Home Blog Page 1993

Non-essential petrol sales halted for two weeks in Sri Lanka

0

Sri Lanka has suspended sales of fuel for non-essential vehicles as it faces its worst economic crisis in decades.

For the next two weeks, only buses, trains and vehicles used for medical services and transporting food will be allowed to fill up with fuel.

Schools in urban areas have shut, while officials have told the country’s 22 million residents to work from home.

The South Asian nation is in talks over a bailout deal as it struggles to pay for imports such as fuel and food.

Sri Lanka is the first country to take the drastic step in halting sales of fuel to ordinary people “since the 1970s oil crisis, when fuel was rationed in the US and Europe and speed limits introduced to reduce demand”, Nathan Piper, head of oil and gas research at Investec, told the BBC.

He said the ban underlined the steep rise in oil pricing and limited foreign exchange reserves in Sri Lanka.

Many of the island’s residents don’t know how they will cope without fuel. There have been long queues at filling stations across Sri Lanka for months.

Chinthaka Kumara, a 29-year-old taxi driver in Colombo, thought the ban would “create more problems for people”.

“I’m a daily wage earner. I’ve been in this queue for three days and I don’t know when we will get petrol,” he told BBC Sinhala.

A Sri Lankan security personnel stands guard outside a fuel station in Colombo.
Image caption, A member of the security forces stands guard outside a fuel station in Colombo

Drivers have been asked to go home, with tokens distributed aimed at rationing scarce fuel stocks. Some kept queuing, but others couldn’t.

“I was in a queue for two days. I got a token – number 11 – but I don’t know when I will get fuel,” S Wijetunga, a 52-year-old private sector executive, told the BBC.

“I need to go to the office now, so I have no option but to leave my vehicle here and go in a three-wheeler.”

Kenat, a motorised rickshaw driver in the Colombo suburb of Kotahena, said people like him were being “destroyed”.

“Our family used to have three meals a day. Now we eat only twice a day. If this continues, it will come down to one meal,” he told BBC Tamil.

‘Severe economic crisis’

With an economy hit hard by the pandemic, rising energy prices and populist tax cuts, Sri Lanka lacks enough foreign currency to pay for imports of essential goods.

Acute shortages of fuel, food and medicines have helped to push the cost of living to record highs in the country, where many people rely on motor vehicles for their livelihoods.

On Monday, the government said it would ban private vehicles from buying petrol and diesel until 10 July.

Cabinet spokesperson Bandula Gunewardena said Sri Lanka had “never faced such a severe economic crisis in its history”.

The cash-strapped country has also sent officials to the major energy producers Russia and Qatar in a bid to secure cheap oil supplies.

Over the weekend, officials said the country had only 9,000 tonnes of diesel and 6,000 tonnes of petrol to fuel essential services in the coming days.

It has been estimated that the stocks would last for less than a week under regular demand.

“We are doing everything we can to get new stocks, but we don’t know when that will be,” power and energy minister Kanchana Wijesekera told reporters on Sunday.

A man with bread loafs on a stave protests with others outside the president's office in Colombo
Image caption, In Colombo, protests against price hikes erupted in April, with mounting calls for the president to quit

In May, the country defaulted on its debts with international lenders for the first time in its history. That followed weeks of protests against President Gotabaya Rajapaksa’s government. His brother Mahinda quit as prime minister, but the president is still under pressure to resign.

“The government seems to take no action at all,” Kannan, another driver seeking fuel in the capital, told BBC Tamil.

“They are asking us to be patient. They say they don’t have dollars. But I ask the government – who is responsible for this?”

He suggested “educated youngsters” should lead the country instead.

Last week, an International Monetary Fund team arrived in Sri Lanka for talks over a $3bn (£2.4bn) bailout deal.

The government is also seeking assistance from India and China to import essential items. New Prime Minister Ranil Wickremesinghe said earlier this month the country needed at least $5bn over the next six months to pay for essential goods such as food, fuel and fertiliser.

