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CBSL optimistic deflation will not impact production long-term

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By: Isuru Parakrama

November 12, Colombo (LNW): Dr. Chandranath Amarasekara, Assistant Governor of the Central Bank of Sri Lanka (CBSL), has expressed confidence that the current period of deflation will not last long enough to significantly affect the country’s production capacity.

Speaking at the recent monetary policy review briefing for 2024, Dr. Amarasekara reassured the public that the economic downturn caused by deflation is expected to be short-lived.

We do not foresee deflation continuing for an extended period in a way that would disrupt production. By the second quarter of next year, we anticipate that deflation will be behind us,” he said.

Dr. Amarasekara’s comments come at a time when Sri Lanka is grappling with negative inflation, with consumer prices having dropped by 2.1 per cent in November—the sharpest deflationary decline recorded since 1961.

Despite the challenges posed by falling prices, Dr. Amarasekara remains optimistic that this will not lead to prolonged stagnation in the economy.

In a follow-up exchange with a journalist who questioned whether corporate profitability might be impacted if deflation persists, CBSL Governor Dr. Nandalal Weerasinghe responded by noting that lower production costs could, in fact, lead to higher profitability for businesses.

When the cost of production decreases, profitability can improve,” he explained, suggesting that companies may benefit from reduced expenses even in the face of deflation.

In another key update, Dr. Weerasinghe noted that Sri Lanka no longer needs to rely on foreign exchange swaps, as the country’s foreign reserves have shown significant improvement, providing the nation with adequate liquidity to manage its financial obligations.

This marks a positive shift for Sri Lanka’s economy, he went on, adding that this has been under pressure from foreign exchange shortages in recent years.

Meanwhile, K.V.K. Alwis, the Director of the CBSL’s Payments and Settlements Department, revealed that Sri Lanka is in the process of negotiating with Indian authorities to implement a system that would allow Sri Lankans to make payments in Sri Lankan rupees whilst visiting India.

This initiative would mirror the UPI (Unified Payments Interface) system, which allows Indian tourists to pay in their own currency whilst in Sri Lanka, creating a more seamless financial exchange between the two countries.

The bank attributes the deflation to downward adjustments in energy prices and the reduction of volatile food prices, factors which are expected to contribute to the return of stable inflation in the months ahead.

Murdu Fernando takes oath as Chief Justice of Sri Lanka

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By: Isuru Parakrama

December 02, Colombo (LNW): Justice Murdu Fernando was officially sworn in as the 48th Chief Justice of Sri Lanka this (02) morning, taking the oath before President Anura Dissanayake.

In a momentous ceremony, she became the second woman in the country’s history to hold this esteemed position, following in the footsteps of Shirani Bandaranayake, who served in the role in 2011.

Justice Fernando’s appointment follows the retirement of Chief Justice Jayantha Jayasuriya, and her elevation to the highest judicial office in the land was approved by the Constitutional Council. As the most senior serving Justice of the Supreme Court, her appointment is seen as a continuation of her significant contributions to Sri Lanka’s judiciary.

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Opposition Leader holds talks with Japanese Ambassador, urges resumption of key development projects

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By: Isuru Parakrama

November 02, Colombo (LNW): Opposition Leader Sajith Premadasa held a productive meeting with Japan’s Ambassador to Sri Lanka, Akio Isomata, yesterday (01), to discuss the resumption of key development projects that were put on hold by the previous government.

The focus of the discussions was on revitalising these important initiatives, which are crucial for Sri Lanka’s long-term infrastructure and economic development.

Premadasa assured Ambassador Isomata of the Opposition’s full support in reactivating the stalled projects, particularly those funded by Japan, and pledged to cooperate closely with the Japanese government to ensure their smooth progress.

He expressed confidence that these projects could significantly contribute to the country’s recovery and future growth.

The timing of this meeting comes on the heels of a recent statement by Japan, indicating that it would only consider new development initiatives in Sri Lanka after a thorough assessment of the government’s requests and the country’s overall economic situation.

This cautious approach reflects Japan’s desire to ensure that any future investments align with Sri Lanka’s economic realities.

According to the Japanese Embassy, the immediate priority is to complete 11 ongoing projects that have been revived following successful debt restructuring discussions.

These projects, which include the expansion of Bandaranaike International Airport (BIA), are reportedly making steady progress.

The Embassy has emphasised that Japan remains committed to supporting Sri Lanka’s development efforts, but only within the framework of careful financial consideration and strategic planning.

Many luxury vehicles assigned to MPs remain unused due to fuel inefficiency: Speaker

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December 02, Colombo (LNW): A significant number of luxury vehicles assigned to Members of Parliament (MPs) and Ministers remain unused, mainly due to their high fuel consumption, Speaker Dr. Asoka Ranwala disclosed.

