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Wednesday April 26, 2023 3:58 pm
Wednesday April 26, 2023 3:58 pm
ECONOMYNEXT – Sri Lanka has evacuated 13 nationals from Sudan, with the help of Saudi Arabia, the Foreign Ministry said, after fighting broke out between two factions of the county’s military.
Twelve more Sri Lankans are in Port Sudan awaiting evacuation.
“The Government of Sri Lanka is making every effort to evacuate the remaining Sri Lankans in Khartoum, taking into account the need for safe passage in a volatile security situation,” a foreign ministry statement said.
Sri Lanka is working with the governments of India and Saudi Arabia. The 13 national rescued have been received by Sri Lanka’s Acting Consul in Jeddah.
The Embassy of Sri Lanka in Cairo can be reached via e-mail : slcairoconsular@gmail.com and telephone +201272813000. The Secretary of the Honorary Consulate of Sri Lanka in Khartoum Sayed Abdel can be contacted via telephone +249912394035 for any immediate assistance, the statement said.
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Thursday April 27, 2023 8:37 am
Thursday April 27, 2023 8:37 am
ECONOMYNEXT – Sri Lanka has generated a primary budget surplus (deficit before interest payments) in the first quarter of 2023 exceeding an indicative target in a program with the International Monetary Fund, an official said.
Sri Lanka’s IMF program had a primary deficit indicative target (IT) of 56 billion rupees for March 2023.
But the Finance Ministry had achieved a surplus of 48 billion rupees, over performing the indicative target, based on preliminary data, Director General of Fiscal Policy at the Finance Ministry Kapila Senanayake told a forum in Colombo.
The primary deficit becomes a core performance criterion for the IMF’s first review test date in June 2023.
For 2022 Sri Lanka had also exceeded a primary deficit for the full year recording a 3.7 percent deficit against 4.0 percent envisaged in a budget.
Related: Sri Lanka budget 2022, deficit 10.2-pct of GDP, revenues 8.2-pct: analysis
Tax revenues were increased 56 percent from 370 billion rupees to 578 billion rupees in the first quarter. The increase came partly from tax hikes and partly from inflation.
The total was slightly below the 650 billion rupees projected in the IMF program.
The improvement in the primary balance came from strict expenditure controls (spending-based consolidation), Senanayake said.
Sri Lanka went on an IMF driven spendthrift strategy called ‘revenue based fiscal consolidation’ (taxing citizens without controlling state spending) in a program in the run up to sovereign default, which critics say may have been a fallout Anglophone ‘progressive’ anti-state austerity ideology.
As a result, spending to GDP which was around 17 percent of GDP in 2014 before cost cutting was abandoned, went up close to 20 percent by 2019.
Taxes were then cut and money was printed to target an ‘output gap’ from 2019 as recurring currency crises from flexible policy led to output shocks (dampened growth).
Targeting an output gap with macro-economic measures without working hard (stimulus) is also an Anglophone economic strategy ‘stimulus’ that emerged in the 1920s, triggering international external disequilibrium in the ensuing years.
The IMF gave technical assistance for Sri Lanka’s trigger happy economic bureaucrats to calculate a ‘potential output’ triggering attempts to bridge the supposed gap with ‘macro-economic’ measures eventually triggering a sovereign default.
The IMF has given a concession in the currency program to allow spending cuts in the current program saying Sri Lanka’s fiscal strategy will be ‘mainly’ revenue based consolidation.
The current administration and officials are trying to contain spending as much as possible at great political cost.
The salary bill had fallen on nominal terms, with a freeze on recruitment and slashing costs in the first quarter, based on preliminary data.
The interest bill had shot up from 379 billion rupees to 673 billion rupees, amid monetary instability.
Countries with reserve-collecting central banks that also target a domestic anchor (flexible inflation targeting and their peers including money supply targeting in the 1980s) usually end up in currency crises, inflation and persistent high interest rates.
The problem of chronically high interest bill persists until dual anchor conflicts (so-called impossible trinity regimes or ISLM-BOP) are abandoned in favour of consistent single anchor regimes like a clean float or a hard peg.
Under the IMF program, a new monetary law is expected to legalize output gap targeting and also potential dual anchor conflicts by simultaneously pursuing both money and exchange policies.
