Rising interest rates and falling export demand are blunting the post-COVID economic resurgence of many Asian economies.But for Sri Lanka, the only country in the region to default on its official debt amid the economic squeeze caused by the pandemic and the Ukraine war, these are sunny days” said co-fund manager of Asia Frontier Capital’s AFC Asia Frontier Fund. Ruchir Desai.

Tourism revenue and remittances from Sri Lankan workers overseas have come roaring back. Inflation, which reached 70% last September, was back down to 6.3% in July. As a result, the Central Bank of Sri Lanka has cut its benchmark interest rate by 4.5 percentage points since June.

Last year’s default was the result of a confluence of factors depleting Sri Lanka’s foreign exchange reserves. Receipts from tourism, an industry that previously brought in close to $5 billion a year in foreign exchange earnings, plunged after the 2019 Easter Sunday bombings of three churches and three luxury hotels; visitors did not return amid COVID-19. Heavy external borrowings, populist moves to cut taxes and political infighting took their toll on investor confidence and the country’s macroeconomic position.

The outbreak of the Ukraine war last year then delivered an unbearable blow. With foreign reserves running low, the country had to deal with soaring costs for imported food and fuel. The government could not turn to international capital markets to shore up its reserves given the lack of confidence in its ability to repay in addition to rising global interest rates.

The Central Bank of Sri Lanka was forced to print money to finance the government’s deficit. This led to a collapse in the value of the Sri Lankan rupee, accelerating inflation. With the government unable to provide or pay for the daily necessities and prices skyrocketing, then-President Gotabaya Rajapaksa was forced to flee the country in July 2022.

Ranil Wickremesinghe, his successor, quickly took measures to stabilize the situation by opening talks with the International Monetary Fund on a loan and getting interim support from regional neighbors like India. A new central bank governor raised benchmark interest rates by 8 percentage points over the course of 2022 to try to put a lid on inflation and bring a degree of macroeconomic stability.

In the first half of the year, tourism revenues reached almost $1 billion while inbound remittances reached $3 billion.

Companies, meanwhile, are benefiting from greater dollar availability and stable power supplies. The IMF, which approved support for Colombo in March, estimates Sri Lanka’s current-account deficit will be around 1.5% of gross domestic product from this year onward.

A government domestic debt restructuring program has removed a lot of uncertainty, especially within the Sri Lankan banking sector. Colombo is in discussions with external creditors on restructuring the country’s external debt. The government also continues to follow through on its reform program.

The rupee and the country’s stock market have reacted positively to recent macroeconomic developments; both have been among the world’s best performers so far this year. The decline in inflation and interest rates, the rebound in tourism and the commitment of the government to reform bode well for Sri Lanka’s outlook.

Execution has not been the strongest area for Sri Lankan policymakers. But with the support of the IMF, neighboring countries and investors, Sri Lanka cannot ask for a better platform to generate sustainable and all-around economic growth. (www.asia.nikkei.com)

The Mihintale sacred area, including the esteemed Rajamaha Viharaya, experienced a disconnection of its electricity supply yesterday morning due to outstanding arrears amounting to Rs 4.1 million in the electricity bill. The Ceylon Electricity Board (CEB), through its Chief Electrical Engineer for Anuradhapura district, S. Jayawardena, confirmed the disconnection, citing non-payment despite prior notice.

In response to the power disruption, the Chief Incumbent of Mihintale Rajamaha Viharaya, Ven. Walawahengunawewe Dhammarathana Thera, addressed the media and asserted that he believes he is being targeted by politicians due to his unwavering stance on issues faced by the people. He stated that his temple is currently engaged in a substantial development program at the sacred site, making it financially challenging to settle such a significant electricity bill. In light of this, he appealed to the authorities to consider providing solar panels as a possible alternative.

Moreover, Ven. Dhammarathana Thera emphasized the urgent need for the government’s protection and support for the area, as it hosts numerous sites of immense archaeological value. The preservation of this historically significant location is of paramount importance, and he called for immediate measures to safeguard its rich heritage.

The popular “Seethawaka Odyssey” tourist train, jointly operated by the Western Province Tourism Board (WPTB) and the Sri Lanka Railway Department, is set to extend its service to Saturdays, starting tomorrow. The decision comes in response to overwhelming demand from tourists, who have flocked to experience the enchanting Seethawaka tourist zone during the train’s exclusive Sunday runs for the past six months.

Announcing the expansion as the “Shanida Seethawaka Odyssey,” WPTB Chairman Sugath Hewapathirana expressed excitement over the opportunities it presents. By running the train on both Saturdays and Sundays, local and foreign travelers can now turn a day trip into a captivating full tour, complete with a night’s stay in the picturesque Seethawaka Tourist Zone.

This move is not only expected to boost tourism and elevate the Western Province’s lesser-known attractions to international visitors, but it also promises to attract more local tourists to explore the area. The potential increase in visitor numbers is anticipated to positively impact foreign exchange earnings, further supporting Sri Lanka’s thriving tourism industry.

• Formulation of a new Medical Act within six months.
• Proposal to be drafted for establishing WHO standard benchmark level 4 lab facility.
• Additional allocation of Rs. 30 billion approved for medical supplies.

President Ranil Wickremesinghe led a follow-up meeting at the Presidential Secretariat to bolster the nation’s healthcare system. He directed the formulation of a new Medical Act within six months with the aim of addressing shortcomings in the present Medical Ordinance and thereby provide better healthcare and protect citizens’ well-being. A high-level Committee, consisting of the Secretary of Health, Legal Draftsman, and President of the SLMC, was assigned to examine the provisions of the Medical Ordinance and formulate a new Medical Act with appropriate provisions.

