The government is taking prompt action to pay the money owed to the public construction contractors in several phases Minister of Urban Development and Housing, Prasanna Ranatunga revealed.

Accordingly, before the end of this year, an amount of 20 billion rupees is expected to be given for that purpose. Mr. Ranatunga also says that the government is currently working to pay all the remaining arrears in the first quarter of next year.

In addition, a committee headed by the Secretary of the Ministry of Urban Development and Housing has also been appointed to look into the possibility of providing concessions to those in the construction industry. The Minister also said that the committee will meet soon and discuss the future measures at length.

Sri Lankan government construction contractors numbering around 3000 are in an urgent need of funding for their survival as they have to recover Rs. 150 billion outstanding payment for the work completed in public construction projects including buildings and infrastructure facilities.

This has resulted in widespread unemployment at present due to closing down of small and medium scale construction companies and if the delay in outstanding payments continues, it could affect the livelihoods of about 1.2 million people in the sector, Ministry of Housing and Development sources said.

President Ranil Wickremesinghe in his capacity as the Finance Minister has directed the Department of Treasury Operations to explore the possibility of making a payment of Rs.50 billion considering the dire straits of government contractors.

The Ministry has already suspended the development project work and the repayment of dues to contractors but it is making arrangements to pay at least Rs. 20 billion out of the total amount to them by the end of this year in accordance with cash availability, a senior Treasury official disclosed.

It is also considering releasing at least Rs. 500 million from the outstanding payments to the Provincial and District level projects, to provide some relief to small- and medium-scale construction companies.

The Ministry is to formally request for funding from the Central Bank by raising the relevant cash through Treasury bills and Treasury bonds to meet any urgent financial requirements, he said.

Some of these contractors have obtained loans by mortgaging their house and property to carry out the construction work and they are now in danger of losing their homes and assets to banks, several contractors complained.

In addition, the fuel shortages and power outages have affected the efficient production process of the industry, affecting all the stakeholders, from small and medium enterprises to the self-employed.

The overall rate of inflation as measured by the Colombo Consumer Price Index (CCPI) in October saw its point-to-point decreasing for the first time in 13 months to 66.0% against its previous month of 69.8% while its annualized average increased to 38.3% against 33.4%. Department of Census and Statistics announced.

This was an about turn in October, bringing an end to the current spell of runaway inflation, which set off more than a year ago when the global commodities prices started rising, caused by the surge in demand amid the supply chain bottlenecks and emergence of foreign currency shortages in the domestic market, economic analysts said.

The core inflation (Y-o-Y), which reflects the underlying inflation in the economy decreased to 49.7% in October 2022 from 50.2% in September 2022, while annual average core inflation increased to 27.8% in October 2022 from 24.1% in September 2022.

According to the Department of Census and Statistics, the Year on Year inflation of Food Group decreased to 85.6% in October 2022 from 94.9% in September 2022 and the Year on Year inflation of Non-Food Group also decreased to 56.3% in October 2022 from 57.6% in September 2022.

However, the current cost of living is not even nearly eased to some extent , as the country is still grappling with the runaway prices and its job will only be completed when the annual increase in inflation is brought down to its desired level of between 4 to 6 percent, which is expected to happen in 2024.

While the October inflation may have come as somewhat a consolation, it is unlikely to compel it to take its foot off the monetary brakes for some time until the evidence shows that the price decline is durable and comes down meaningfully towards its desired levels.

In the run up to the October inflation print, there were signs that the prices might have peaked in September, as the monthly prices, particularly in the food basket, showed some cooling.

The inflation measured by the Colombo Consumer Price Index, the authorities’ preferred inflation gauge, rose 66 percent in October from a year ago, from 69.8 percent through September, after the Central Bank raised the interest rates to sky high levels early this year, in its relentless pursuit to tame the prices through demand destruction policies.

The overall consumer prices declined 0.4 percent in October from a month earlier while the food prices also fell by 2.0 percent after decelerating for three consecutive months.

However, the annual food prices are still at hyperinflationary levels, with such prices having soared by 85.6 percent, coming off a peak of 94.9 percent reached in September, which caused a large majority to significantly cut down on their food intake while pushing the poor and vulnerable into starvation.

The earnings reports of companies for the September quarter showed a broad base softening in demand, due to the escalated cost of living and deep economic downturn.

However, in the last few weeks, there was some easing in the prices of certain essential goods, after the foreign currency conditions in the domestic market improved somewhat, enabling imports and the significantly dampened demand.

However, the prices still remain manifolds higher than where they were a year ago, after the rupee collapsed, shedding nearly 100 percent of its value