State Finance Minister Ranjith Siyambalapitiya revealed the government will amend some of the archaic laws necessary to support diverse industries in the economy.

“We are going to introduce several new laws to control the liquor industry. When I visited the Excise Department the other day, I came to know that our existing laws are still the same as they were made 60 to 70 years ago to nab sugarcane.

Now the Excise officials have to argue with those who deal with e-money and therefore new regulations will be introduced to amend those archaic laws,” State Finance Minister Ranjith Siyambalapitiya said.

He made these remarks at a ceremony to issue soft liquor licence for establishments registered with the Sri Lanka Tourism Development Authority (SLTDA) at the Tourism Ministry yesterday.

State Finance Minister revealed that of the total reserves of $ 1.8 billion, only $ 300 million can be utilized for all essential imports, emphasizing the need to develop the tourism industry to boost foreign exchange inflows.

“We must extend certain incentives to develop the tourism industry, but that does not mean it is used to promote the use of alcohol,” he stressed.

On 13 June, the Cabinet Ministers approved to issue soft liquor licenses for the sale of beer and wine to all establishments registered with the SLTDA, as a measure to boost the tourism sector. The proposal to this effect submitted by President Ranil Wickremesinghe in his capacity as the Finance, Economic Stability and National Policies Minister was approved by the Cabinet Ministers.

Tourism Minister Harin Fernando said it was necessary to amend some of the archaic laws in catering to the diverse lifestyles of tourists as well as to put an end to the misuse of authoritative powers vested among certain law enforcement agencies.

“By allowing soft liquor does not mean we undermine the culture of our country, but rather accommodating our guests. This will help promote tourism and improve foreign exchange income for the country as well as all tourism stakeholders. This license also prevents certain law enforcement agency officials harassing the tourist establishments unnecessarily,” he explained.

Fernando also said this will also provide a level playing field for the stakeholders to draw crowds rather than limiting one restaurant or hotel to draw crowds and create additional employment opportunities.

The fee for the soft liquor license is Rs. 25,000 and it is required to be renewed annually.

Accordingly, all SLTDA registered star-class hotels, boutique hotels, boutique villas, eco-friendly rest houses, historic hotels, tourist hotels, tourist guest houses, tourist hostels, tourist bungalows, camp sites, historic bungalows, historic residences, tourist restaurants, food courts and tourist apartments will be allowed to sell soft liquor subject to conditions with effect from 28 July.

The Ceylon Motor Traders Association (CMTA), the most senior automotive association in South Asia, have raised serious concerns about the importation of used Electric Vehicles to Sri Lanka. In order to minimize the negative impact to the consumer, environment, society, and the economy, it is imperative that the country imports EVs which are directly shipped by the manufacturer with the recommendation for this tropical climate.

EVs built for colder climates may not be suitable for tropical regions as they might not have the required HV battery cooling systems.

The CMTA further warns that EVs purchased and imported through importers who are not the agents for the respective brand, might not come with a proper warranty cover to protect the consumer.

Used EVs that are shipped over to Sri Lanka may have HV batteries which could have damages that is not visible externally. Manufacturers’ warranties are a minimum of 5 years for passenger cars and 3 years for two-wheelers, in order to protect the consumer’s interest.

Another one of the CMTA’s biggest concerns is the disposal High Voltage (HV) batteries, as it can be extremely hazardous to both the environment and ground water systems,

if not disposed of properly. Therefore, the CMTA recommends that EV importers should be signed up with a battery recycling/ re-exporting company Due to the impact that improper disposing of HV batteries and other components may cause, it is also important to establish a legal framework to prosecute people who do so.

It is important to note that the landed cost of an HV battery could vary from Rs.5 million upwards for most EVs, or approximately 50% of the CIF value of the vehicle.

It is therefore imperative that any EVs imported into the country must be imported within 6 months of manufacture, as it would negate the negative impacts HV batteries might have.

Charaka Perera, Chairman of the CMTA said, ‘It is imperative that we encourage the importation of Brand New EVs directly from the manufacturer as opposed to used ones.

Vehicle electrification will bode very well for Sri Lanka, and we must ensure that the necessary steps are taken to ensure these vehicles are imported properly and that they do not pose environmental or economic threat to the country.”