In recent weeks, ministers also called on farmers to grow more rice and gave government officials an extra day off a week to grow food, amid fears of shortages.

The government blames the crisis on the Covid pandemic, which affected Sri Lanka’s tourist trade – one of its biggest foreign currency earners.

But many experts say mismanagement is the main cause of the economic collapse.

Sri Lanka’s foreign currency reserves dwindled to almost nothing after years during which it imported much more than it exported and racked up huge debts with China on controversial infrastructure projects.

When Sri Lanka’s foreign currency shortages became a serious problem in early 2021, the government tried to limit the outflow by banning imports of chemical fertiliser, telling farmers to use locally sourced organic fertilisers instead.

This led to widespread crop failure. Sri Lanka had to supplement its food stocks from abroad, which made its foreign currency shortage even worse.

BBC

LIOC restricts issuance of petrol

0

Lanka Indian Oil Company (LIOC) has restricted the issuance of petrol from all LIOC owned filling stations, effective from last (28) night.

Accordingly, the following limitations will be in effect;

Motorcycles: Rs. 1,500 max.
Threewheelers: Rs. 2,500 max.
Motor vehicles: Rs. 7,000 max.

MIAP

Central Bank decides to liquidate five failed finance companies

0

Five failed finance companies are to be liquidated in accordance with a decision taken by the Monetary Board of the Central Bank of Sri Lanka (Monetary Board).

The Monetary Board of the Central Bank of Sri Lanka (Monetary Board) established the Advisory Committee for Revival of Failed Finance Companies (Committee) in October 2021 to examine possible revival options for five (5) failed finance companies.

These companies are Central Investments & Finance Ltd., ETI Finance Ltd., TKS Finance Ltd., The Finance Company PLC and The Standard Credit Finance Ltd, of which licenses have been either cancelled or suspended.

The Monetary Board has vested the Committee with the responsibility of recommending possible revival options or recommending liquidation for aforementioned five failed finance companies if such revival options do not seem feasible.

The Committee submitted its final report to the Monetary Board on 31.05.2022, after careful consideration of several proposals submitted by different parties for revival of four (4) of the above-mentioned companies.

The Monetary Board, having considered the Report of the Committee on the said five failed finance companies, noted that the proposals received for perusal of the said Committee were not viable and entailed a number of policy and legal implications, which did not appear to be workable within the existing regulatory framework.

Further, given the present economic conditions, the said Committee does not expect any viable proposals to be received from prospective investors.

Under these circumstances, the only option concerning the five (05) failed finance companies would be to continue with liquidation proceedings/filing for liquidation. In the light of the above, the Committee in its report has recommended to wind up the Committee.

Based on the recommendation of the Committee the Monetary Board decided to dissolve the Committee.

Consequently, actions will be taken to liquidate the aforementioned five failed finance companies in accordance with applicable legal provisions.

SL Trade Development Council demands Govt. to protect SMEs

0

Sri Lanka Trade Development Council (SLTDC) recently demanded immediate action from the Government to protect the small and medium enterprises (SMEs) with a plan to Cabinet paper, warning they would otherwise bring all engaged in the sector to the streets.

The SME sector has been the worst hit by back-to-back blows since 2019, and the economic crisis has worsened the situation with most unable to operate their businesses or on the verge of bankruptcy.

The key demands of SLTDC include; immediately extending a financial relief package to all SMEs for one year whilst suspending all recovery actions, supporting the SME sector to convert businesses to export-oriented companies by providing special credit facilities and tax reliefs.

“SMEs are the live wire of the economy that helps to at least maintain it in this dire straits. We have been the worst hit with triple blows since 2019.

Yet, the resilient SMEs managed to continue despite internal and external challenges. But now, we have exhausted ourselves with no support whatsoever from the authorities. Hence, we submitted key proposals to the Government to implement immediately to protect the SMEs,” SLTDC Chairman Roshana Waduge said.

