Sri Lanka’s worst economic crisis since independence is spinning off a “serious food crisis,” said World Food Programme Representative and Country Director Abdur Rahim Siddiqui, while describing a toxic mix of spiking prices, shrinking crop yields, the fallout of the war in Ukraine and a lack of state funds to pay for key supplies.
“The economy has collapsed and the country has run out of the money needed to import essentials like fuel, food and fertiliser,” he said, and urged more donor support to WFP and other humanitarian responders.
A recent assessment by WFP and the UN Food and Agriculture Organization (FAO) showed that 6.3 million people – nearly 30 percent of the population – are food-insecure. It comes as WFP warns of an unprecedented global food crisis.
Sri Lanka is grappling with a record 90 percent food inflation, making even staples such as rice unaffordable for millions of families. The average monthly cost of a nutritious diet has soared 156 percent since 2018.
The WFP highlighted that multiple factors are shaping Sri Lanka’s food crisis. In its bid to make farming more environmentally sustainable, the government last year banned imported chemical fertilisers.
However, the move sharply reduced agricultural output – and while import rules have since been eased, the effects remain.After two consecutive harvest failures, a third would be “catastrophic,” said Siddiqui.
Sri Lanka is also feeling the aftershocks of the war in Ukraine. Along with disrupting key grain exports and driving up global food and fuel prices, the conflict has battered two of its top tourist markets – Russia and Ukraine itself – reducing the availability of hard currency and, in turn, Sri Lanka’s ability to import, with far-reaching effects.
“Around 200,000 fishermen are out of their livelihoods because this country doesn’t have fuel following import restrictions. We need to provide support to the smallholder farmers.”
“International organisations like WFP have a duty to step in to provide emergency food assistance to the most vulnerable cross-section of the population,” added the WFP official.
WFP kicked off its emergency response operation in mid-June, distributing food vouchers to pregnant women in some of the underserved sections of the capital.
The programme, via its emergency response aims to scale up and reach 3.4 million people with food and nutrition assistance.
WFP says rising prices reduce access to food for millions in Sri Lanka:
LIOC records remarkable performance in 1Q of 2022 amidst SL economic crisis
With the country facing the most challenging times marred with steep unprecedented inflation, severe foreign exchange crisis, highly volatile international oil prices, threat of new COVID variants and fears of global recession, the operational environment has been full of uncountable bottlenecks.
Notwithstanding the economic crisis , highly volatile international oil prices and fears of global recession, Lanka Indian Oil Corporation’s(LIOC’s) performance during the Q1 22-23 has been remarkable , company officials said.
with an increase in revenue by nearly 196% Y-o-Y from Rs. 16.86 billion to Rs. 49.93 billion mainly on account of high cost of product, in view of steep rise in international oil prices.
The Sales volume of the company also increased to 139,762 MT from 135,354 MT on a Y-o-Y basis. With Net Profit after Tax at Rs. 9.93 billion, the Earnings per share of the company increased to Rs. 18.64 in Q1 22-23 as against Rs. 0.51 in Q1 previous year reflecting Q1’s robust performance.
However, the incessant devaluation of currency from Rs. 299 to Rs. 367 per $ coupled with extremely high borrowing costs, raising the finance expenses during the quarter to Rs. 1792 million as against Rs. 123 million Y-o-Y, significantly affected Q1’s performance and remains an area of concern, being uncontrollable.
Describing the robust performance, LIOC Managing Director Manoj Gupta said: “The company ventured into a new line of business of selling diesel directly to Sri Lanka industries in dollars .
These included export houses, tourism services providers registered under Sri Lanka Tourism Development Authority, licensed telecommunication service providers and Power Generation Companies.
The collection in $ eliminated the exchange rate risk and allowed sale of fuel to industries at a predetermined price.
“On the other hand, it met the essential fuel requirement of innumerable industries which are responsible for the livelihoods of millions of employees and their dependent family members.
It is beyond imagination to believe the repercussions in case fuel requirements were not met on time he added.
LIOC workforce at Trincomalee Terminal had round the clock operation of the terminal for more than three weeks with limited resources to supply fuel not only to industries but also to ensure supply of 7500 MT of diesel to CPC for onward dispatches for essential services, he disclosed.
Company’s Bunkering business has registered strong exceptional performance, the main contributor has been the exchange gain in view of depreciation of currency, as the sales take place in $.”
