Home Blog Page 1682

Sri Lanka Original Narrative Summary: 04/05

Radi
-
0
Sri Lanka Original Narrative Summary: 04/05

1. President Ranil Wickremesinghe leaves for the UK to attend the coronation of King Charles III being held at Westminster Abbey on 6th May.

2. Foreign Minister M U M Ali Sabry asks ADB for a downgrade of Sri Lanka’s status from the currently classified “upper middle income country” status to access “low interest concessionary loans”: SL’s per capita GDP has plunged from USD 3997 in 2021 to USD 3474 by 2022 in the wake of the debt default announcement on 12th April 2022: SL’s per capita GDP was a promising USD 3819 at end 2014.

3. PUC Chairman Janaka Ratnayake warns CEB’s revenue has fallen below the set target due to the massive decline in demand for electricity following 2 sharp upward revisions to the tariff: says demand fell by 20% after the 1st tariff hike in Sept’22, leading to a Rs.15 bn shortfall in revenue from the targeted Rs.60 bn: says the CEB was forced to take a Rs.15 bn loan from a major bank as a result.

4. Energy Minister Kanchana Wijesekara says the Govt expects to review the expensive electricity prices and revise by Jul’23, in a possible move to calm the public who have protested against exorbitant tariff hikes: analysts says the move also comes as the Govt will have to face elections next year.

5. Secretary General of the Joint Apparel Association Forum Yohan Lawrence says apparel exports in Mar’23 was the lowest in 3 years: expecte USD 1 bn reduction for 2023 from last year’s exports of USD 6 bn: also says it could be 5 to 6 more months before a recovery takes place in global demand: in the 1st quarter, exports to USA, EU and UK dropped by 22%, 13% & 10% respectively: also says the steep 66% power tariff hike in Feb’23 has hit competitiveness.

6. Cabinet approves the Finance Minister to seek Parliamentary approval to issue Rs.6,000 bn worth of Treasury Bills, up from the current limit of Rs.5,000 bn: as at 31 Mar’23, T-Bill maturities amounted to Rs. 4,636 bn: at yesterday’s Rs.160 bn weekly T-Bill auction, CBSL sold only 41% of the 364-day maturity, even with yields increasing for the 3rd consecutive auction.

7. Cabinet Media Spokesman Minister Dr Bandula Gunawardena says that “due to various spurious claims made by people with vested interests, the public had started to rise against the Govt concerning the issue of re-structuring debt”: State Finance Minister Dr Ranjith Siyambalapitiya says the blueprint on re-structuring debt will be announced within this month, thereby pushing back the release of its debt re-structuring plan from April to May.

8. Nestlé Lanka announces its decision to go “private” ending 40 years as Public Listed Company in the Colombo Stock Exchange: majority shareholder Nestle SA owning 91.95% of the stock to purchase the remaining shareholding from those wishing to divest.

9. Colombo High Court grants permission to the Attorney General to amend the indictments filed against Swiss Embassy employee Ganiya Bannister Francis for allegedly making a false claim that she has been abducted and sexually harassed.

10. Minister of Ports and Aviation Nimal Siripala de Silva says the Ministry is planning to convert the Hingurakgoda Air Force airport into an international airport: key priorities identified as extending the present 2,287m runway to 2,800m, construction of a taxiway, setting up an air navigation system, and building an Air Traffic Control tower & passenger terminal.

CB misappropriates Rs. 235 bn of profit – A daylight scandal on public property?

MIAP
-
0
CB misappropriates Rs. 235 bn of profit – A daylight scandal on public property?

The Central Bank (CB) has released its Annual Report over the bankrupt economy in 2022. Unlike in the recent past, there was no photo shoot of presenting it to the Minister released to the media with a note of highlights. As such, the Monetary Board seems to have covered up its shame of driving the economy into bankruptcy while sleeping on the Monetary Law Act (MLA) by releasing the annual report covertly.

