In an official announcement unveiling the National Accounts Estimates, the Department of Census and Statistics (DCS) has revealed a concerning economic outlook for the second quarter of 2023. The report highlights a year-on-year GDP growth rate of -3.1%, marking a significant decline when compared to the corresponding quarter in 2022.
Furthermore, the Gross Domestic Product (GDP) for Sri Lanka in the second quarter of 2023, computed at a constant price (2015), has experienced a substantial drop, falling from Rs. 2,680,074 million in the second quarter of 2022 to Rs. 2,597,441 million.
It’s worth noting that the year-on-year GDP growth rate for the second quarter of 2023 is calculated based on the real GDP value reported in the same quarter of the previous year. The provided figure below illustrates the fluctuations in real GDP levels in the second quarter GDP series, spanning from 2018 to 2023.
Sri Lankan Rupee has maintained its stability against the US Dollar at various commercial banks in Sri Lanka, with rates closely resembling those from the previous Friday.
At Peoples Bank, the exchange rates for the US Dollar have shown a marginal increase, with the buying rate moving from Rs. 315.69 to Rs. 315.93 and the selling rate from Rs. 329.87 to Rs. 330.12.
Commercial Bank, on the other hand, has reported that the buying rate for the US Dollar remains consistent at Rs. 317.19, while the selling rate remains unchanged at Rs. 327.50.
Meanwhile, at Sampath Bank, there have been no notable fluctuations in the exchange rates for the US Dollar, with both the buying and selling rates remaining steady at Rs. 318 and Rs. 328, respectively.
Colombo (LNW): Hamilton Reserve Bank’s actions delay Sri Lanka’s debt restructuring program while other creditors face financial adjustments, possibly paving the way for significant profits.
The timing of their court case filing immediately following Sri Lanka’s declaration of bankruptcy raises concerns about hidden agendas.
The U.S. Attorney General’s office’s intervention underscores international unease, with Britain and France also supporting Sri Lanka in the New York Court.
However, Sri Lanka’s refusal to accept any conclusions or recommendations regarding economic crimes remains a significant challenge. The lack of prosecutions further exacerbates this issue.
The United Kingdom and France joined the United States of America to intervene in a New York court case filed by the mysterious St Kitts Bank (Hamilton Reserve Bank) against Sri Lanka over its ISB (International Sovereign Bond) default.
The London Financial Times reported that the two countries filed a joint “amicus curiae” petition to the New York Southern District judge hearing the case, arguing in favour of Sri Lanka’s request for a six month freeze on any litigation.
According to the intervening petitions, both the UK and France support Sri Lanka’s request for a stay of proceedings to safeguard the ongoing debt restructuring process for Sri Lanka and the country’s efforts to restore the sustainability of its economy. The US intervened earlier.
Amicus briefs are filed by people, organisations or countries that are not themselves party to any legal case, but have a strong opinion on how it should go.
“France is naturally interested in the Sri Lanka lawsuit as it hosts the so-called Paris Club, where government-to-government debts are restructured.
The UK is part of the Paris Club, but presumably cosigned the amicus brief because it historically oversaw the London Club, the less formal group for private creditors to negotiate with sovereign borrowers,” the FT report added.
The co-signatories want the judge to grant Sri Lanka the six-month stay it has requested, because they worry that the lawsuit by the Hamilton Reserve Bank’s chief, Chinese-American investor Benjamin Wey, could wreck the ongoing restructuring talks.
A judgement in favour of the plaintiff Hamilton before the completion of the debt restructuring process would risk disrupting the ongoing negotiations by creating an incentive for holdout creditors, thereby jeopardising the comparability of treatment between different categories of creditors, the report said.
This principle is at the core of all sovereign debt restructuring processes, as it is key to secure the consent of all creditors.
A disruption would lead to delays in the negotiations, delaying the cash disbursement by the IMF to the debtor country and resulting in significant costs for Sri Lanka and the official creditors’ taxpayers.
Colombo (LNW): Twenty delegates from the USA have arrived in Sri Lanka to participate in the 14th Council Meeting of the Trade and Investment Framework Agreement (TIFA) between the two countries, which was held in Colombo ton September18.
