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CBSL eases restrictions on standing facilities for licenced commercial banks

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February 08, Colombo (LNW): The Central Bank of Sri Lanka (CBSL) has announced its decision to alleviate restrictions previously imposed on Standing Facilities available to Licensed Commercial Banks (LCBs) under Open Market Operations.

Effective from February 16, 2024, the CBSL will eliminate the restriction on the Standing Lending Facility and ease limitations on the Standing Deposit Facility.

Initiated on January 16, 2023, the CBSL had imposed restrictions on LCBs’ utilisation of Standing Facilities within Open Market Operations.

These restrictions encompassed a maximum of five accesses per calendar month to the Standing Deposit Facility (SDF) and capped access to the Standing Lending Facility (SLF) at 90 percent of each LCB’s Statutory Reserve Requirement (SRR) on any given day.

The rationale behind these measures was to mitigate LCBs’ reliance on overnight facilities provided by the Central Bank.

This aimed to revitalise the domestic money market, particularly the call money market, while encouraging LCBs to implement internal corrective measures.

Positive outcomes ensued from these measures, evident in the revitalisation of the domestic money market and the mitigation of excessive competition among financial institutions for deposit mobilisation.

Furthermore, these measures contributed to moderating the market interest rate structure in line with the monetary policy stance, thereby upholding the stability of financial institutions and the financial system.

Following a meticulous review of developments in the domestic money market and LCBs’ market participation, alongside liquidity improvements, the Monetary Policy Board, in its meeting held on February 07, resolved to relax the restrictions on Standing Facilities available to LCBs within OMOs.

Commencing from the reserve maintenance period starting February 16, 2024, the restriction on the SLF will be lifted entirely, and the restriction on the SDF will be relaxed from five to ten accesses per calendar month.

The relaxation of these restrictions is anticipated to expedite the downward adjustments in market interest rates, aligning with the overarching monetary policy direction of the Central Bank.

President leaves SL to participate 7th Indian Ocean Conference in Perth, Australia

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February 08, Colombo (LNW): President Ranil Wickremesinghe has left Sri Lanka earlier this (08) morning to participate in the 7th Indian Ocean Conference in Perth, Australia.

His attendance expects a key note address from February 09 to February 10 at the conference, according to a statement by the President’s Media Division.

Invited by the India Foundation and the Government of Australia, he will also explore investment opportunities for Sri Lanka during the event.

Dollar rate at commercial banks today (Feb 08)

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February 08, Colombo (LNW): The Sri Lankan Rupee happens to have slightly depreciated against the US Dollar today (08) in comparison to yesterday, as per leading commercial banks in the country.

At Peoples Bank, the buying price of the US Dollar has increased to Rs. 307.69 from Rs. 307.20, and the selling price to Rs. 318.41 from Rs. 317.90.

As of 9 am this morning, Commercial Bank reveals that the buying price of the US Dollar has increased to Rs. 307.99 from Rs. 307.12, and the selling price remains unchanged at Rs. 318. These figures may subject to change later today.

At Sampath Bank, the buying and selling prices of the US Dollar remain unchanged at Rs. 308 and Rs. 317, respectively.

Sri Lanka Original Narrative Summary: 08/02

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  1. President Ranil Wickremesinghe leaves for Perth, Australia to participate in the 7th Indian Ocean Conference at the invitation of the India Foundation and Govt of Australia: expected to deliver the keynote address and to “explore investment opportunities for SL”.
  2. Presidential Secretariat issues Gazette to bring the Online Safety Act under the purview of the Ministry of Public Security.
  3. Reports emerge that SL is not likely to join Operation “Prosperity Guardian” in the Red Sea to counter attacks mounted by Yemen-based Houthis: previously, the possibility of SL deploying 2 vessels to support the US-led operation was discussed after President Wickremesinghe declared an intention to join the multinational maritime task force.
  4. State Minister of Tourism Diana Gamage confirms that the Cabinet had already approved the export of cannabis: previously, Minister Bandula Gunawardena had dismissed claims that a proposal had been presented to the Cabinet on cultivating cannabis for export.
  5. Central Bank says Official Reserve Assets have increased 2.3% to USD 4,491 mn in Jan’24 from USD 4,392 mn in Dec’23: also says it includes the SWAP facility from China of around USD 1,400 mn, which is subject to conditionalities on usability: analysts point out however that about USD 8,000 mn is now in default as “unpaid”, after the CB Governor & Treasury Secretary announced bankruptcy on 12th April’22.
  6. Wife of late Minister Sanath Nishantha who was recently killed on the Katunayake Expressway, lodges a complaint with the CID stating that there are suspicions over the late Minister’s death: requests the CID to investigate.
  7. Colombo Fort Magistrate Thilina Gamage questions as to how the CID filed action before the Mount Lavinia Magistrate’s Court against Pastor Jerome Fernando under the Prevention of Money Laundering Act, contrary to the accepted Court jurisdiction: observes the CID has no authority to arbitrarily determine the judicial jurisdictions when filing a case, as these have been established through a gazette notification.
  8. President Ranil Wickremesinghe stresses need for a long-term, robust nation building programme: says he will introduce an “Economic Transformation Act” to enable the required economic transition: invites presentation of alternative methods for national reconstruction: expresses readiness to engage in discussions with top officials the IMF & World Bank in that regard: appeals for unity in nation-building despite political differences: calls on SJB, JVP, Tamil parties & Muslim parties to follow the example set by the SLPP, and join in a collective effort for the country’s progress.
  9. SJB & Opposition Leader Sajith Premadasa walks out of the Parliament Chamber when President Ranil Wickremesinghe begins to present the Govt’s policy statement at the opening of the 5th Session of the 9th Parliament: however, several SJB MPs including Sarath Fonseka, Rajitha Senaratne, Kumara Welgama, Faisal Cassim, A H M Fowzie, Vadivel Suresh and Ishaq Rahman remain in the Chamber.
  10. Top spinner Prabath Jayasuriya climbs 3 places to the 6th position in the ICC’s Men’s Test Bowling Rankings after his impressive 8-wicket haul in the one-off Test against Afghanistan: another bowler, Asitha Fernando also rises 7 spots to 34th position, after taking 6 wickets in the same match.