As usual, this annual report is also just a report over the economy in 2020. Therefore, it is not a report of the Monetary Board as required in the MLA on the condition of the CB and a review of the policies and measures adopted by the Monetary Board in the economic context in 2022.

This article only highlights how the Monetary Board has hidden the profit on money printing by not transferring the profit to the government as required in the MLA.

MLA Requirement on Profit Distribution

The Part IV of the MLA sets out the procedure for calculation and distribution of the CB’s profit before the expiration of 60 days after the end of each financial year.

  • According to the note 35 to financial statements of the CB for the year 2022, the CB’s distributable profit is Rs. 235,034,628, i.e., Rs. 235 bn.
  • As per 39 (c) of the MLA, this profit should be either be applied in liquidation of obligations of the government to the CB or be paid and credited to the Consolidated Fund in consultation with the Minister.
  • However, this total profit has been transferred to the CB’s surplus (or capital) which is a gross violation of the section 39 sated above.
  • Therefore, the Monetary Board has not only violated the MLA but also the provisions of the Public Property Act by misappropriating or converting to own use the funds belonging to the government (pubic property), especially at present bankrupt condition of the government caused by the policy default of the Monetary Board itself.
  • According to the CB annual report 2021, the Monetary Board similarly has concealed Rs. 27,526,076 or Rs. 27.5 bn. of profit by not transferring to the Consolidated Fund.
  • Further, CB’s financial statements show a transfer of profit of Rs. 30,000,000 or Rs. 30.0 bn. to the Government in 2020 However, no accounting is seen how this was effected.

Therefore, it has been a habit of the Monetary Board to misappropriate public property or profit transferable to the Government. What an independence is given to the Monetary Board to rob the government.

CB’s financial condition summary in 2022

CB’s financial statements are prepared and presented in terms of International Financial Reporting Standards and audited by the Auditor General. Accordingly, selected financial highlights for the year 2022 are as follows.

  • A historic loss of Rs. 374.2 bn, from the profit of Rs. 158.2 bn reported in 2021. The fair value loss of Rs. 737.4 bn on foreign currency assets is the major contributor. The increase in net interest income on local currency assets to Rs. 445.1 bn from Rs. 60.1 bn in 2021, mainly on government securities portfolio which was the only policy action of the CB, in response to extra tight monetary policy has contained the profit negativity to some extent. Meanwhile, CB’s operating expense has doubled to Rs. 20 bn.
  • Assets of Rs. 4,510.3 bn, increased from Rs. 3,046.3 bn reported in 2021. The increase in government securities portfolio from Rs. 1,377.8 bn to Rs. 2,499 bn is the major contributory factor.
  • A total equity of Rs. 82.2 bn, declined from Rs. 463.6 bn reported in 2021. Other reserves fallen to negative Rs. 191.2 bn from Rs. 315.1 bn reported in 2021 is the contributor.

Concluding Remarks

Financial statements are reflective of the management efficiency of any institution, private or public. However, it is not a secret that mismanagement is hidden behind creative financial reporting techniques that are not easy to detect.

The profit calculation, distribution of profit and accounting entries of the CB’s financial statements violate not only relevant legal provisions in Sri Lanka as highlighted above but also accounting principles.

The adoption of financial reporting standards that are not of any practical use for the CB is also a major problem. For example, the profit/loss on the CB’s operations does not accrue to the owner.

Further, the management of a central bank, despite its money printing monopoly and world famous economists, at losses to the owner/government is a question of common sense as managers always hide behind the monetary policy to explain financial outcomes while the monetary policy itself has defaulted on public duties.

Therefore, it is pertinent to carry out an external investigation into financial outcomes of the CB before all go under the carpet of the new central bank waiting in the Parliament as part of the IMF programme approved by it.

Given the extent of statutory violations of the CB, no doubt that this also will go under the carpet as the government is least interested in the compliance and good governance of public institutions.

(This article is released in the interest of participating in the professional dialogue to find out solutions to present economic crisis confronted by the general public consequent to the global Corona pandemic, subsequent economic disruptions and shocks both local and global and policy failures.)

