By: Staff Writer

Colombo (LNW): Sri Lanka’s business confidence is tumbling on its slippery course, sliding perilously into the unknown – and taking a nation’s hopes along on an unbidden ride,” business magazine LMD reported in its latest edition.

News about how the domestic debt optimization framework (a.k.a. DDO) will unfold, an easing of monetary policy and the downward spiral in inflation have brought some respite to a beleaguered business community in the recent past.

But we have yet to see the effects of these events – and the burdens loom large LMD observed in its analysis of current and expected developments, including the disinflation process and benign inflation expectations in the domestic economy..

The Monetary Board of the Central Bank of Sri Lanka reduced its Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) by 200 basis points to 11 percent and 12 percent respectively in July – for the second consecutive month.

Meanwhile, the Governor of the Central Bank Dr. Nandalal Weerasinghe alluded to three key aspects that will be addressed in the debt restructuring process: firstly, discussions are underway regarding the restructuring of official bilateral debt; secondly, deliberations regarding the monies borrowed through sovereign bonds in commercial markets are ongoing; and thirdly, the focus is on optimising domestic debt.

By the end of June however, Sri Lanka had fulfilled only 33 out of the 41 trackable programme commitments under the IMF’s Extended Fund Facility (EFF), according to the ‘IMF Tracker’ maintained by Verité Research.

THE INDEX It is against this backdrop that the LMD-NielsenIQ Business Confidence Index (BCI) shed 10 basis points in July to register 93 – although this mark is five notches higher than the 12 month median (88) and almost twice as high as where it stood in July last year – i.e. 49.

After gaining ground in the preceding three months, the barometer headed south once again to below the 100 mark. The BCI has seen fluctuations since the beginning of this year with the index at its peak (108) in April.

SENSITIVITIES Financial sector volatility, the ongoing fluctuation of the value of the Sri Lankan Rupee and high taxes continue to fluster the business community.

In addition, the price of black gold rose to its highest level in nearly three months recently when US inflation data suggested that interest rates in the world’s largest economy were close to their peak. This could have implications for our forex outflows in the short term at least.

PROJECTIONS NielsenIQ’s Director – Consumer Insights Therica Miyanadeniya cautions that “as the country struggles to maintain equilibrium, businesses and the people are still in a state of flux.”

In the last two months, we have maintained that “the burning question for the weeks ahead is whether the perceived pros will outweigh the cons – and if they do, we expect the BCI to stand firm and not fall below the psychologically important 100 mark.”

The verdict therefore, seems to be that we’re currently in negative territory – although we may see a reversal of sorts next month if the real benefits of lower inflation begin to filter through and there’s more good news on the debt restructuring front.

By: Staff Writer

Colombo (LNW): After becoming the best-performing currency in the first half of the year, the Sri Lankan Rupee has taken a dramatic turn, plummeting to become the worst-performing currency in Asia recently although it remains steady against the US Dollar at commercial banks in Sri Lanka today (July 28) compared to yesterday .

At Peoples Bank, the buying and selling rates of the US Dollar remain unchanged at Rs. 321.15 and Rs. 336.95, respectively.

According to Commercial Bank, the buying rate of the US Dollar has reduced from Rs. 323.41 to Rs. 321.66, while the selling rate has also reduced from Rs. 334 to Rs. 333.

At Sampath Bank, the buying and selling rates of the US Dollar remain unchanged at Rs. 324 and Rs. 334, respectively

However the currency has seen a drop of over 6% in just one month, marking its longest daily losing streak in nearly five years.

This is a significant departure from its laudable performance in the first six months of the year, during which it saw a rise of 19%. Forecasts indicate that the currency may further depreciate by 8% by the end of the year.

The reasons for this set back were the uncertainty about the impact of head winds arisen out of market sentiment of further declining of policy interest rates of the central bank and the removal of import restrictions on majority of essential and non-essential items. leading to the increase in demand for dollar.

