as opposed positive nominal interest rate. However, as per current statistics, this has not been the case. The real interest rate has been declining since 2015, with the rate being -47.2% in 2022. The EPF has already been subjected to a 32% haircut in US dollar terms, as the value of the fund in 2021 was $15.8 billion, and by the end of 2022, it was $9.5 billion due to the rupee crashing and the impact of inflation. Harsha proposed that if the interest rate given to the recipient is less than 2.5%, the Central Bank should be given a loan from the Treasury to give the recipients a minimum of 2.5% interest. Harsha hopes that this proposal would be discussed in Parliament and that necessary legislation would provide relief to the already suffering middle class.
Harsha reiterates support for the IMF program but suggests tweaking it to make it more bearable for the people. Additionally, if Sri Lanka needs to undergo domestic debt restructuring, Harsha proposes extending a warrant, a domestic debt restructure warrant, in other words, a derivative or put option, to creditors subjected to domestic debt restructuring. Harsha suggests that since the government has promised the people stability and an increase in GDP growth to 3% by 2027, the people have agreed to tough measures like high taxes and a reduction in subsidies. Therefore, if the economy grows beyond expectations, the extra growth should be extended to the people to honor their sacrifices. Harsha expressed support for establishing discussions on this topic. Finally, the SJB believes that the government ought to treat both foreign and domestic creditors equally and non-discriminately, with the primary goal being to stabilize the country’s debt while minimizing its impact on the EPF and banks.
Colombo (LNW): Intensified by rainy conditions, a major increase in the number of dengue cases can be expected in Sri Lanka, and the record in 2023 so far is three times higher than that of the corresponding period of the last two years, revealed Deputy Director of Medical Services Dr. G. Wijesuriya.
The majority of cases are from the Colombo and Gampaha districts, and the people are advised to take measures such as destroying habitats available for mosquitoes, using mosquito repellents, not letting water stagnate and wearing protective clothing, Dr. Wijesuriya told media.
He added that a total of 45 children are currently receiving treatment for dengue at the Lady Ridgeway Children’s Hospital, and a majority of children infected are between the ages 05 – 14.
Despite any congestion being non-existent in normal hospital wards, minor congestion could be observed at Intensive Care Units in several hospitals, he went on, adding that in the case of children, there are several children being treated for dengue haemorrhagic fever.