P Samarasiri

Former Deputy Governor, Central Bank of Sri Lanka

(Former Director of Bank Supervision, Assistant Governor, Secretary to the Monetary Board and Compliance Officer of the Central Bank, Former Chairman of the Sri Lanka Accounting and Auditing Standards Board and Credit Information Bureau, Former Chairman and Vice Chairman of the Institute of Bankers of Sri Lanka, Former Member of the Securities and Exchange Commission and Insurance Regulatory Commission and the Author of 10 Economics and Banking Books and a large number of articles published. 

The author holds BA Hons in Economics from University of Colombo, MA in Economics from University of Kansas, USA, and international training exposures in economic management and financial system regulation)

Source: https://economyforward.blogspot.com/2023/05/cb-hides-profit-from-government.html

Sri Lanka apparel exports to drop by $1 bln in 2023-trade body

CN
-
0
Sri Lanka apparel exports to drop by $1 bln in 2023-trade body

By Uditha Jayasinghe

COLOMBO, May 3 (Reuters) – Sri Lanka’s apparel export earnings could slump by $1 billion this year, a top industry expert said on Wednesday, 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.

“Given the slowdown in demand we are seeing now, a $1 billion reduction in exports this year is not unreasonable,” he told Reuters.

“Our projection is it could be five to six more months before we see a recovery in global demand.”

Shipments to the Unites States, the country’s biggest buyer, dropped by 22% to $470 million in the first quarter.

Exports to the European Union fell 13% to $344 million while first-quarter exports to the United Kingdom were down 10% to $167.7 million, according to the latest JAAF data.

A steep 66% power tariff hike in February has also hit Sri Lanka’s competitiveness, Lawrence added.

However, the industry is not expecting significant job losses from the downturn but small and medium companies could see difficulties as the sector adapts to deal with a slowdown in orders.

The island’s apparel sector has about 300,000 employees, most of whom are women.

Reporting by Uditha Jayasinghe; Editing by Raju Gopalakrishnan

Two new mushroom species to hit the Colombo market soon

Radi
-
0
Two new mushroom species to hit the Colombo market soon

By: Staff Writer

Colombo (LNW): Two new mushroom species and a new record of a mushroom species have been identified from Sri Lanka.

The new species of mushroom were discovered by Dr. Aseni Navoda Ediriweera from the Mae Fah Luang University in Thailand, and the Chinese Academy of Sciences and her research team.

The research was guided by Professor Samantha C. Karunarathna. The new species from Sri Lanka have been named as Candolleomyces ruhunensis and Termitomyces srilankensis.

A new record of Crepidotus striatus was reported from the wet zone of Sri Lanka, mainly in Kanneliya, and it previously only recorded in China.

“In 2023, we discovered two new mushroom species and a new record of a species. Sri Lanka’s records on mushrooms date back to the 1700s.

It was only after the year 2000, that a proper research on mushrooms was carried out. This is also the first time that a mushroom species was named after a university.

This was the first record of a Candolleomyces species. In addition, we also discovered Termitomyces srilankensis.

The other record was of Crepidotus striatus from the Kanneliya forest. This is the second ever record of this species. It was identified as a new species in China,” elaborated Dr. Aseni Navoda Ediriweera.

Market prices for Sri Lanka mushrooms have varied across the years. Before 2019, one kilo of mushrooms was going for US$7.50 in 2017 and US$5.67 in 2018. In 2019 the export price changed to $5.00 per kilo, by -11.765%.

Some of the best performing markets in 2019 for Sri Lanka mushrooms for each kilo were fetched from exports to Australia, United Arab Emirates (UAE) and the Maldives.

The exports of mushrooms from Sri Lanka are categorized as:Mushrooms of the genus “Agaricus”, prepared or preserved otherwise than by vinegar or acetic acid (HS code 200310).