To address immediate medical needs, an additional allocation of Rs. 30 billion was approved for medical supplies under the Provision to Ministry of Health, sufficient for the next three months.

On President Wickremesinghe’s directions to the NMRA to expedite the approval process for FDA-approved drugs and reference drugs from other countries that collaborated with the Health Ministry, the NMRA sought to obtain Cabinet approval to make the necessary amendments to the NMRA Act that will ensure faster access to critical medications.

The meeting resolved the issue of staff shortage at the NMRA. The President called for a detailed report to strengthen the role of the National Medicines Regulatory Authority (NMRA) in regulating medical products and ensuring public health safety.

Efforts to improve medicine distribution and inventory management were discussed, with the President emphasizing the need for a web-based system to provide real-time information on available medicines and their distribution among hospitals with immediate effect as discussed during the meeting two weeks ago.

A five- member committee led by Mr. A. K. Seneviratne, Deputy Secretary to the Treasury was appointed to, among other tasks; devise a simple and transparent scheme for the procurement of quality drugs and medical devices.

The Ministry of Health requested the Department of Management Services to amend the Service Minute to align nurse recruitment qualifications with current healthcare requirements. The President urged health officials to consider recruiting and training individuals with Arts and Commerce Stream qualifications as nurses.

Additionally, the President instructed the Health Ministry and NMRA to draft a proposal for establishing WHO standard benchmark level 4 to assess the quality, safety and efficacy of medical products.

The Chief of Presidential Staff and Senior Adviser on National Security to the President Mr. Sagala Ratnayake emphasized to the health officials to immediately submit a list of unusable hospital equipment and equipment or related materials or goods that will expire or be removed within two years.

The meeting concluded with a commitment to promptly implement the proposed reforms, aiming to build a robust and accessible healthcare system for all citizens.

Prime Minister Dinesh Gunawardena, Health Minister Dr. Keheliya Rambukwella, Chief of Presidential Staff and Senior Adviser on National Security to the President Mr. Sagala Ratnayake, Secretary to the President Mr. E. M. S. B. Ekanayake, Secretary to the Prime Minister Mr. Anura Dissanayaka, Secretary to the Ministry of Health Mr. S. Janaka Sri Chandraguptha, Director General of Health Services, Ministry of Health Dr. Asela Gunawardena, Health officials and Finance Ministry officials attended the meeting.

• Land deeds already given to 20,000 families – Minister of Sports and Youth Affairs and Minister of Irrigation Roshan Ranasinghe.

The distribution of land deeds for 15,000 families in the Mahaweli region will commence from the second week of this month as per the instructions of President Ranil Wickremesinghe, Minister of Sports and Youth Affairs and Minister of Irrigation Roshan Ranasinghe stated.

Minister Roshan Ranasinghe also mentioned that steps have been taken to provide land deeds to 20,000 families who do not possess land deeds in the Mahaweli region.

He expressed these views Agu; (02) during a press conference themed ‘Collective Path to a Stable Country’ held at the Presidential Media Centre (PMC).

Minister Roshan Ranasinghe further commented;

On President Ranil Wickremesinghe’s instructions, 20,000 land deeds have been distributed to the citizens of the Mahaweli region under the first phase of the ‘Idam Aithiya Niwasatama’ (Land right to home) Program. Another 15,000 land deeds will be distributed starting in the second week of this month, according to plans.

Additionally, the dry weather has made it difficult to deliver water from the Walawe River. Paddy fields covering over 25,000 hectares are irrigated using water from the Walawe River. Additionally, 8000 hectares of intercrops are grown. Water supply for paddy fields is becoming a challenge in such a situation.

In this situation, the issue of maintaining a steady supply of electricity and water for farming has also come up. However, the Ministry is making an effort to safeguard crops. The Nation’s food security must also be taken into account.

The previous Cabinet meeting included a lengthy discussion on the present dry weather conditions. There, the opinion was also expressed that we should go for a program that does not cut off the electricity.

However, if ships with generators that provide electricity with the dry weather are expedited to get electricity, it is possible to solve the electricity crisis and provide water to the farmers. The Electricity Board has paid special attention in this regard as well.

PMD

Today, August 04, the Sri Lankan Rupee witnessed a depreciation against the US Dollar at commercial banks in Sri Lanka when compared to yesterday’s rates.

At Peoples Bank, the buying rate of the US Dollar surged from Rs. 305.58 to Rs. 311.42, while the selling rate rose from Rs. 320.61 to Rs. 326.74.

Commercial Bank also reported an increase in the buying rate of the US Dollar, which rose from Rs. 307.58 to Rs. 309.78. Simultaneously, the selling rate climbed from Rs. 322 to Rs. 325.

Similarly, at Sampath Bank, the buying rate of the US Dollar went up from Rs. 310 to Rs. 313, and the selling rate increased from Rs. 322 to Rs. 325.

The fluctuations in exchange rates underscore the ongoing volatility in the currency market, impacting financial transactions and import costs for businesses and consumers in Sri Lanka.

The Chairman of Litro Gas Company, Muditha Peiris, has reassured the public that domestic gas cylinder prices will not be increased today (August 04). However, the company was scheduled to announce the price revision for liquefied petroleum (LP) gas cylinders today, as part of its monthly price adjustment based on the pricing formula.

In a positive trend for consumers, Litro Gas has implemented four consecutive price reductions this year. Last month’s revision brought down the price of a 12.5kg cylinder to Rs. 2,892 and a 5kg cylinder to Rs. 1,198. As the company continues its pricing formula-based adjustments, consumers will be closely observing any changes to the gas cylinder prices in the market.