Mainly fair weather to prevail over the island today (Feb 08)

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By: Isuru Parakrama

February 08, Colombo (LNW): Mainly fair weather will prevail over the island, with misty conditions being expected at some places in Central, Sabaragamuwa and Western provinces and in Galle and Matara districts during the morning, the Department of Meteorology said in its daily weather forecast today (08).

Marine Weather:

Condition of Rain:
Mainly fair weather will prevail in the sea areas around the island.
Winds:
Winds will be north-easterly and wind speed will be (20-30)kmph. Wind speed may increase up to (45-50) kmph at times in the sea areas off the coasts extending from Matara to Pottuvil via Hambantota and from Colombo to Mannar via Puttalam.
State of Sea:
The sea areas off the coasts from Matara to Pottuvil via Hambantota and from Colombo to Mannar via Puttalam can be fairly rough at times.

President Wickremesinghe Champions Climate Change Collaboration at South Asia Hydromet Forum IV

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February 07, Colombo (LNW): President Ranil Wickremesinghe welcomed participants to the South Asia Hydromet Forum (SAHF) IV in Colombo, Sri Lanka, expressing the nation’s dedication to tackling Climate Change (CC) through collaborative efforts both regionally and internationally. The inaugural session at the Galle Face Hotel on February 6, themed ‘Unlocking Regional Synergies,’ saw President Wickremesinghe addressing key issues of adaptation and mitigation in the fight against CC.

Highlighting Sri Lanka’s commitment to supporting regional initiatives in CC mitigation and adaptation, President Wickremesinghe outlined significant steps, including the establishment of an international CC university. This university aims to provide postgraduate education and training for officials from various countries, contributing to a collective response to climate challenges.

President Wickremesinghe also proposed the creation of a tropical belt as a carbon sink, a concept discussed during COP 28 in Dubai. Emphasizing the importance of private sector investment in sustainable development projects within this region, he underlined the potential impact of these initiatives in combating CC.

Addressing the challenges posed by the COVID-19 pandemic and economic crises, President Wickremesinghe outlined Sri Lanka’s plans to enhance its meteorological organizations. He stressed the necessity of a comprehensive Hydromet regional network to effectively address CC-related challenges, particularly in South Asia.

The ongoing SAHF Forum, scheduled until February 8, aims to facilitate discussions and collaborations on Hydrology and Meteorology-related initiatives in South Asia. Initiated in 2018, SAHF connects National Meteorological and Hydrological Service providers (NMHSs) from the region, promoting data and knowledge exchange to address technical challenges and enhance collaboration.

President Wickremesinghe, underscoring the urgent need for action, drew attention to the economic repercussions of CC, citing potential GDP losses of up to 2% in low-income countries. He emphasized the necessity of establishing a regional network to facilitate collective action and announced plans to establish a panel of experts to conduct in-depth studies on proposed initiatives.

Highlighting collaborative efforts within the Indian Ocean Rim Association (IORA), President Wickremesinghe proposed potential funding mechanisms, including the establishment of a loss and damage fund. He suggested exploring alternative avenues, such as debt relief for countries investing in climate mitigation efforts within the tropical belt, to harness the potential of this region for global carbon reduction.

President Wickremesinghe concluded with optimism, expressing hope that the discussions at the Forum would lead to innovative solutions and initiatives in the region’s fight against CC. He urged participants to contribute their ideas and expertise to ongoing projects aimed at CC mitigation and adaptation.

SAHF Co-Chair Karma Dupchu, Director of the National Centre for Hydrology and Meteorology in Bhutan, along with other distinguished participants, convened at the Forum to further discussions on Hydrology and Meteorology-related initiatives in South Asia.