The other varities were Dried mushrooms of the genus “Agaricus”, whole, cut, sliced, broken or in powder, but not further prepared (HS code 071231)Mushrooms of the genus “Agaricus”, provisionally preserved, e.g., by sulphur dioxide gas, in brine, in sulphur water or in other preservative solutions, but unsuitable in that state for immediate consumption (HS code 071151)

The total values in export for mushrooms in Sri Lanka were US$ 14, US$ 15, US$ 51 and US$ 78 in US dollar thousand for the years 2016, 2017, 2018 and 2019 in that order.

Sri Lanka Introduces Economic Reforms Agenda to Boost Economic Recovery

CN
-
0
Sri Lanka Introduces Economic Reforms Agenda to Boost Economic Recovery

In a bid to revive the country’s struggling economy, Sri Lanka has implemented a comprehensive economic reforms agenda. The government has initiated several key recovery strategies, with the establishment of a National Productivity Commission being a flagship project.

Despite on-going economic constraints, the government allocated funds for the commission’s establishment in the Budget 2023. An inter-ministerial Working Group has been appointed to lead the task, comprising members from various ministries, departments, and organizations.

The Working Group aims to explore international insights on productivity materialization, and to this end, the Government reached out to the Australian Productivity Commission, which is recognized as an international standard. In response, the Australian High Commission in Sri Lanka expressed their willingness to support Sri Lanka in this regard.

To facilitate knowledge-sharing, the Australian Productivity Commission conducted a virtual session on April 27th, 2023, for the Sri Lankan Working Group assigned to establish the commission. The event was hosted by the Presidential Secretariat.

This initiative marks another engagement between the Government of Australia and the Government of Sri Lanka, reflecting their support for Sri Lanka’s economic reforms and revival.

ADB continues engagement with Sri Lanka with renewed vigour

Radi
-
0
ADB continues engagement with Sri Lanka with renewed vigour

By: Staff Writer

Colombo (LNW): The Asian Development Bank pledged to continue engagement with Sri Lanka with renewed vigour in a variety of areas.

Foreign Minister Ali Sabry met with the President of Asian Development Bank, Masatsugu Asakawa in Seoul, Republic of Korea during the 56th Annual Meeting of the ADB.

The Minister expressed Sri Lanka’s gratitude for the excellent partnership and cooperation extended by the Asian Development Bank during a challenging period for Sri Lanka and for supporting the country’s recovery process.

Whilst conveying the best wishes of President Ranil Wickremesinghe, Minister Sabry further sought technical support and financial assistance from the ADB in the spheres of digitalisation, agriculture, renewable energy, and financial sector stability.

The ADB President expressed his appreciation for the encouraging work Sri Lanka has done so far to avert a greater crisis and for laying a strong foundation for the country’s recovery.

The ADB President pledged to continue engagement with Sri Lanka with renewed vigour in a variety of areas.

Sri Lanka is currently facing a severe economic crisis, which has brought upon unprecedented hardships on the population, especially the poor and vulnerable including women and children.

The economic fallout from the balance of payment and debt crises has resulted in shortages of essential items such as fuel, food, fertilizer, cooking gas and medicines.

To support the country during difficult times, ADB repurposed funds from existing projects and is helping the import of essential items (medicines, chemical for water treatment, and fertilizer), financing support for small and medium-sized enterprises, and livelihood development in the agriculture sector.

ADB also approved an emergency assistance loan of $200 million, in addition to administering a $3 million grant from the Japan Fund for Prosperous and Resilient Asia and the Pacific (JFPR), to improve food security and livelihoods of the poor and vulnerable, especially women and children.

Working together with its partner banks, ADB’s Trade and Supply Chain Finance Program is also supporting import of essential items in the country.

ADB is working closely with other development partners, including the Asian Infrastructure Investment Bank, the World Bank, and the United Nations, as it responds to the country’s needs in the time of crisis

As a key long-term partner, the ADB stands ready to provide further support,” the bank’s president, Masatsugu Asakawa, told reporters at its annual gathering.