Countries with dual anchor conflicts and market access, exemplified by Latin America, with revenues exceeding 20 percent of GDP and deficits around 5 percent of GDP repeatedly default amid currency crises. (Colombo/April26/2027)
Wednesday April 26, 2023 11:17 pm
Wednesday April 26, 2023 11:17 pm
ECONOMYNEXT – Sri Lanka’s liquid milk production could fall sharply if a fresh outbreak of lumpy skin disease (LSD) in cattle continues its spread to more areas, officials warned.
Lumpy skin disease was first detected in the Eastern and Northern provinces around 2020 and was contained. But it has since re-emerged.
“There will be a drop in the milk harvest due to this,” Media Director at the Ministry of Agriculture Dharma Wanninayake said.
“A cow that gives 30 to 40 litres of daily, the milk can fall by 50 percent due this disease.”
Cows and buffaloes that are infected with the virus develop visible lumps under the skin.
Since the disease is painful the cows are in a mental stress, milk yields fall, Provincial Director at Department of Animal Production and Health (DAPH) S Vaseeharan told EconomyNext.
Authorities have told dairy farmers not to move cattle from district to district, Vaseeharan said.
Cattle is moved for slaughter. Farmers have also moved stock to plough rice paddies.
“We warned the farmers not to bring the cattle from those areas but many have not listened and the lump disease has resumed again, and there will be a drop in milk production,” Wanninayake said.
The disease spread from carriers like mosquitoes and ticks.
According to a research report by the Governor Veterinary Surgeon from Vavuniya the disease was first identified in Zambia in 1929 and has been reported in Africa and the Middle East. In 2019 an outbreak was detected in Odisha, India, and later in Sri Lanka.
Link to the official statement; https://www.np.gov.lk/pdf/AP&H/Emerging%20lumpy%20skin%20disease%20in%20Sri%20Lanka.pdf
(Colombo/April26/2023)
Wednesday April 26, 2023 11:16 pm
Wednesday April 26, 2023 11:16 pm
ECONOMYNEXT – Sri Lanka’s shares slipped at market close for the eighth consecutive session to a two-month low on Tuesday, with President Ranil Wickremesinghe disclosing the island’s position regarding debt restructuring, according to an analyst.
The main All Share Price Index (ASPI) fell 0.37 percent or 33.60 points to 9,091.72, the lowest since February 21, 2023, while the most liquid index, S&P SL20, was down 0.39 percent or 10.39 points to 2,646.48.
Sri Lanka will discuss debt restructuring with the Paris Club, including India and China separately, as part of an International Monetary Fund-backed plan to reduce and manage debt, President Ranil Wickremesinghe said.
India and the Paris Club have given assurances to restructure debt, and China has also given assurances, allowing the International Monetary Fund program to be approved.
Domestic debt also has to be restructured, he said, but no final decision has been reached.
There was a net foreign inflow of 70 million rupees for the day, but the total net foreign outflow for the year so far is 1.5 billion rupees.
The top losers during trade were Vallibel One, Citizens Development Bank, and Melstacorp.
The market generated a turnover of 740 million rupees, which is below the daily average of 1.6 billion rupees. The hotel industry has contributed significant amounts of revenue as tourism outcomes have become favorable. The crisis-hit island nation is looking at several avenues to generate dollars.
Sri Lanka’s stock market has been low ever since the approval of the International Monetary Fund, as reforms to stabilize the economy have been undertaken, and most of the implemented reforms are controversial to the demands of the public.
“Some banks are saying we cannot face it. Then I am saying take over the economy and take it forward,” President Wickremesinghe said.
The banking sector, which comprises the largest index in the market, has been seeing a constant wait-and-see approach as investors fear domestic debt restructuring.
“People cannot place a gun to the head and say if this is done this will collapse. This condition and that condition are not possible.”
Some are saying that the stock market will collapse.
“If it collapses, I will close it,” Wickremesinghe said. “That is all that has to be done.”
Sri Lanka has tried to run the country by denying monetary stability through a combination of flexible inflation targeting and output gap targeting (printing money to boost growth) for several years, running into a series of currency crises and depreciating the currency, running up foreign debt as long as ratings were favorable. (Colombo/April 26/2023)
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