Speaking at an event at the Nāgānanda International Institute for Buddhist Studies, the Speaker explained that these vehicles, while luxurious, are deemed unsuitable for Sri Lanka’s current circumstances.

Ranwala told reporters that many MPs and Ministers have chosen not to use these vehicles because of their poor fuel efficiency, making them impractical in the context of the country’s fuel challenges.

He highlighted that despite the presence of a large fleet of such vehicles in storage, they are not being utilised.

He also noted that no MP has officially requested a luxury vehicle through Parliament, emphasising the reluctance of elected officials to use such high-maintenance cars.

The Speaker further elaborated that even vehicles assigned to his own office have not been put into service due to their high fuel consumption.

When asked if the unused luxury vehicles could be sold, Dr. Ranwala responded that any decision regarding the auctioning of these vehicles would need to be made at a national level.

Regarding government-owned residences for Ministers, the Speaker clarified that no Minister had requested an official residence for personal use. Ranwala asserted that residences owned by the government should be used for official purposes only, and it is the government’s responsibility to maintain these properties.

New Chief Justice Murdu Fernando to take oath today (Dec 02)

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By: Isuru Parakrama

December 02, Colombo (LNW): Justice Murdu Fernando is poised to take the oath as Sri Lanka’s 49th Chief Justice today (02).

The event is expected to take under the patronage of President Anura Kumara Dissanayake.

This follows the retirement of the previous Chief Justice, Jayantha Jayasuriya, who served in the position until recently.

Fernando’s appointment marks a significant milestone in the country’s judicial history, as she becomes the second woman to hold the prestigious office of Chief Justice, following in the footsteps of Shirani Bandaranayake, who held the role in 2011.

With a distinguished legal career spanning over three decades, Justice Fernando began her journey in the Attorney General’s Department, where she joined as a state counsel.

Over the years, she climbed the ranks, demonstrating exceptional legal expertise and leadership, eventually being promoted to senior state counsel.

Her career continued to flourish as she took on key roles, including deputy solicitor general, additional solicitor general, and senior additional solicitor general.

Fernando’s impressive track record in these capacities led to her appointment as a President’s Counsel.

In March 2018, during the presidency of Maithripala Sirisena, Fernando’s judicial career reached a new height when she was appointed as a Justice of the Supreme Court, cementing her place among the nation’s highest legal authorities.

LG Polls announcement to follow completion of A/L Exams

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By: Isuru Parakrama

December 02, Colombo (LNW): The announcement for the upcoming Local Government (LG) Elections is expected to be made after the conclusion of the 2024 G.C.E. Advanced Level examinations.

The Election Commission has explained that releasing the election details before the exams could lead to candidates launching their campaigns during the critical exam period, potentially causing disruptions.

In light of this, it has been decided that no official election announcements will be made until after the exams have finished.

The move is aimed at preventing any interference with the exam process, which could cause unnecessary distractions for students.

The Advanced Level exams, which had been delayed due to adverse weather conditions, are set to resume this week after several days of postponements.

As the examination period progresses, the focus will be on ensuring that no external activities impact the integrity of the exams.

In a related development, a crucial meeting of political party leaders is scheduled for tomorrow (03). The meeting will be chaired by the Leader of the House, Bimal Rathnayake, and is expected to address several key issues regarding the upcoming LG Elections. Notably, party leaders will make final decisions on when to call for nominations for the elections.

It has also been confirmed that earlier nominations for the LG elections will be cancelled. The decision stems from the fact that many candidates who had initially been nominated have either switched political parties, retired from politics, or left the country.

As a result, political parties will now move forward with a fresh slate of nominations for the upcoming elections.

Showery conditions to decline further: Fair weather to prevail (Dec 02)

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By: Isuru Parakrama

December 02, Colombo (LNW): Several spells of showers will occur in Northern province, with a few showers being expected to occur in Galle and Matara districts, the Department of Meteorology said in a statement.

Mainly fair weather will prevail elsewhere.

Strong winds of (40-45) kmph can be expected at times over Northern, North-central, North-western, Western, Central and Southern provinces.

Marine Weather:

Condition of Rain:
Showers or thundershowers will occur at several places in the sea areas extending from Puttalam to Trincomalee via Kankasanthurai.
Winds:
Winds will be Westerly to South-westerly and wind speed will be (30-40) kmphin the sea areas around the island. Wind speed can increase up to 60 kmph at times in the sea areas extending from Puttalam to Trincomalee via Kankasanthurai. Wind speed can increase up to 50 kmph at times in the sea areas extending from Puttalam to Pottuvil via Colombo, Galle and Hambantota.
State of Sea:
The sea areas extending from Puttalam to Trincomalee via Kankasanthurai will be rough at times. The sea areas extending from Puttalam to Pottuvil via Colombo, Galle and Hambantota will be fairly rough at times. The swell waves (about 2.5–3.0 m) height may increase in the sea areas off the coast extending from Puttalam to Hambantota via Galle. (this is not for land area) Temporarily strong gusty winds and very rough seas can be expected during thundershowers.