“We strongly believe that the Central Bank could have been more proactive in supporting the SMEs, but they have kept mum about it. Therefore, we made the request to the Government and hope they will take immediate steps to put forward a Cabinet paper next Monday before the sector collapses,” he added.

Waduge said it was sad that the gravity of the economic crisis and the urgency to protect local businesses has still not been comprehended by the political authorities.

“In other countries, SMEs are the first to be taken care of as they represent the backbone of an economy. However, in Sri Lanka, the banking and financial sector is killing the already crippled SME sector with recoveries and legal actions, while imposing high-interest rates of 30% on facilities obtained previously at low rates of 7-8% in an unfair manner.

“If the SMEs collapse, it will have an unimaginable adverse impact on the economy which will lead to an increase in unemployment, poverty, and scarcity of products and services,” he explained.

SMEs make up the largest part of the economy, accounting for 80% of all businesses whilst contributing to over 52% of GDP, and 45% of the total workforce accounting for 4.6 million employees engaged in the sector.

SLTDC Vice Chairman Indika Sampath Merenchige said the ignorance by the Government will only lead to economic peril.

“If the political authorities ignore our appeal to protect the backbone of the economy, we assure to take the lead for the next phase of people’s struggle by taking the baton from them. It will mean 4.6 million people in SMEs taking to the streets,” he warned.

Merenchige said the urgency today is a complete system change and not just the 21st Amendment to the Constitution. “We need consistent national policies to ensure economic development, stability, and sustainability,” he pointed out.

Post offices open three days a week only

0

From July 10, all post offices will remain open for three days a week only, revealed Post Master General Ranjith Ariyaratne.

Accordingly, all post offices will be open on Tuesdays, Wednesdays and Thursdays, he added.

MIAP

Sri Lanka confectionery industry suffers 30 percent production drop

0

Sri Lanka’s confectionary industry has suspended the production of several of its most popular product ranges to prioritise the manufacturing of ready-to-eat items, which is becoming a popular option as the country continues to face severe shortage in gas.

As the cost of raw materials and fuel are increasing at a pace that industries cannot cope with, the Lanka Confectionery Manufacturers Association (LCMA) said stakeholders have started discontinuing production of ranges, especially easy-to-make desserts, and are instead focusing on keeping the production of items such as biscuits.

The confectionery industry has seen a 30 percent drop in overall production so far, as a reflection of multiple challenges they endured amidst the worst economic crisis.

The us $ 150-200 million worth confectionery industry — had been struggling for the past two years to import raw materials, deal with the exchange rate, source fuel and find containers to ship their goods to export markets on time.

“We have seen a 30 percent drop in overall production so far. With no concrete plan from authorities on how to fix the problems, the stakeholders fear the production will further drop to 40 percent by next week,” Lanka Confectionery Manufacturers Association (LCMA) President S.D. Suriyakumar.

Due to the shortage of ingredients, such as wheat, and increase in production costs, many manufacturers have halted operations. This has led to a drop in supply of confectionery items in the market.

The industry increased the price of its products by 30 percent last month. According to Suriyakumara, the hike has had little impact on sales.

“People don’t have a choice. There is no gas to cook food. Bakeries and eateries have closed down. Biscuits are a new staple now.

The LCMA head shared that following the further increase in the price of flour, which went up by Rs. 40 per kilogram yesterday, the industry has no choice but to pass it on to the consumer.

About 50,000 direct employees and over 500,000 informal workers have been discontinued due to the inability to maintain costs.

Suriyakumar said the initiative to promote confectionery products in new markets will be done as a private-public partnership (PPP) with support from the Department of Commerce.

“At the early stage of our export industry, our products were only sold in areas where ethnic groups were residing, but now our products are in leading supermarkets such as Tesco, Lulu and Walmart, to name a few. We export to over 50 countries at present,” he added.

In November 2021, the industry said they were looking to move production to more favourable overseas locations.

However, the decision was later reversed after considering the impact it would have on the livelihood of over 550,000 people engaged in the industry and overall economy.