The event was extra special for the two countries as it coincides with the 75th anniversary of bilateral relations between the two nations.
The USA is the largest export destination, on a country basis. Further, in the context of the broad policy perspective of the Government on economic and trade relations, this collaboration is of great importance.
Previous to this, it was in 2019 that Sri Lanka hosted the 13th Council meeting of TIFA between the USA and Sri Lanka which was signed in 2002.
After a hiatus of 4 years, this year the council meeting has covered a wide range of contemporary important areas leading to enhanced collaboration between the two nations.
Furthering the flourished friendship between the two countries into a more dynamic and multifaceted relationship, both countries re-engaged on a wide variety of bilateral trade and investment-related issues.
Given the constrained economic situation, officials said Sri Lanka looks forward to making this a platform to build more fruitful partnerships and collaborations with this leading economy in identified multiple sectors.
Development of the country’s digital economy, gem and jewellery industry, floriculture industry, and boat building industry are a few such sectors that Sri Lanka wishes to have such cooperation efforts in.
Moreover, recognising the technological advancement that the USA possesses in contrast to that in Sri Lanka, Coconut Research Institute anticipates proposing a technology transfer from the USA especially in relation to their research commercialisation.
Delegations will include officials from corresponding agencies in the two countries in trade, investment, customs, labour, intellectual property, and agriculture sectors.
The Sri Lankan delegation will be headed by the Office for International Trade Chief Negotiator, K.J. Weerasinghe and the US delegation is led by Assistant US Trade Representative for South & Central Asia Brendan Lynch.
Sri Lanka’s exports to the US in 2022 amounted to a record $ 3.3 billion accounting for 25.3% of the total. Between 2018 and 2022, exports to the US have been ranging between a low of $ 2.5 billion (2020) and $ 3.3 billion last year.
Imports from the US in 2022 were $ 378 million or 2.1% of the total. The highest value in the past five years was $ 542 million in 2019.
Colombo (LNW): Sri Lanka Tourism Development Authority (SLTDA) Chairman Priantha Fernando on Friday formally notified the General Managers of Colombo City hotels about the introduction of Minimum Room Rates (MRR) from 1 October 2023 ending speculation about a possible deferment due to protest by tour operators.
The new directive brings forth a series of guidelines aimed at standardising room pricing across distribution channels.
The move comes following the Government issuing an Extraordinary Gazette on 11 September declaring the MRR effective from 1 October.
This mandate necessitates Colombo City Hotels to strictly adhere to the Gazette notification, thereby ensuring uniformity in room rates.
The directive also contains provisions for the continuation of previously confirmed bookings made prior to 1 October 2023, encompassing group reservations, series groups, and contracts with foreign direct tour operators.
These will be honoured at the rates agreed upon before the implementation of the new regulations.
As per the Gazette notification, the prices for corporate and free independent tourists (FIT), the MRR structure has been defined to accommodate different hotel categories: $ 100 for 5-star hotels, $ 75 for 4-star establishments, $ 50 for 3-star accommodations, $35 for 2-star hotels and $ 20 for one-star tourist hotels.
Any existing agreements that fall below the stipulated MRR will be rendered null and void starting 1 October 2023. Contracts for crew stays that were executed before this date will be honoured for the duration of their current validity period.
According to the Gazette, the prices for airline crew rooms are; $ 75 for 5-star hotels, $ 55 for 4-star establishments, $ 40 for 3-star accommodations, 30 for 2-star hotels and $ 20 for one-star tourist hotels.
However, renewals and new contracts must strictly adhere to the rates set out in the Gazette notification.
Hotels are prohibited from offering supplementary incentives to ensure compliance, aiming to maintain a level playing field for all establishments. Additionally, hotels must accurately present their star classification on public platforms, aligning pricing accordingly.
For group bookings, regardless of the number of paying rooms a complimentary 11th room will be extended, subject to a maximum limit of 10 complimentary rooms.
The Chairman also pointed out that three reputable audit companies will be appointed to oversee adherence to the Gazette notification.
They will be responsible for conducting both general and spot audits. The Gazette also delineates penalties for non-compliance. “In the event of a violation, the guilty party is required to remit the penalty fee to SLTDA within two weeks of receiving the violation report,” the letter reads.