Sri Lanka Original Narrative Summary: 02/12

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  1. The Road Development Authority (RDA) will assess the damage to roads and bridges, with a special team appointed for this task: Director General S.M.P. Suriyabandara stated that immediate action would be taken to repair the affected infrastructure, ensuring timely restoration of damaged roads and bridges to maintain safety and functionality.
  2. Opposition Leader Sajith Premadasa emphasised the need for unity across all differences to ensure justice for Palestinians: Speaking at the UN Day for Solidarity with the Palestinian People conference, he called for action, not just rhetoric, in support of Palestinian rights: Premadasa condemned state terrorism, urged global leaders to take decisive action, and advocated for peaceful coexistence between Israel and Palestine.
  3. Former President Ranil Wickremesinghe expressed support for the government’s economic programme in partnership with the IMF to strengthen Sri Lanka’s economy: Speaking at the opening of a new five-star hotel in Colombo, he praised the initiative: The event was attended by figures including Minister Vijitha Herath and Opposition Leader Sajith Premadasa, and marked a significant investment by a prominent gem businessman.
  4. Foreign Minister Vijitha Herath invited nine newly appointed Ambassadors and a High Commissioner to attend Sri Lanka’s Independence Day celebrations: The diplomats, who recently presented credentials to President Anura Kumara Dissanayake, expressed interest in strengthening diplomatic ties and enhancing economic and trade relations with Sri Lanka: The Minister agreed to review potential new agreements to support these initiatives.
  5. The Ministry of Finance, Planning and Economic Development announced a reduction in the Special Commodity Levy on imported big onions from Rs. 30 to Rs. 10 per kilo, effective until December 31, 2024: However, the levy on imported potatoes will remain unchanged at Rs. 60 per kilo: These changes were initially introduced in a gazette notification on October 2, 2024.
  6. Senior Economic Advisor Duminda Hulangamuwa stated that the new government is encouraging the private sector to lead economic development while retaining control over strategic public sectors: Discussing state-owned enterprise (SOE) restructuring, he emphasised a careful approach, analysing which SOEs burden the treasury: He also mentioned ongoing efforts to restructure SriLankan Airlines’ finances, ensuring the country’s priorities come first.
  7. The Vehicle Importers’ Association of Sri Lanka is confident that vehicle imports will resume in February 2025: During a press briefing, the association announced upcoming discussions with the President to ensure a smooth process: The President and the Central Bank of Sri Lanka have promised support, while the IMF has also granted approval for the resumption of imports.
  8. Prime Minister Dr. Harini Amarasuriya emphasised that combating the drug problem requires inspiring positive change in children and youth, not just relying on laws: Speaking at the 2024 All-Ceylon Art and Animation Video Competition, she highlighted the urgent need for a comprehensive program to address drug addiction and rehabilitation, alongside strong law enforcement efforts to combat drug trafficking.
  9. The Ceylon Electricity Board (CEB) will submit a revised electricity tariff proposal to the Public Utilities Commission of Sri Lanka (PUCSL) on December 6th: CEB spokesperson Eng. A.D.K. Parakramasinghe confirmed the report is nearly complete: Previously, the CEB proposed a 6-11% tariff reduction for the last quarter of 2024, but the PUCSL rejected it, requesting a revision for the first half of 2025.
  10. Sri Lanka dropped to 5th place in the WTC 2023-25 standings after a heavy 233-run defeat to South Africa in the first Test, with a points percentage of 50%: South Africa moved to 2nd place, with Marco Jansen’s match-winning figures of 11/86 earning him Player of the Match: India remains top, while South Africa trails with 59.26%.

U.S. Ambassador’s Visit to BOC Highlights Strengthening Economic Ties

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By: Staff Writer

December 01, Colombo (LNW): In a groundbreaking diplomatic gesture, Julie Chung, U.S. Ambassador to Sri Lanka, visited the Bank of Ceylon (BOC) Head Office on November 19, 2024.

This significant visit facilitated an important interaction between the newly appointed Chairman, Kavinda de Zoysa, and Ambassador Chung.

The Ambassador was warmly welcomed by Chairman de Zoysa, General Manager/CEO Russel Fonseka, and other senior leadership of the Bank.

The occasion provided an opportunity to showcase BOC’s role as Sri Lanka’s largest financial institution and emphasize its strategic initiatives, such as women’s empowerment, youth development, financial inclusion, and digital transformation.

This US Diplomat’s visit to Sri Lanka’s largest financial institution highlighted the Bank’s strategic focus areas, including women’s empowerment, youth development, financial inclusion and digital transformation

While foreign diplomats’ visits to local banks are not common, this one stands out due to the context of U.S.-Sri Lanka relations and the ongoing economic challenges faced by the country.