The CMTA is the only association in the country that has access to global manufacturers of EVs and represents them in Sri Lanka and urges the public to educate themselves of all aspects prior to purchasing an EV.

Such awareness will enable them from facing issues which were faced by consumers who bought certain EV models during the heavy influx of EVs in 2014. Additionally, CMTA has entered strategic partnerships with Sri Lanka Insurance Corporation (SLIC), HNB Leasing, and SLT-Mobitel as Annual Corporate Partners of CMTA for planned future initiatives

Sri Lanka Imports in August have hit a four-month high and marked the fourth consecutive monthly gain despite restrictions and the forex crisis

As per Central Bank data imports in August amounted to $ 1.48 billion highest since the April figure of $ 1.7 billion.

Imports have also grown month-on-month since May. In July imports were $ 1.28 billion, $ 1.24 billion in June and $ 1.45 billion in May.

However, year-on-year, August imports were down by 12% and CBSL said it was the sixth consecutive month dip year-on-year.

CBSL said in August a decline in expenditure was observed in investment goods and non-food consumer goods, while an increase was recorded in imports of intermediate goods and food and beverages.

Import expenditure on a cumulative basis from January to August amounted to $ 12,801 million, which is a decline of 4.6% (y-o-y).

Considering the need to prioritize essential imports amidst a shortage of forex liquidity, the Government tightened import restriction measures on non-urgent imports during August, which, however, were partially relaxed in September.

“Import expenditure is showing a tendency to increase on a month-on-month basis, since bottoming out in June 2022, which prompted the Government to further tighten import restrictions in August 2022 in order to preserve forex for essential imports, although some of which were relaxed in September 2022,” CBSL said.

Expenditure on the importation of consumer goods declined by 28.7% in August, compared to August 2021, driven by a decline in expenditure on non-food consumer goods despite an increase in expenditure on food and beverages.

The decline in import expenditure on non-food consumer goods was observed in all subcategories, with a notable drop in imports of medical and pharmaceuticals (mainly, vaccines), telecommunication devices (mainly, mobile telephones) and home appliances (mainly, televisions).

In contrast, expenditure on the importation of food and beverages increased by 17.2% in August (y-o-y), with a substantial share of the increase being contributed by the imports of cereals and milling industry products (primarily, rice), and sugar.

However, expenditure on dairy products (mainly, milk powder), seafood (mainly, dried and fresh fish), oils and fats (mainly, coconut oil), vegetables (mainly, big onions) and fruits declined in August, compared to August 2021.

Expenditure on the importation of intermediate goods increased by 2.6% in August, compared to August 2021, mainly driven by fuel, textiles and textile articles (mainly, fabrics) and fertilizer (mainly, urea).

Further, import expenditure on chemical products; diamonds and precious stones and metals (primarily, industrial diamonds); paper and paperboard and articles thereof; and rubber and articles thereof also recorded an increase during August, compared to August 2021.

Meanwhile, many other types of intermediate goods recorded a notable decline, including base metals (mainly, iron and steel), wheat and maize, agricultural inputs (mainly, animal fodder), vehicle and machinery parts, etc.

However, import expenditure on fuel, which consists of crude oil, refined petroleum and coal, increased by 10.2% (y-o-y) to $ 389 million in August, and the increase was attributed to higher average import prices despite lower import volumes of crude oil and refined petroleum. The average import price of crude oil was $ 114.71 per barrel in August, compared to $ 74.88 per barrel in August 2021.

The International Monetary Fund (IMF) is waiting for Sri Lanka to comply with all the applicable IMF policies before further steps can be taken.

an emailed response to Daily Mirror, Peter Breuer, Senior Mission Chief for Sri Lanka and Masahiro Nozaki, Mission Chief for Sri Lanka, said that on 1st September 1 the IMF reached a staff-level agreement (SLA) with Sri Lanka on a 48-month arrangement under the Extended Fund Facility of about US$2.9 billion.

“The SLA is ad-referendum i.e., subject to IMF Management and IMF Executive Board approval. Once all applicable IMF policies are complied with (including taking prior actions and restoring debt sustainability consistent with program parameters),

IMF management recommends to the IMF Executive Board to approve an IMF arrangement. Once the IMF arrangement is approved, the member will receive financing under in tranches subject to the IMF Executive Board’s regular review of the member’s policy implementation,” the IMF said.