US delegation requests Intl. Banks to provide assistance to procure medicines, essentials

0

The visiting high-level US diplomatic delegation has assured that they will support by requesting international banks to assist Sri Lanka when issuing Letters of Credit (LC) to obtain medicines and essential commodities, President’s Media Unit said.

They have also assured that the US Government will continue its support to strengthen the relationship with the International Monetary Fund at all levels.

The meeting between the US State Department and the Treasury delegation and the President held at the President’s House, Colombo, ON Monday 27 .

President Rajapaksa commended the delegation for their visit to Sri Lanka and briefed them on the current economic and social crisis in the country.

The President also briefed about the progress of the ongoing discussions with the IMF. Kelly Keiderling, Deputy Assistant Secretary of State for South and Central Asia, US Department State and Robert Kaproth, Deputy Assistant Secretary of Treasury for Asia.

The US Department of Treasury further stated that US President Joe Biden is interested in the future of Sri Lanka.

The US President has also instructed to support Sri Lanka during this difficult time and to extend all possible assistance to the country.

The delegation expressed confidence with the implementation of the programme with the IMF will provide relief to the vulnerable families and will continue to have a positive impact on the future.

They said they were pleased with the similarities between the President’s understanding and their understanding of the economic reform process taking place in the country.

The delegation commended the President on the free space given to anyone to express their opinions without any hindrance to the right to freedom of expression.

The US government has provided US$100 million as medium term assistance to Commercial Bank to promote and uplift small scale businesses and also US$ 5.75 and another US$ 6 million financial assistance as humanitarian aid to Sri Lanka.

The delegation recalled the other US supported projects such as polyester fiber and yarn processing projects which are manufactured with disposable plastic materials.

Matthew Mohlenkamp, Treasury Office Director for South and Southeast Asia, John McDaniel, State SCA/NSB Economic Unit Chief, Julie Chung, US Ambassador to Sri Lanka, US Embassy, Geoff Chanin, Acting Political Chief, US Embassy, were present at this discussion.

Private bus operations drop to 10 per cent. Recommendations on fare revisions today

0

Islandwide private bus operations will drop to 10 per cent today (29) due to the ongoing fuel crisis, said President of the Ceylon Private Bus Owners Association Gemunu Wijeratne.

Despite recommendations from certain bus associations to increase the bus fares by 30 per cent and the minimum fare up to Rs. 40, there had been disagreements between the unions pertaining to such revisions. The discussions with Transport Minister Bandula Gunawardena in this regard yesterday were halted in the middle.

However, recommendations pertaining to bus fare revisions will be handed over today, said the National Transport Commission.

MIAP

US President announces $20 million aid to strengthen SL food security

0

At the G7 Summit today (June 28), President of the United States Joe Biden announced $20 million in additional assistance to strengthen food security in Sri Lanka.

Building on other recent funding announcements from the United States, this newly posted assistance will target Sri Lankans most in need during the current economic crisis.

The funding aims to support a school nutrition program that will feed over 800,000 Sri Lankan children and provide food vouchers for over 27,000 pregnant and lactating women over the next 15 months, according to the U.S. Embassy in Colombo.

The effort also plans to support approximately 30,000 farmers through the contribution of agricultural assistance and cash in order to increase food production in vulnerable Sri Lankan communities.

“President Biden’s announcement of $20 million in additional assistance to Sri Lanka demonstrates the United States’ ongoing commitment to food security, public health, and the economic well-being of all Sri Lankan people,” said U.S. Ambassador to Sri Lanka Julie Chung. “

The United States will continue to support Sri Lankan efforts to promote economic stability and will ensure this assistance reaches the communities – and children – who need it most.”

The $20 million of humanitarian assistance announced today builds on nearly $12 million in recent U.S. commitments in economic and humanitarian assistance, totaling $32 million in U.S. support for the Sri Lankan people since June 16, 2022.