Sri Lanka’s economy has contracted and it is suffering from very high inflation severely affecting living standards, Asakawa said. The annual figure exceeded 70% in August.

Asakawa said he was confident Colombo was working to finalize a staff-level agreement with the International Monetary Fund (IMF) for a loan of about $2.9 billion, by seeking financing assurances from creditors, among other steps.

“After the IMF program is completed, we will consider joining another, by providing additional financial resources to join other rescue packages for Sri Lanka,” said Asakawa, a former Japanese vice finance minister for international affairs.

Asakawa pointed to the risks of abrupt capital outflows from Asia and the prospect of very sharp currency depreciation continuing for some time, as the U.S. central bank tightens monetary policy aggressively.

However, Asia has become more resilient against financial turmoil, with an improved current account balance and sufficient accumulation of foreign reserves, than it was during the Asian financial crisis of the late 1990s, he added.

National Productivity Commission launches work under economic reforms

Radi
-
0
National Productivity Commission launches work under economic reforms

By: Staff Writer

Colombo (LNW): In a bid to revive the country’s struggling economy, Sri Lanka has implemented a comprehensive economic reforms agenda, the President’s Media Division (PMD) reported.

Accordingly, the government has initiated several key recovery strategies, with the establishment of a National Productivity Commission being a flagship project.

Despite on-going economic constraints, the government allocated funds for the commission’s establishment in the Budget 2023. An inter-ministerial Working Group has been appointed to lead the task, comprising members from various ministries, departments, and organizations.

The Working Group aims to explore international insights on productivity materialization, and to this end, the Government reached out to the Australian Productivity Commission, which is recognized as an international standard. In response, the Australian High Commission in Sri Lanka expressed their willingness to support Sri Lanka in this regard.

To facilitate knowledge-sharing, the Australian Productivity Commission conducted a virtual session on April 27th, 2023, for the Sri Lankan Working Group assigned to establish the commission. The event was hosted by the Presidential Secretariat.

President Ranil Wickremesinghe has proposed to establish the National Productivity Commission as an independent institution to investigate and study productivity issues based on quantitative and qualitative data.

According to the Head of State, this commission will also be tasked with making recommendations on trade adjustment schemes, and advising the government on micro-economic policies related to industries and commerce and trade.

It will also provide recommendations on the elements and aspects requiring changes to the existing regulations on social and environmental issues.

The National Productivity Commission will train and guide the employees in industries that are closing down due to economic instability and the difficulty of adapting to new technologies, enabling them to find new job opportunities and if not, propose a compensation mechanism for employees who lost their jobs.

He said Rs 100 million would be allocated to establish the National Productivity Commission.Meanwhile, the operations of the National Productivity Secretariat will also be incorporated into the proposed commission.

This initiative marks another engagement between the Government of Australia and the Government of Sri Lanka, reflecting their support for Sri Lanka’s economic reforms and revival.

Dialog Axiata and Airtel to syndicate operations in Sri Lanka

Radi
-
0
Dialog Axiata and Airtel to syndicate operations in Sri Lanka

By: Staff Writer

Colombo (LNW): Dialog Axiata Plc, Axiata Group Berhad and Bharti Airtel Limited have entered into a binding term sheet to combine operations of Bharti Airtel Lanka (Private) Limited, Airtel’s wholly-owned subsidiary with Dialog, a subsidiary of Axiata Group Berhad.

The proposed transaction envisages Airtel being granted a stake in Dialog, representing the fair value of Airtel Lanka. Airtel would accordingly be issued new shares in Dialog upon completion of the transaction.

Discussions with respect to the proposed transaction are ongoing between the Parties and also with the relevant regulatory authorities as per applicable laws and regulations, according to a corporate disclosure filed with the Colombo Stock Exchange.

The proposed transaction is subject to signing of definitive agreements and necessary closing conditions including applicable regulatory and shareholder approvals, it further said, adding that the parties involved will issue further announcements in due course should there be any material developments.

The deal is subject to the signing of definitive agreements and meeting necessary conditions, including regulatory and shareholder approvals,” the companies said.

