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SL manufacturing and services badly hit by socio economic crisis

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Sri Lanka’s Business Activities wil badly affected for the next three months further i due to prolonged power outages, supply shortages and sharp increases in prices of fuel, gas and other inputs, increase in borrowing costs, subdued demand for non-essentials and economic, political and social instability in the country, Central Bank analysys predicted.

The country’s manufacturing and service sectors suffered a set back significantly in April 2022, following the seasonal pattern and indicating a contraction in manufacturing activities on a month-on-month basis.

Accordingly, manufacturing recorded a decline in Production, New Orders, Stock of Purchases, and Employment subindices compared to the seasonal peak in month of March.

The decline in Production, particularly observed in the manufacture of food & beverage and textiles & apparel sectors, was due to fewer working days during the month owing to new year holidays, and supply-side constraints including ongoing power outages/energy shortage.

Decrease in New Orders, especially witness in the manufacture of food & beverage sector, was due to end of the festive season demand. Employment also dropped on a month-on-month basis with the increase of absentees following the new year holidays.

Further, Stock of Purchases declined mainly due to the unavailability of required quantities in the domestic market and difficulties in opening letters of credit for importing materials.

Many respondents in the manufacturing sector highlighted that they had to slow down production due to the unavailability of required raw materials, The Central Bank analytical report revealed.

Meanwhile, Suppliers’ Delivery Time lengthened at a higher pace in April 2022, mainly on account of international logistical issues, clearance delays due to forex payment issues, and diesel shortage.

As the manufacturers are concerned about the growing uncertainties from multiple fronts, the overall expectations for manufacturing activities for the next three months deteriorated further in April 2022.

Services sector performance was not up to the expectations in April 2022 indicating a deterioration across the sector amid the prevailing economic, social and political instability in the country.

New Businesses declined in April 2022 for the first time since August 2021, particularly with the deteriorations observed in accommodation, food and beverage, insurance, real estate and transportation sub-sectors.

Business Activities also declined in April 2022 due to the continuous disturbances to business operations mainly attributable to prolonged power outages and difficulties in sourcing inputs including fuel and gas.

Further, the subdued demand amid reduction in purchasing power, drop in tourist arrivals and uncertainties in the country also affected the business activities of some sub-sectors negatively. Accordingly, accommodation, food and beverage, professional services, education, insurance and real estate sub-sectors recorded major contractions during the month.

Nevertheless, several companies, mainly in wholesale and retail trade and other personal activities sub-sectors, saw progresses supported by the festive demand.

Employment recorded a marginal decline in April 2022 due to contract expirations, retirements and resignations. Meanwhile, Backlogs of Work increased for the first time since September 2021 due to power outages, shortages of supplies and transportation difficulties.

Vesak Day Blessing Ceremony 2022

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On the 14th of May 2022, the Embassy of Sri Lanka in Viet Nam carried out the Vesak Day Blessing Ceremony of 2022, in collaboration with Bai Dinh Pagoda in the Ninh Binh Province of Viet Nam, Linea Aqua Viet Nam Co. Ltd, and Sri Lanka International Buddhist Academy (SIBA Campus) in Pallekele, Kundasale.

The event commenced with a traditional Pooja to the Lord Buddha, which was followed by blessings led by Most Ven. Thich Minh Quan, Chief Monk of Bai Dinh Pagoda, and other resident Monks of the Pagoda. A pre-recorded sermon conducted by Ven. Viharagala Pannaloka Thero, Lecturer of SIBA Campus, was also relayed to the congregation.

Addressing the worshippers, Most Ven. Thich Minh Quan expressed his profound gratitude to the Embassy for organizing the event at Bai Dinh Pagoda for the first time. Most Ven. Quan recognized the contributions of Sri Lanka to preserving and propagating Buddhism, of which he was also a beneficiary. He blessed Sri Lanka and its people and prayed for the good health and happiness of the peoples of Viet Nam and Sri Lanka.

Ambassador Prasanna Gamage acknowledged the dedicated support extended by Bai Dinh Pagoda in making the event a success. During his remarks, the Ambassador emphasized the importance of the teachings of the Lord Buddha to the modern world – in particular, the principle of impermanence and its relevance to human life.

On behalf of the Monks and the Management Committee, Most Ven. Thich Minh Quan and Mr. Nguyen Van Truong, the lay custodian of Bai Dinh Pagoda, donated a sum of USD 20,000/- as a contribution to the economic relief efforts in Sri Lanka.

A dansal was also organized on the Pagoda premises, which was a novel experience for the more than 300 Vietnamese Buddhist worshippers who gathered at the Pagoda. Mr. Sanjaya Lakpathirana, Director, Linea Aqua Viet Nam Co. Ltd., and the staff generously contributed to the dansal.

Embassy of Sri Lanka

Ha Noi

Viet Nam

17 May 2022

Wheat Flour prices increased again!