The IMF also said that according to the IMF policies, the Memorandum of Economic and Financial Policies (MEFP), which describes the proposed policy measures in the SLA in detail, will be published shortly after the Board approval of the EFF arrangement.

Peter Breuer and Masahiro Nozaki said that in the interest of transparency, the IMF issued a press release on September 1, and held a press conference on the same day, to disseminate key elements of the SLA.

The Sri Lankan authorities disseminated further details in a presentation to creditors on September 23.

ri Lanka has decided to send a delegation for the annual summit of the International Monetary Fund and the World Bank.

The 2022 Annual Meetings of the International Monetary Fund (IMF) and the World Bank Group (WBG) will take place in person from Monday, October 10, through Sunday, October 16 in the IMF and World Bank Group headquarters, in Washington DC.

Sri Lanka’s delegation will be led by Acting Finance Minister Shehan Semasinghe.

He said the Governor of the Central Bank of Sri Lanka, the Finance Secretary and several others will accompany him.

The Acting Finance Minister said that the 2022 Annual Meetings of the International Monetary Fund (IMF) and the World Bank Group (WBG) will be of paramount importance for Sri Lanka to restructure its debt, and also obtain financial assistance from the IMF.

The recent IMF agreement requires debt restructuring with all external and private creditors.

Although the country is eyeing a December 2022 deadline for the bailout, the debt relief measures throw this timeline into doubt. Japan has been endowed with the responsibility of holding talks with Sri Lanka’s major bilateral creditors such as India and China.

However, the diplomatic coldness between India and China, along with China’s hidden loans and Belt and Road Initiative (BRI) ambitions in Sri Lanka, might dampen the debt restructuring process.

Sri Lanka’s economic crisis is deepening with unsustainable debt and a severe balance of payment crisis on top of lingering scars of the COVID-19 pandemic. Debt restructuring and the implementation of a deep reform program are critical for Sri Lanka’s economic stabilization, says the World Bank in its twice-a-year update, underscoring the need for Sri Lanka to build resilience.

Released today, the latest South Asia Economic Focus,Coping with Shocks:Migration and the Road to Resilience, projects regional growth to average 5.8 percent this year – a downward revision of 1 percentage point from the forecast made in June.

This follows growth of 7.8 percent in 2021, when most countries were rebounding from the pandemic slump.

While economic distress is weighing down all South Asian countries, some are coping better than others. Exports and the services sector in India, the region’s largest economy, have recovered more strongly than the world average while its ample foreign reserves served as a buffer to external shocks.

The return of tourism is helping to drive growth in Maldives, and to a lesser extent in Nepal—both of which have dynamic services sectors.

The combined effects of COVID-19 and the record-high commodity prices due to the war in Ukraine took a heavier toll on Sri Lanka, exacerbating its debt woes and depleting foreign reserves

Plunged into its worst-ever economic crisis, Sri Lanka’s real GDP is expected to fall by 9.2 percent this year and a further 4.2 percent in 2023.

High commodity prices also worsened Pakistan’s external imbalances, bringing down its reserves. After devastating climate-change-fueled floods submerged one-third of the country this year, its outlook remains subject to significant uncertainty.

Also released today as a companion piece is the latest Sri Lanka Development which highlights the poverty and welfare impacts of the crisis and the role of social protection in protecting the vulnerable populations.

“Protecting the vulnerable is critical as Sri Lanka fast tracks deep reforms to navigate the deepening economic crisis.

The crisis calls for immediate action to protect the poorest and most in need while also focusing on strengthening the social protection system,” said Faris H. Hadad-Zervos, World Bank Country Director for Maldives, Nepal and Sri Lanka.

“In the face of the economic crisis, poverty estimates doubled to 25.6 percent between 2021 and 2022, increasing the number of people living in poverty by 2.7 million. Sri Lanka will need to expand employment in industry and services and recover real value of incomes to mitigate the impacts of the crisis, and build long-term resilience of its people. ” added Hadad-Zervos

He underscored the need for a coordinated approach to support the poor and vulnerable. The South Asia Economic Focus also put a spotlight on Sri Lanka’s economic crisis, drawing lessons from the Asian Financial Crisis of 1997.