The fees payable for re-registration and licensing of 5-star tourist hotels is Rs 3 million and Rs. 2 million, 4-star tourist hotels Rs. 1.5 million and Rs. 2.3 million, 3-star tourist hotels Rs. 1.85 million and Rs. 1.2 million, 2-star tourist hotels Rs. 1.5 million and Rs. 1 million and 1-star tourist hotels Rs. 1 million and Rs. 750,000 respectively.
Colombo (LNW): Several Indian companies have planned investments in Sri Lanka in the coming years. According to Indian CEOs some big Indian companies operating in the Sri Lankan market include CEAT, Gujarat Glass, Indian Oil Corporation, Neelkamal Plastics, Gujarat Ambuja amob them .
Members of the Sri Lanka India Society comprising Indian CEOs assured Prime Minister Dinesh Gunawardena to promote further Indian investments as the time is ripe for expanding collaboration in several sectors.
This was conveyed when a delegation from the Sri Lanka India Society paid a courtesy call on the Premier to discuss ways and means of expanding bilateral economic ties including trade and investment.
The Prime Minister, pointing out the growth in Government-to-Government development cooperation, thanked the Indian CEOS for their efforts to promote private sector Indian investments.
The business heads underscore the need for some structural changes in Sri Lanka to augment foreign investments, especially when the challenge of costs is so stark, following the drastic depreciation of the Sri Lankan rupee.
The ease of doing business must improve, they underscore, suggesting that a single window regulatory process be put in place to help save costs and time, and give incentive for new investors to come in
Sri Lanka India Society President and Platinum Realty Investments Managing Director Kishore Reddy said there is enormous potential for investments in the agriculture, tourism, information technology, renewable energy, and education sectors.
As Sri Lanka has emerged out of the recent economic crisis and restored stability, it is still a good time to invest as there is an enormous scope for foreign direct investment in a host of sectors.
These Sectors are manufacture of automobile accessories, value addition to mineral sands, agriculture products such as manufacture of tomato puree, dairy industry through expansion of farmer cooperatives in addition to information technology, tourism, and renewable energy.
Past President T.S. Prakash said Sri Lanka could expand the dairy sector taking lessons from the success story of Amul in India by using farmer cooperatives for production and collection of milk.
The Indian CEOs, referring to their experience of doing business in Sri Lanka for decades, said that entrepreneurs in Indian states are willing to invest in Sri Lanka to manufacture products for the huge Indian market.
Reddy thanked the Prime Minister for the continuous support extended to the India Sri Lanka Society for its activities to promote cooperation between the two countries.
The Sri Lanka India Society, established in 1949 is one of the oldest and largest friendship societies in Sri Lanka dedicated to strengthening economic cooperation
Former CB Deputy Governor W A Wijewardene says the MB has tried to establish a lie that the 14% tax rate applied on the EPF is a “concessionary rate”: also says the previous MB statements had compared the EPF tax rate of 14% on its Gross Interest Income with the 30% tax rate on financial institutions on their Net Interest Income: asserts the EPF has paid a tax of Rs.49bn in 2022 on its gross income of Rs.370bn, when a financial institution earning a similar gross income would have paid only about Rs.2bn as taxes.
National Trade Union Centre denounces the EPF’s recent decision to submit an offer to exchange the portfolio of their Treasury Bonds under the Domestic Debt Optimisation programme.
The Indian Central Govt informs the Madras High Court that it has taken steps to deport the 4 Sri Lankans convicted in the Rajiv Gandhi assassination case, to Sri Lanka.
Dept of Motor Traffic initiates an investigation against officials who are allegedly connected to a racket of registration of luxury vehicles under registration numbers of diplomatic vehicles which are no longer in use: a recent audit report issued by the National Audit Office had revealed that, as a result, the Govt has lost millions of Rupees.
Police say a 6-year old girl was killed when unidentified gunmen on a motorcycle opened fire at a 3-wheeler near the Maligakanda Courts in Maradana: her father also in a critical condition.
Police say unidentified persons in a vehicle had opened fire at SLPP MP Uddika Premaratne’s vehicle soon after he returned to his residence in Anuradhapura: MP escaped unhurt.