Funding is provided through the U.S. Agency for International Development (USAID) and will be awarded to partners that adhere to globally recognized monitoring and evaluation standards. This ensures that funding is accounted for and assistance reaches those identified as most vulnerable to food insecurity, the U.S. Embassy in Colombo noted.

The United States has agreed to provide technical assistance for fiscal management in Sri Lanka, Prime Minister’s Media Division said.

Kelly Keiderling, Deputy Secretary of State for South and Central Asia at the U.S. State Department, who arrived in Sri Lanka yesterday, held a discussion with Prime Minister Ranil Wickremesinghe today (27).

The US Diplomatic Group also stated its support for the ongoing talks between the Government of Sri Lanka and the International Monetary Fund.

Robert Kaproth, Deputy Assistant Secretary of the Treasury for Asia in the United States and Julie Chung, US Ambassador to Sri Lanka, also participated in the discussion held at the Prime Minister’s Office.

Following the meeting with Prime Minister Wickremesinghe, the U.S. Ambassador on Twitter said the U.S. continues to support Sri Lankan efforts to promote economic growth.

“We met PM Ranil Wickremesinghe to explore ways to strengthen the bilateral relationship, and to discuss US efforts to provide millions of dollars in humanitarian assistance directly to low-income communities in Sri Lanka,” Chung said.

In addition, Secretary to the Prime Minister Saman Ekanayake and Senior Adviser to the Prime Minister Dr. R.H. Samaratunga were also present at the meeting.

“In search of Young Climate Changemakers in Sri Lanka” Applications are now open!

0

Climate Action Champions Network to select 100 individuals to lead Climate Action Policies and Initiatives in South Asia 

COLOMBO-June 28, 2022: The United States Department of State, in collaboration with the Sri Lanka Development Journalist Forum (SDJF), Genlab, Observer Research Foundation (ORF), and Pavilion Group, launched the Climate Action Champions Network (CACN), that will support 100 individuals from Sri Lanka, India, Bangladesh, Nepal, and Bhutan as they lead climate action policies and initiatives in their respective countries, as well as the wider South Asia and Indo-Pacific Region.

Climate Change is a critical transnational threat, with South Asia being one of the most affected regions. The Climate Action Champions Network (CACN) is a timely initiative that will raise awareness and encourage action. This program will appoint 100 young individuals over a 12 -month period to work together to drive policy and programs that combat climate change in South Asia and the Indo-Pacific Region.

Commenting on the initiative, U.S. Ambassador to Sri Lanka, Julie Chung stated: “Climate-related challenges in South Asia cut across borders. The region’s ability to address the multifaceted challenges posed by climate change will have an enormous impact on youth populations. This is a fantastic opportunity for young changemakers to influence policy and an initiative that will encourage young people to take an active role in promoting environmental conservation.”

The cohort will work on specific thematic areas such as the green technology industry, climate change impact on biodiversity, climate-smart agriculture, climate finance, and climate change policymaking. They will also delve into the broader climate change and development agenda, examining how climate change intersects with developmental indicators such as gender, global health, and urbanization.

“We are looking forward to receiving applications from promising individuals, and it is an enormous honor to be part of the steering committee for such a worthy cause. Climate change, a hot-button issue and a critical phenomenon that could surely determine the fate of humanity and its future course, has been a prime concern, by and large, for all the nations irrespective of their political or economic agenda. As youth are crucial strata in virtually all societies, they are the most vibrant actors of the change and progress; when it comes to mitigating and addressing Climate Change, the same principle is valid.  If you believe you are the change, this is the call for you. We will be at every guiding footstep of our young changemakers and will provide the necessary support,” added Dr. Darshana Ashoka Kumara the Chairman of the Sri Lanka Development Journalist Forum, while taking the lead in delivering the message to the youth in Sri Lanka.

Applications are now being accepted and can be found on the SDJF’s official website. Enthusiastic individuals between the ages of 18 and 35 who are passionate about climate action and advocacy, are analytical, and demonstrate leadership qualities and innovation are strongly encouraged to apply for the program by July 15, 2022. For further information contact [email protected].