Government Approves NVQ-3 for Tree Tappers and Coconut Pluckers

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February 07, Colombo (LNW): In a significant development, the government has granted approval to issue National Vocational Qualification-3 (NVQ-3) level certificates for individuals involved in the skilled practices of tapping Palmyrah, Coconut, and Kithul trees, as well as those engaged in coconut plucking.

The National Apprenticeship Board is set to conduct a comprehensive two-week formal training program for individuals within these professions. This training not only focuses on honing their skills but also includes vital information on handling sudden illnesses, snake bites, and safety measures while working at heights, such as falling from trees.

Furthermore, a proactive initiative has been outlined to extend financial support to those involved in these activities for either self-employment or business development. The government plans to provide a subsidized loan assistance of Rs.500,000 to eligible individuals, fostering economic empowerment within these sectors.

Recognizing the inherent risks associated with these professions, special attention has been given to establishing an insurance system. The Agricultural and Agrarian Insurance Board, under the guidance of Minister Mahinda Amaraweera, will oversee the implementation of these initiatives, ensuring the well-being and security of those contributing to these essential industries.

Green Light for Hearing-Impaired Drivers: Nationwide Licences Approved!

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February 06, Colombo (LNW): Cabinet grants nationwide issuance of light vehicle driving licences for hearing-impaired individuals following successful pilot project.

This news builds upon the successful pilot project conducted in Gampaha District, which began in November 2022. Based on its positive outcomes and recommendations from a committee overseen by the Transport and Highways Ministry Secretary, the Cabinet has now authorized the expansion of this program to encompass the entire nation.

This move marks a significant advancement in promoting inclusivity and mobility for hearing-impaired individuals in Sri Lanka. Licences will be issued on a bi-annual renewal basis, ensuring regular assessments and maintaining safety standards.

Parliament Passed the Online Safety Bill in Accordance with Supreme Court Decision – Speaker

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February 06, Colombo (LNW): Yesterday, the Speaker’s office announced that the Parliament successfully passed the Online Safety Bill, aligning with the Supreme Court’s determination, a confirmation echoed by the Attorney General’s Department.

Addressing concerns about a potential violation of the Supreme Court ruling in passing the Online Safety Bill, the Speaker’s office released a statement. It emphasized that the legislative process of the Parliament is a collaborative effort involving the Attorney General’s Department and the Legal Draftsman’s Department. Consequently, it asserted that there is no room for any action that contradicts a Supreme Court determination or violates the Constitution during the passage of a Bill.

The statement clarified, “The Speaker is obligated by Articles 79 and 80 of the Constitution to endorse the Certificate on a Bill once it has been duly passed.” In line with this obligation, the Speaker endorsed the Certificate on the Online Safety Bill on February 2, 2024, officially designating it as the Online Safety Act, No. 9 of 2024.

Sri Lanka’s credit card usage surges after a prolonged period.

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By: Staff Writer

February 07, Colombo (LNW): Sri Lanka’s credit card industry is becoming increasingly dynamic, as the number of new cards issued declines yet the purchase volume and transaction value have steeply increased..

Even though Sri Lanka’s credit card penetration is considered to be fairly sufficient, it is comparatively low to its Southeast Asian counterparts

The credit card activity, which remained lull for a prolonged period, appears to have broken its trend and set off to potentially a robust run of spending in the period ahead.

The cardholders were seen swiping more frequently for their festive spending and leisure and travelling needs in December last year.

In the current trend toward a cashless society, credit cards are the predominant form of “plastic” currency used to take over cash. Credit card usage in Sri Lanka has steadily increased over the past few years.

However, users’ inability to manage spending may lead to excessive outstanding balances, prolonged repayment periods, and increased interest payments.

The latest data available showed that in December 2023, the cardholders have ramped up their spending considerably, as the outstanding credit card balance of the licensed commercial banks has jumped by a robust Rs.6,176 million, the largest monthly increase from a very long time.

This was in comparison to the Rs.1,205 million increase in November and Rs.309 million contraction in the month before.

The trend points to a sharp acceleration in the spending by the card users for their spending, as they appear to have felt a bit more ease to stretch their budgets, with the cooling inflation and softening interest rates.

The consumer sentiments in December also saw picking up, although that could be tempered by the January tax hike and the sharp increase in the prices of consumer goods.

However, the Central Bank is confident that the current price pressures wouldn’t last long, as inflation would settle at its medium-term target of around 5 percent, after a few months of running above the midpoint.

Despite the December jump in card balances, the full-year gain came in only a bit higher at Rs.8,275 million, reflecting that almost all the increases in 2023 came during the last two months.

December is however a month with some heightened activity, due to the year-end festive demand, where the people usually loosen their purse strings than in any other period of the year, except during March and April, for the traditional new year celebrations.

While the ceiling interest rate in cards’ outstanding balance was cut to 28 percent in September, from a high of 35 percent, it is expected that the Central Bank would further slash the maximum rate chargeable on cards in the near future, as the lending rates in the economy are easing faster.