The Bank of Ceylon, being the largest and most influential state-owned bank in the country, plays a central role in Sri Lanka’s financial and economic activities.

The visit by a U.S. ambassador could signal enhanced collaboration on economic development, including financial inclusion and support for restructuring Sri Lanka’s debt crisis.

The U.S. has historically been involved in supporting financial systems and governance improvements in Sri Lanka, which could align with such engagements at key institutions like the BOC.

It’s possible the visit also underscored the strategic importance of strengthening economic ties and fostering business exchanges as Sri Lanka continues to navigate its recovery.

As Sri Lanka navigates its financial restructuring, the visit suggests potential U.S. support for enhancing economic development, including debt restructuring and financial system improvements.

The Bank of Ceylon’s pivotal role in Sri Lanka’s economy was highlighted, along with its status as a global ‘Top 1000 Bank’ and its leadership in gender equity, with women comprising 60% of its workforce.

The discussions also focused on the bank’s digital transformation, youth empowerment efforts, and innovations that are driving economic growth.

During the visit, Ambassador Chung toured the bank’s museum and interacted with notable BOC athletes and the Bank’s Best Branch Manager of 2023.

Chairman de Zoysa expressed his honor in hosting the Ambassador, emphasizing the shared goals of promoting economic growth, innovation, and sustainability, with the U.S. being Sri Lanka’s top export market.

With over 2,300 touchpoints globally, including branches in India, the Maldives, and Seychelles, as well as a subsidiary in London, BOC remains a leader in both modern banking solutions and maintaining its rich legacy of excellence.

Hotel Sector Poised for Growth amidst Challenges in Sri Lanka

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By: Staff Writer

December 01, Colombo (LNW): By 2024, Sri Lanka’s hotel industry is set to generate US$180.40 million in revenue, with expectations to grow at a compound annual growth rate (CAGR) of 11.17%, reaching US$306.30 million by 2029.

The country is forecasted to welcome 2 million tourists in 2024, bringing the sector close to pre-pandemic levels. This surge is expected to contribute approximately $3.5 billion to foreign exchange reserves, supporting the nation’s economic recovery.

The Sri Lankan government is prioritizing tourism development, implementing strategic initiatives to boost the sector.

Hotels across the country are increasingly adopting sustainable practices, offering nature-focused experiences, and integrating innovative technologies. These include AI-driven customer service, contactless check-ins, and personalized guest experiences powered by IoT devices.

M. Shanthikumar, President of the Hotels Association of Sri Lanka (THASL), addressed policymakers at the association’s 59th anniversary celebrations, providing a candid assessment of the sector’s challenges and the need for immediate policy intervention.

He emphasized the crucial role of the hotel industry, which contributes significantly to Sri Lanka’s economy, noting US$15 billion in infrastructure investments and the employment of 70% of the tourism workforce.

Shanthikumar pointed out that the sector is the second-largest foreign exchange earner for the country, surpassing apparel, and urged for new, robust policies.

He highlighted the industry’s ongoing struggles, including the impact of the 2019 Easter attacks, the COVID-19 pandemic, and the economic crisis. Despite these setbacks, the sector has shown resilience and is poised for further recovery.

The THASL President called for the tourism industry to be granted export status to better reflect its foreign exchange contribution and multiplier effect on the local economy.

He also voiced concerns over the informal accommodation sector, which he believes rivals the formal sector in room numbers. He stressed the need for regulation to ensure safety, proper licensing, and tax compliance.

Shanthikumar also criticized recent increases in liquor license fees and turnover-based taxes, calling them unfair burdens on hoteliers.

He argued that the disparity in tax treatment between the hotel industry and other high-earning sectors, like banking and supermarkets, is a longstanding issue that needs addressing.

Another significant challenge facing the industry is the acute shortage of skilled and unskilled workers. Shanthikumar urged the Sri Lanka Institute of Tourism and Hotel Management (SLITHM) to ramp up training programs, particularly targeting women and youth in rural areas.

The underrepresentation of women in the hospitality workforce was also highlighted as an area for improvement.

The lack of a global tourism campaign for the past 15 years has hindered Sri Lanka’s competitiveness, according to Shanthikumar.

He pointed out that rival destinations such as the Maldives, Vietnam, Thailand, and Malaysia have implemented effective marketing strategies in key source markets. He called for urgent action to roll out a new global campaign to meet tourist arrival targets.

In closing, Shanthikumar recommended the establishment of an inter-ministerial committee, led by the President, to ensure cohesive decision-making across the 18 ministries involved in tourism.

While commending the efforts of the new Tourism Minister and SLTDA Chairman, he stressed the need for comprehensive and sustainable policy development to support the industry’s long-term success.