Revision on electricity bills next Tuesday: PUCSL
The revisions on electricity tariffs will be declared next Tuesday (09), said Chairman of the Public Utilities Commission of Sri Lanka (PUCSL) Janaka Ratnayake speaking to media this morning (07).
“The increase of electricity bills is to be announced next Tuesday. Accordingly, by next week we can inform consumers and the public how the electricity bill will increase. We made a request to the Treasury to see if they would provide subsidies to low-income families during the revisions, but we did not receive a good response. Nevertheless, we will be presenting necessary provisions to avoid that situation in the revision of the electricity bills,” he said.
MIAP
Opposition Leader proposes to build country via committees (VIDEO)
The Samagi Jana Balawegaya (SJB), together with the Samagi Jana Sandhanaya, as the main Opposition of the country, have decided to go on a common journey and it would be an all-party, unified country-building programme in which the opposition parties will not cater to any deals such as sharing ministries, said Leader of the Opposition Sajith Premadasa, speaking to the electorate assembly of Deraniyagala SJB Electorate Organiser Ranjith Polgampala yesterday (06).
The event was held under the patronage of the Opposition Leader and was attended by many people.
The Opposition Leader pointed out that the familiar and disgusting political culture must not be brought back and that the country should be built by re enabling a parliament committee system vested with executive power. Accordingly, an effective programme building the country can be backed via such a committee system instead of gaining ministries, Premadasa emphasised.
The SJB, therefore, will be extending its support to a common programme that drives the country towards prosperity, he added, reminding that Sri Lanka as a whole was thrown into a very vulnerable state due to a wrong decision take by the people at the 2019 Presidential Polls.
The Opposition Leader stressed that as of now, the 22 million people of the country are helpless due to the conduct of the unruly,arrogant and heartless government.
He further added that it takes more than five years to restore the country to the state it had in 2019 and the people shall not be fooled by lies that it can be restored within two-to-three months.
MIAP
Former President Sirisena reveals of an obstacle to an all-party govt (VIDEO)
Leader of the Sri Lanka Freedom Party (SLFP) and former President Maithripala Sirisena speaking to reporters after a ceremony held in the Party Headquarters yesterday (06) said the process of the formation of an all-party government is seemingly being met with an obstacle, one, however, he refused to elaborate.
Q: How is the programme of the all-party government with the President?
“We were invited for negotiations. We went. Now the responsibility of doing the works is at the side of the government. But I think that there is an obstacle now. Many members in Parliament are willing to. But another group is not.”
Q: Are there people who do not want this all-party government to be formed?
“Looks like it”
Q: Are they in the Pohottu Party? Who are they?
“You can find out, can’t you?”
MIAP
Rebellion can only be controlled by repression. Galleface a small problem: Namal
In the birth of a rebellion, one can only be controlled by repression and there is no other way, Ruling Party MP Namal Rajapaksa said, commenting about the Galleface protests with the reporters after attending a meeting with the Prime Minister at the Sri Lanka Podujana Peramuna (SLPP) Headquarters two days ago (05).
“As the Sri Lanka Podujana Peramuna, we will be extending our support to His Excellency the President on every good matter for the country.”
Q: The protesters at the moment are withdrawing. In the meantime it is said that repression is in operation?
“In the birth of a rebellion, one can only be controlled by repression. There is no other way, is it?”
Q: Are you suggesting that this method is good?
“First thing is law and order has to be maintained. So, this Galleface was but a small problem.”
MIAP
BOI launches online visa recommendation system to attract investors
Aimed at enhancing the Ease of Doing Business and accelerating digital transformation, the Board of Investment (BOI) has completed the integration of the visa recommendation system in coordination with the Department of Immigration and Emigration and the Ministry of Defence.
It is aimed at providing online visa recommendation for potential investors visiting Sri Lanka and all the enterprises that fall under the purview of the BOI.
The BOI had already completed the online system up to the point where investors/enterprises could submit the visa application online and obtain the approved application from the BOI.
For this, the investors were required to make three physical visits to the BOI head office. However, with the integration with the Department of Immigration, there is no need for the investors to visit the BOI at all.
Under the newly launched system, visa recommendations will be granted under three visa categories namely, entry visas, residence visas, and when extending visas. In addition, the applicants, who will be eligible to apply for this, are the investor, employees, and dependents of the investor, and selected employees.