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The All Ceylon Bakery Owners’ Association states that a company that imports wheat flour has taken steps to increase the price of a kilogram of wheat flour by another 35 rupees.

The Chairman of the All Ceylon Bakery, N.K. Jayawardena stated that wheat flour is imported by only two companies and one of them has increased the price yesterday (17).

Accordingly, the wholesale price of a 50 kg bundle of wheat flour has now risen to Rs. 12,500 and some time ago it was below Rs. 4,000.

The CID to record statements today from 6 MPs including Johnston

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It is reported that the CID is scheduled to take statements from 06 parliamentarians today (18) regarding the attack on the Galle Face protest.

Accordingly, statements are to be recorded from Johnston Fernando, Sanjeewa Edirimanne, Rohitha Abeygunawardena, CB Ratnayake, Indika Anuruddha and Pavithra Devi Wanniarachchi.

Sources said that it will be carried out in Parliament.

PM decides to cut the expenses of the PM’s Office by 50%

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It is reported that the Prime Minister Ranil Wickremesinghe has decided to cut the expenses of the Prime Minister’s Office by 50%.

It is also stated that 26 employees who were attached to the Prime Minister’s Office by other government agencies have been sent back to their original institutions and 16 vehicles obtained from other institutions have been returned.

Accordingly, Ranil Wickremesinghe has instructed the Prime Minister’s Office to cut costs by using a small staff and limited resources. The Secretary to the Prime Minister Saman Ekanayake has said that steps should be taken to reduce the expenditure of other government agencies and ministries following this initiative.

96 million was spent on the Prime Minister’s Office in January this year, 96 million rupees in February and 126 million rupees in March.

Sajith urges Sri Lankans abroad to use the formal banking channels for remittances

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Opposition Leader Sajith Premadasa has called on all Sri Lankans living abroad to send money to Sri Lanka through the banking system.

He said that this is the kind of support that should be given to the country at the moment and kindly requested the support of others in this regard.

Following is the Twitter message released by the Leader of the Opposition.

Pohottu MPs Indika and Weerasinghe seize two journalists’ mobile phones!

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SLPP MPs Indika Anuruddha and D. Weerasinghe have threatened two journalists who were covering Parliament yesterday (17) and seized their mobile phones. The Free Media Movement has released a statement saying that they strongly condemned the incident.

Following is the statement issued by them.

No photo description available.

Govt bears interest rate hike burden in billions of rupees

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The sharp hike in interest rate to severely hit the Government most as analysts estimate one percentage increase translates to Rs. 20 billion per annum.

Maturing public debt is Rs. 2 trillion this year and 10% increase in interest rate fuels debt servicing cost by a further Rs. 20 billion per 1% hike.

Several financial analysts said that the public debt (Treasury Bills and Bonds) is estimated at Rs. 9 trillion, the average maturity of which is four and half years.

On that basis the value of such maturing public debt is Rs. 2 trillion per annum and a 10% increase in interest rate adds a Rs. 200 billion extra per annum.

This works out to Rs. 20 billion per 1% increase in interest rate. Since the policy rate hike, the interest rate has risen by 12%, they added.

On the basis of 4 and 1.2 average maturity the additional cost of debt servicing is a staggering Rs. 900 billion.

On 3 April in the tightest ever monetary policy stance the Monetary Board decided to double policy rates by 700 basis points (7%).

It justified the move saying a substantial policy response is imperative to arrest the build-up of added demand driven inflationary pressures in the economy.

Another reason for the rate hike was the escalation of adverse inflationary expectations, to provide the required impetus to stabilise the exchange rate and also to correct anomalies observed in the market interest rate structure, Central Bank said.

Since then, the benchmark 364-day Treasury Bill yields have doubled to 24% as of last week from 12% as at end March. From a year ago however it is a near five-fold increase.

“The Government is to increase taxes such as VAT and Income Tax to raise the revenue to GDP ratio.

However, any additional revenue garnered from this move gets negated due to the higher cost of debt servicing following the hike in interest rate,” analysts opined.

The next monetary policy review announcement by the Monetary Board is due on Thursday 19, Central Bank revealed. .

Some analysts expect a further tightening stance. If this happens the Government’s debt servicing cost will soar further, analysts warned.

The sharp fall in the value of the rupee helped swell the amount of outstanding loans and advances to the private sector in March, as the banks revalued their foreign currency assets and liabilities at the weaker rupee stood at the end of the month compared to a month earlier.

This gave a sudden boost to the private credit numbers stood at end-March, which otherwise had been anaemic and lacklustre, as the banks grew skittish over the deteriorating economic conditions and their consequences on their borrowers’ solvency and thereby the asset quality.

The latest private sector credit growth numbers published by the Central Bank for March showed that the licensed commercial banks’ outstanding private sector credit growth had swollen by an unprecedented Rs.478.0 billion, marking the biggest expansion in private credit in a single month

EU grants Rs.60 million to support small tourism businesses

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The European Union (EU) has granted Rs 60 million to the Sri Lanka Tourism Development Authority (SLTDA)  to disburse among Covid-19 affected small tourism businesses in  the island.   