The demand for dollars in the country has surged as the nation, currently facing a crisis, has begun to ease import restrictions on a wider range of goods, including tiles and medical supplies.

This increase in demand for imported goods has put pressure on the already struggling rupee. Adding to this, the nation’s benchmark interest rate was also cut for the second time in the month as disinflation accelerated, a move that further impacted the currency.

Another factor was the Central Bank’s limited intervention in the foreign exchange market activities, financial analyst said.

As inflation cools down rapidly, the trade balance is expected to become more negative. This may lead to further reductions in the interest rate. The fluctuation of the rupee is being attributed to banks covering positions. In light of the volatile situation, the central bank’s governor has advised businesses to use hedging instruments and make decisions based on inflation expectations rather than the exchange rate.

When compared to other Asian currencies, the Sri Lankan rupee’s performance stands out starkly. For instance, the Pakistani rupee recently hit a new all-time low against the US dollar in the interbank market, making it the second-worst performing currency in Asia.

However, the Sri Lankan rupee’s dramatic shift from being the best to the worst in the region underscores the severity of the economic challenges the nation is grappling with at present financial analysts said.

The police have fired tear gas and water cannons in Borella Sahaspura area to disperse the protest march organized by several parties including the Joint Development Officer Center and the Labor Struggle Center under the name of Working People’s Joint Protest which started near the Colombo National Hospital today (28).

The protest was organized to protest against the non-grant of life allowance of 20,000 rupees, non-resolution of civil servants’ professional problems, pension cut, unfair labor law amendment etc.

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Starting from August 1, the Health Ministry’s Medical Administration Service and other executive grade officers will be required to use fingerprint machines to record their daily arrival and departure. The circular announcing this mandatory measure was issued by Health Ministry Additional Secretary Geethamani C. Karunaratne and forwarded to all Additional Secretaries, the Director General of Health Services, and all Chief Financial Officers.

Specifically, the officers of the Medical Administration Service and other executive grade officials who receive additional duty allowances must utilize the fingerprint machines for attendance tracking. This decision comes as a result of a Cabinet directive aimed at ensuring accurate payment of allowances to officials engaged in additional duties within the Health Ministry.

The Lotus Tower, standing tall as South Asia’s highest tower, has achieved a significant milestone by welcoming one million visitors since its public opening on September 15, 2022. The momentous occasion was marked on Wednesday (26) as the millionth ticket was sold, and a lucky family from Wilgamuwa, Matale, won a cash prize of Rs. 150,000 and other rewards worth around 50,000 rupees.

Among the one million visitors, 22,000 were foreigners, highlighting its appeal as a tourist attraction. The Chief Executive Officer of the Lotus Tower Management Private Company, Major General (retired) Prasad Samarasinghe, expressed his delight at the overwhelming response.

Apart from ticket sales, the Lotus Tower generates substantial income by offering services to various institutions located within the tower. Major General Samarasinghe revealed that the second and third phases of the Lotus Tower project, currently in progress, are expected to be completed by December.

The tower, sprawling over an area of 30,600 square meters and towering at 350 meters, provides visitors with a unique opportunity to spend 30 minutes on its seventh floor, offering breathtaking views of prominent landmarks such as Sigiriya, Adam’s Peak, and Knuckles Range. The Lotus Tower remains open to both local and foreign tourists, promising continued allure to visitors from all corners of the globe.

Emphasizes Government’s Support While Ensuring Commission’s Full Authority and International Accountability Process

During a discussion held at the Presidential Secretariat yesterday (26), Mr. Ali Sabri, Minister of Foreign Affairs, highlighted the significance of establishing a Truth-Seeking Commission to address the ethnic problem’s impact on affected communities. He stressed that the commission should operate independently, with the government’s role limited to providing necessary support and facilities.

Once established through an act, the truth-seeking commission will be granted full authority. To promote its implementation, Minister Ali Sabri announced the organization of international forums. The Cabinet-approved Interim Secretariat is expected to lay the groundwork for expediting the commission’s operations.