Govt asks the Depts of Inland Revenue, Excise & Customs to immediately raise between Rs.400bn and Rs.450bn in revenue to overcome the expected cash flow shortfall due to the strict restrictions on “money printing” now in place owing to the new CBSL Act: under the new Act, the CB’s ability to “print money” will be permitted only in exceptional circumstances such as a global health emergency: analysts expect the interest rates to rise sharply and the recent “hot money” inflows to reverse, as a result.
Foreign Ministry Spokesperson Priyanga Wickramasinghe says the Chinese research vessel Shi Yan 6 has commenced its 80-day expedition into the Indian Ocean, despite Colombo not yet granting permission for the vessel to call port or carry out a planned joint survey in the SL waters: previously, the Ministry of Defence had said permission for the Shi Yan 6 to call port in Colombo had been granted.
UK and France join the United States to intervene in a New York Court case filed by the Hamilton Reserve Bank against Sri Lanka over SL’s ISB default, by filing a joint ‘amicus curiae’ petition supporting SL’s request for a 6-month freeze on the litigation pertaining to the matter.
India record a huge win against SL in the Asia Cricket Cup 2023 Final played in Colombo: SL 50 all out (15.2 overs): IND 51/0 (6.1 overs): India’s Mohammed Siraj produced a devastating spell of swing bowling returning figures of 6 for 21 in 7 overs: SL’s total is the lowest by any team against India in Men’s ODIs.
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In a significant development, a special gazette notification has been issued, reaffirming the status of electricity supply and related services, the supply and distribution of petroleum products and fuel, as well as health services as essential services in Sri Lanka.
The announcement was made by Acting Presidential Secretary Chandanie Wijayawardhana on September 17, 2023, in compliance with the directives of President Ranil Wickremesinghe. This decision was enacted under the authority granted to the President by Section 2 of the Essential Public Services Act No. 61 of 1979.
This recent notification follows a prior declaration of these services as essential in a Gazette Extraordinary published on May 17, 2023. President Wickremesinghe had previously issued multiple announcements to this effect, dated August 3, 2022, September 3, 2022, October 4, 2022, January 3, 2023, and February 17, 2023, underscoring the critical nature of these services to the nation.
In a recent revelation, Sri Lanka’s overall risk concerning money laundering and terrorism financing has been assessed as “medium” according to the national assessment conducted by the Financial Intelligence Unit of the Central Bank of Sri Lanka (CBSL).
This disclosure emerged as the Financial Intelligence Unit of the Central Bank of Sri Lanka (CBSL) published the sanitized report of the 2021/2022 National Risk Assessment on Money Laundering and Terrorism Financing.
The comprehensive assessment was developed through collaborative efforts between the CBSL’s Financial Intelligence Unit and various stakeholders from both the public and private sectors.
The National Risk Assessment pinpointed several key areas of concern. It identified drug trafficking, bribery, corruption, and customs-related offenses, including the laundering of trade-based proceeds, as the most prevalent predicate offenses, elevating the money laundering threat to a medium-high level.
Fraud, robbery, environmental, and natural resource crimes were noted to have a medium-level money laundering threat. Meanwhile, activities such as human smuggling or trafficking, tax offenses, illegal and unreported fishing, were assessed as having a medium-low money laundering threat, with counterfeiting of currency posing a lower threat.
The assessment extended to evaluating the money laundering risk within financial and designated non-financial businesses and professions. Notably, the Informal Money Remitting sector was identified as having a high risk.
The Real Estate sector, Banking sector, and Finance Companies were deemed to carry a medium-high risk. Money Value Transfer Services Providers, Stockbrokers, Primary Dealers, Casinos, Dealers in Precious Metals and Stones, Notaries, and Lawyers were categorized with a medium-level threat.
In contrast, Accountants, Trust and Company Service Providers, and Insurance service providers were found to have a medium-low-level threat of money laundering.
The Financial Intelligence Unit emphasized the critical importance of strong political commitment in addressing the national Anti-Money Laundering and Counter Financial Terrorism plan. Furthermore, understanding the current risk environment allows stakeholders to allocate resources effectively, particularly to high-risk areas, in order to safeguard the integrity of Sri Lanka’s financial system moving forward.