One of the major benefits enjoyed by investors/enterprises out of the novel system, is the elimination of investors’ physical presence at the BOI saving their time. Investors can also monitor the online portal and review the status of the process.
Upon the completion of the process, the applicants will be notified via an SMS and email alert. Then, the applicants can take the passport and relevant documents to the Immigration Department where they will be issued the visa.
Furthermore, this system will also safeguard against misuse in submission of information, down to the strict assessment.
BOI Director General Renuka M Weerakone, stated “the implementation of the online visa recommendation system is yet another milestone in the journey of digitizing the entire investor experience to ensure seamless delivery of services to investors,”
“The BOI hopes this system will curb inconveniences faced by the investors/enterprises and will further strengthen the digital transformation of work with the respective line agencies and ministries. In addition, we are happy to hear the feedback on the process and make necessary adjustments if there are any shortcomings,” Ms. Weerakone added.
Cabinet nod to extend duty concessions to apparel industry
The Cabinet of Ministers at its meeting on Monday approved granting duty concessions to import appliances and items needed for the apparel industry.
“The duty concessions will be granted to import items that are not manufactured locally,” Cabinet Co-Spokesman and Minister Bandula Gunawardena told journalists at the post-Cabinet meeting media briefing this week.
The proposal to this effect was submitted by Industries Minister Dr. Ramesh Pathirana to provide relief to the apparel industry which is dealing with price hikes of raw materials and the prevailing unfavourable economic situation in the country.
The apparel exports have become one of the main sectors earning much-needed foreign exchange despite multiple challenges of the COVID pandemic and ongoing economic crisis.
In June, apparel exports recorded an all-time high figure for a month of $ 537 million as well as in the first half with $ 2.8 billion, reaffirming the sheer resilience of the private sector-driven industry.
Investors are cashing in on the strong prospects of Sri Lanka’s apparel and textile exports sector, the country’s main export industry, which caters to some of the leading fashion brands globally.
The BOI has thus far signed agreements worth $ 76 million for both new investments and expansions in the apparel sector in 2022. The total pipeline – together with pending approvals for investments and expansions in apparel – currently stands at $ 165 million.
Besides expanding apparel manufacturing facilities, some investors are also eyeing lucrative opportunities in raw material production and backward vertical integration in the Sri Lankan apparel industry.
The apparel and textile sector recorded us$ 2.25 billion in export earnings during the during the first quarter of 2022 reflecting an 86% increase year-on-year.
FDI inflows to the apparel sector – considering the value of agreements signed with investors too as increased fourfold up to the end of June 2022 in comparison to January-June of the corresponding period in the previous year.
“Considering the challenges that Sri Lanka has overcome in the past, investors remain confident of the country’s prospects and resilience,” said Board of Investment Director-General Renuka M. Weerakone.
“Due to strong interest, especially among apparel industry investors, we recently set up three new re-investment teams to support investors. We have been receiving multiple queries regarding the availability of suitable land from investors looking to further expand their apparel manufacturing plants in Sri Lanka since many of them have seen an increase in orders.”
Colombo Port City begins strategic businesses to generate foreign exchange
The Colombo Port City is set to start businesses of strategic importance with offshore companies, authorized persons, duty-free retail operations following the cabinet approval for its Duty-Free Regulations soon.
These key regulations awaiting cabinet approval were completed, together with suitable draft policies and procedures for identified thrust sectors, designed with extensive benchmarking studies in fiscal and non-fiscal areas.
The facility will be operated by two of the world’s leading DF operators, positioning Colombo Port City as a regional shopping destination.
Additionally, an expedited approval for investor agreement and licensing processes for potential investors and authorized persons have also been completed.
The Colombo Port City Commission now headed by young dynamic business leader Dinesh Weerakkody has expedited the work to generate much needed foreign exchange in to the country attracting leading investors world wide.
The Commission has granted six fresh Indenture of leases for a 99-year period to the investors valued at approximately $ 200 million and investors have projected a collective investment commitment of $ 600 million.
The update on the leases is contained in the Colombo Port City Economic Commission’s second biannual progress report which covers the activities of the Colombo Port City project from January to June 2022.
It said the Colombo Port City has received 42 out of the 74 plots technically completed by the project company, for which completion certificates have been issued to the project company.