They added that discussions with respect to the proposed transaction are ongoing between the parties and also with the relevant regulatory authorities as per applicable laws and regulations.

Dialog Axiata is Sri Lanka’s largest mobile network operator with 17.4 million subscribers, accounting for 57% of the country’s mobile market.

Airtel Lanka, one of the fastest-growing telecom service providers, has over 5 million customers and operates in 25 administrative districts.

It has a distribution network of over 50,000 retailers with 4G and 2G services present across major towns in Sri Lanka.

This announcement comes a day after Airtel announced a strategic partnership with Bridgepointe Technologies, a tech advisory firm assisting mid-market and enterprise companies in optimizing tech investments and business results.

This partnership enables US enterprises seeking to expand into India and Africa to leverage Airtel’s digital infrastructure solution.

“At Airtel, we have massive network investments, a strong product ecosystem and a large customer base, especially in India and Africa.

We are delighted to collaborate with Bridgepointe to extend our extensive suite of products to their customer base,” said Vani Venkatesh, CEO, Global Business, Bharti Airtel.

On Tuesday, shares of Bharti Airtel ended at 1.14% lower at ₹790.20 apiece on the National Stock Exchange.

Sri Lanka’s Foreign Affairs Minister holds cordial discussion with India’s Finance Minister

CN
-
0
Sri Lanka’s Foreign Affairs Minister holds cordial discussion with India’s Finance Minister

Foreign Affairs Minister of Sri Lanka, Ali Sabry, met with India’s Finance Minister, Nirmala Sitharaman, on May 3 to discuss the further strengthening of bilateral relations and economic partnership between the two nations. The meeting, held on the sidelines of the 56th Annual Meeting of the Board of Governors of the Asian Development Bank (ADB) in Seoul, was attended by around 3,000-4,000 participants, including Ministers of Finance, Governors of Central Banks, Senior Officials of the major global banks, companies, and media.

During the meeting, Sabry expressed his gratitude to Sitharaman and the Indian government for their assistance and support towards Sri Lanka during its difficult and challenging times, contributing positively towards its recovery process. The foreign minister will also deliver a statement at the Governor’s Business Session on May 4, among other interventions during the period.

The Director General of the Department of External Resources, Ajith Abeysekera, is accompanying Sabry on the visit.

NBRO Issues Landslide Warnings for Several Districts as Heavy Rains Continue

CN
-
0
NBRO Issues Landslide Warnings for Several Districts as Heavy Rains Continue

The National Building Research Organization (NBRO) has issued landslide early warnings for several areas in Badulla, Matara, and Kegalle districts today due to heavy rains. A Level 1 (Yellow) warning has been issued for Haldummulla and Passara Divisional Secretariat divisions in Badulla district, Kotapola and Pasgoda Divisional Secretariat divisions in Matara district, and Kegalle Divisional Secretariat division in Kegalle district.

According to the NBRO, the rainfall within the past 24 hours has exceeded 75 mm, and people living in the aforementioned areas have been urged to be on high alert about the possibility of landslides, slope failures, rock falls, cutting failures, and ground subsidence.

Meanwhile, the Department of Meteorology has warned that the prevailing showery condition over the island is expected to continue for the next few days. Showers or thundershowers are expected to occur over most parts of the island after 1.00 p.m., according to the weather report. Coastal areas of Western and Southern provinces, as well as Jaffna, Kilinochchi, Mannar, and Puttalam districts, may experience showers during the morning hours too.

Fairly heavy showers of about 100 mm are expected in parts of Eastern and Uva provinces and in Polonnaruwa district. Other areas of the island may also experience fairly heavy showers above 75 mm.

The general public is advised to take adequate precautions to minimize damages caused by temporary localized strong winds and lightning during thundershowers. As the heavy rains and adverse weather conditions continue, people in the affected areas are urged to stay alert and take all necessary measures to ensure their safety.

1...1,6811,6821,683...2,533Page 1,682 of 2,533