Minister Ali Sabri Briefed Trade Unions and Civil Organizations on the Truth-Finding Commission at a discussion held at the Presidential Secretariat yesterday.

The Minister acknowledged the importance of an internationally recognized accountability process and assured that the government is committed to creating such a mechanism. He pledged to take all essential steps to instil confidence in the truth-seeking commission.

Mr. Saman Ratnapriya, Director General of Trade Unions to President Wickremesinghe, also expressed his views during the discussion. He pointed out that the three-decade-long war had caused extensive damage throughout the country as a whole, and there is a pressing need for a thorough investigation.

He noted that previous commissions’ proposals on this matter were not adequately implemented, leading to the consideration of models from countries like South Africa to devise a suitable mechanism for Sri Lanka. Mr. Ratnapriya emphasized that informing society about the commission and garnering support for its implementation is vital to prevent the country from facing further difficulties.

Also addressing the event, Mr. Asanga Gunawansa, the Director General of the Truth and Reconciliation Commission, drew attention to Singapore’s remarkable transformation into a developed country through reconciliation, two decades after gaining independence.

He underscored that reconciliation is an indispensable factor for Sri Lanka’s own development. Mr. Gunawansa highlighted the commission’s potential to create an environment where the unfortunate past would not be repeated.

To support the establishment of this commission and contribute to a locally effective and internationally recognized mechanism, three divisions have been set up: the Interim Secretariat, Legal and Policy Division, and Public Relations Division, along with the Information Technology Division. The event witnessed the participation of numerous representatives from trade unions and civil organizations.

The best foreign policy of independent Sri Lanka is being implemented in the present era, State Minister of Foreign Affairs Tharaka Balasuriya said.

The State Minister further noted that Sri Lanka would gain greatly in the future as a result of President Ranil Wickremesinghe’s non-aligned foreign policy and his strong cooperation with all countries.

He expressed these views yesterday (26) during a press conference themed ‘Collective Path to a Stable Country’ held at the Presidential Media Centre (PMC).

State Minister Tharaka Balasuriya further commented; 

Some earlier governments were accused for maintaining close relationships with China while some were accused for maintaining close ties with the West. Today, such accusations are not made due to the foreign policy of the current government and strong foreign relationships maintained.

President Ranil Wickremesinghe follows a non-aligned foreign policy. The close relationship with our neighbour India is very important for us as a country. It will provide strong support for the nation’s future growth.

During President Ranil Wickremesinghe’s recent visit to India, it was possible to improve the relationship with India. Additionally, there are advantageous aspects between the two nations in terms of investments as well as development projects. 

85% of the containers destined for this country go to India. Therefore, we may benefit economically if we negotiate with India and expand the ports that are already in place. Also, a direct ferry service between the two countries as well as the improvement of the Palali airport are under discussion.

Attention has also been focused on making Sri Lanka an energy hub. It will be discussed on how to develop offshore wind energy, solar energy and green energy in the future. Modernizing the Trincomalee Oil Tank Complex and enhancing trade between the two nations have also received attention.

 The President is scheduled visit China and a number of countries in the future. We should also improve our relations with regionally powerful countries.

Until now, only policies to develop political relations with countries were implemented through the Ministry of Foreign Affairs. But in the same way, the government is currently focusing on how to develop economic and social relations with other countries in the world.

President Ranil Wickremesinghe is working closely with all countries through a non-aligned foreign policy. We have been successful in obtaining international support as a country. The current foreign policy can be called the best era of foreign relations in Sri Lanka’s history. This makes it possible for the country to grow while maintaining close ties with the international community.

PMD

The Maligakanda Magistrate’s Court has issued an order restricting a dozen members of the Frontline Socialist Party (FSP) from staging demonstrations or protest marches in certain parts of Colombo until 10.00 a.m. on Saturday (July 29).

The court’s directive specifically prohibits FSP activist Duminda Nagamuwa and 11 others from conducting protests near critical locations such as the National Hospital Complex, Health Square, National Eye Hospital, and other healthcare institutions.