Out of the 34-project company marketable land plots granted to the project company on a 99-year lease basis, six plots were released back to the Commission by the project company.
Additionally, an expedited approval for investor agreement and licensing processes for potential investors and authorized persons have also been completed.
The Commission, in collaboration with the Department of Immigration and Emigration (DIE), is streamlining and automating the visa application and approval process for three defined visa types under the Colombo Port City law.
These are Investor Visa (10 years), Employment visas (dependent on the contract tenure), and long-term Residence visas (dependent on lease tenure) and include all dependents.
An expedited process has been established with the Registrar of Companies in Sri Lanka for ease of setting up companies under Colombo Port City law, under the Single Window Facilitation process mandate defined in Section 30 of the CPCEC Act.
The Monetary Board and Ministry of Finance have approved full the CPCEC regulated offshore licenses for four banks initially.
The Central Bank has created a new class of account available for all banks under its regulatory purview, the Colombo Port City Investment Account designed to facilitate the inflow of funds to be used for investing in Colombo Port City.
The Commission is conducting a detailed ESG (Environmental, Social, and Governance) benchmarking study of the most climate-friendly cities in the world to apply best practices in the development of Colombo Port City infrastructure and facilities.
Negotiations are ongoing to introduce a leading Global Food and Beverage operator into Colombo Port City, offering a range of East, West, and Fusion cuisine, creating a ‘watering hole’ concept for DF shopping, as well as a world-class dining destination in the City of Colombo.
India expects a part of US $8-$9 bn bilateral trade with Sri Lanka in two months
India expects bilateral trade worth $8-9 billion with Russia and Sri Lanka in the next two months after it allowed international trade in rupees, India’s trade secretary B. V. R. Subrahmanyam said.
With increasing assistance from India to abate the Sri Lankan crisis, the new President Ranil Wickremasinghe is keen to enhance bilateral relations.
Traditionally, India–Sri Lanka bilateral relations are centered on a few specific issues and concerns—security concerns (now includes security cooperation), ethnic issues, fishers dispute, and investment climate—each one getting greater focus at specific times and under particular circumstances.
Even as India began extending forex assistance, a section of the political Opposition in Sri Lanka was critical of the Rajapaksa regime for signing high-cost investment agreements , though not all of them named India’s public and private sector entities in this regard.
Likewise, on the fisheries front, through the past months of Indian assistance to a nation facing both economic and political crises, one out-witting the other, on daily-basis Indian fishermen continued to be arrested and their boats and gears impounded on allegations of violating and poaching in Sri Lankan waters.
However, India’s China concerns viz Sri Lanka continue to remain real though through the past years, there is nothing to suggest that Chinese commercial investments had led to any military/security tie-up that New Delhi should be worried about, economic experts said.
Now, after the ascension of the new government, Beijing may have to bend backwards to prove to Sri Lanka and Sri Lankans that it did not desert a ‘friend in need’ in its real hour of economic crisis, they added.
The Reserve Bank of India last month allowed importers and exporters to pay in the partially convertible rupee, a move widely seen as making trade with Russia and South Asian neighbours easier instead of relying on dollars.
“The rupee-denominated sales will be a big, big advantage,” Indian commerce secretary B.V.R. Subrahmanyamsaid adding that he anticipate in the next two months $8-$9 billion of trade with Russia and Sri Lanka.”
India emerged as the top lender to Sri Lanka for the first four months of 2022, extending loans worth $376.9 million.
India is planning to provide further financial assistance to neighbouring country Sri Lanka after providing aid worth $3.8 billion since January this year , official sources said .
The Giant neighbour has come to rescue Sri Lanka which is currently under a severe economic crisis. The island country is facing an acute shortage of foreign currency along with food and fuel crisis.
India also emerged as the first responder under Prime Minister Narendra Modi’s neighbourhood first policy when Sri Lanka was left alone by its so-called benefactors for funding support.
Despite wide expectations, China’s unwillingness or the reluctance to come to the rescue of Sri Lanka when it needed the most raised many eyebrows.
Subrahmanyam said the government was working on new trade deals with countries like the United Kingdom that would boost its exports and offset demand weakness in some of its markets.
He expects India merchandise exports to jump to about $500 billion in the current fiscal year that started on April 1, from about $420 billion in the year-ago period.