The Delegation of the European Union inSri Lanka (EU) and the Sri Lanka Tourism Development Authority (SLTDA) recently awarded the first three grants – worth Rs.1 million each – to small tourism enterprises to help them accelerate their post COVID-19 recovery and build a stronger base for growth as tourists start returning to the country. 

Grants will be disbursed to up to 60 small and medium enterprises (SMEs) over the next two months, under the EU-funded ‘Tourism Resilience Project’ (TRP), the EU said.

The tourism industry has been gradually emerging from the COVID-19 pandemic, but is now being affected by the Russian invasion of Ukraine and by the ongoing crisis in the country. Many SMEs have been slow to recommence their businesses due to a lack of funding.

EU Ambassador in Sri Lanka, Denis Chaibi speaking at the event to hand over the first grants said: “Small enterprises in the tourism sector were hit the hardest by the pandemic and needed support on multiple fronts, including grant funding. 

The current difficult situation in the country and Russia’s invasion of Ukraine is pushing local tourism industry yet into another phase of uncertainty. 

Therefore, the EU is working together with the SLTDA to put in place a series of activities for businesses to reestablish their operations in the short term and build a stronger base for the future growth. 

This includes access to finance, business incubation, and supply chain integration to help build a more resilient, sustainable, and safety conscious industry”.

SLTDA Chairperson Kimarli Fernando said: “There are over 550,000 people, directly and indirectly, engaged in the tourism industry—most of them working in SMEs and over 3 million dependent on tourism. 

The EU  took a proactive approach from the start of the pandemic by putting in place measures to mitigate the challenges faced by the industry. 

It has supported Sri Lanka in this process, helping jointly develop a wider programme to build resilience in the industry and support the development of authentic signature experiences.”

Over 280 grant applications were received from tourism SMEs across the country and were subject to a multi-level screening process, before being shortlisted for the funding. 

Several criteria were put in place to qualify, including the size of the business, the number of employees, and their plan to regrow their businesses and retain staff. SMEs were also evaluated on their commitment to environmental sustainability.

The grants are part of the EU’s 5.7 million euro (Rs.1.3 billion) investment in support of Sri Lanka’s tourism recovery after the COVID-19 pandemic. 

The Tourism Resilience Project (TRP) is one of the interventions under this larger EU’s support package. Workforce and enterprise capacity-building projects are key components of the TRP project to ensure staff retention and attract back lost talent, upskilling, and foster a start-up culture in existing and new tourism destinations in the island

Sri Lanka Mission in Maldives organises Blood Donation to mark Vesak

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The Sri Lanka High Commission in Maldives organised a blood donation programme today (14.05.2022) to mark the auspicious day of Vesak.

The programme was the first ever blood donation initiative, undertaken by the Sri Lanka Mission with the active support and participation of the Sri Lankan  community and was sponsored by  SriLankan Airlines and Bank of Ceylon.

The one day blood donation programme was conducted at the Maldives Blood Services (Thalassemia Centre) in the Maldivian capital, Malé under the   distinguished patronage of the Minister of State for Health of Maldives,  Dr. Shah Abdulla Mahir and with the participation of the Mission staff, the Country Manager of SriLankan Airlines, Mr. Fawzan Fareid, the Country Manager of Bank of Ceylon, Mr. Govinda Arampath and members of the Sri Lankan community.

Speaking at the inauguration of the programme,  the Maldivian State Minister of Health, Dr. Mahir conveyed the sincere appreciation of the Maldivian government  to the  Sri Lanka High Commission and the Sri Lankan community in Maldives  for this noble endevour in organising a blood donation programme. 

He highlighted the fact that there is an acute need for blood, not only for surgeries in hospitals but also for the considerable number of Thalassemia patients, who require regular blood transfusions, which is a matter of survival for them.

Delivering the welcome remarks,  the Sri Lanka High Commissioner, A.M.J. Sadiq thanked State Minister Dr. Mahir for his presence and patronage of the blood donation programme at short notice and stated that the event had been organised as a gesture of goodwill and friendship by the Sri Lankan community towards the Maldivian people.  He thanked the members of the Sri Lankan community and well-wishers who had volunteered  to donate blood on the occasion to mark Vesak, signifying the Birth, Enlightment and Passing away (Nirvana) of Lord Buddha.  He also thanked the Country Managers of SriLankan Airlines and Bank of Ceylon, Malé, for their sponsorship of the programme.  The two Country Managers in their brief remarks, pledged their continued support to the Sri Lanka High Commission in all future community related activities too. 

The event was a resounding success and had to be extended beyond the scheduled closing time to accommodate the 65 volunteers who  donated blood, far  in excess of the 40 volunteers  who had signed up for the programme.

Sri Lanka High Commission

Malé

Maldives

17 May, 2022