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Sunday March 26th, 2023

Cabinet sets a limit on the number of Ministers in proposed 20A

ECONOMYNEXT- The Cabinet has approved three changes to the proposed 20th Amendment to be presented at the committee stage apart from changes to be done based on the determination of the Supreme Court.

Speaking at the cabinet briefing Co-Cabinet Spokesman Udaya Gammanpila said that the government has decided to limit the number of Cabinet Ministers to 30 and state ministers to 40 as originally enacted in the 19A.

He said that it was also decided to retain the power given to the Auditor General to audit state institutions, including the offices of the President and the Prime Minister as per the 19A to the constitution.

Further, he said when bringing emergency Bills to Parliament, the cabinet has decided to limit the fields to national security and national disaster management.

Today in Parliament Speaker Mahinda Yapa Abeywardena reading the determination of the Supreme Court said that clauses 3,5,14 and 22 in the proposed 20th amendment to the constitution requires approval by the people through a referendum to be made law as those clauses in present form have inconsistencies with Article 3 and 4 of the constitution.

However, he said such inconsistencies in clauses 3 and 14 could be eased by amending in accordance with the proposed committee stage amendments and inconsistency in clause 5 would cease if clause 5 suitably amended as specified in the determination.

Accordingly, clause 3 of the 20th amendment refers to the powers and function of the President which is included in the 20th amendment by repealing Article 33 of the constitution.

Clause 5 refers to the Immunity of the President from suit, clause 14 refers to Powers of the President to summon, prorogue and dissolve Parliament and clause 22 refers to the offences any public officer has to face due to failure of complying to the directions given by the Election Commission in holding elections and referendum as mentioned in Article 104GG which was completely repealed in the 20th amendment. (Colombo/Oct20/2020)

Reported by Imesh Ranasinghe

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Sri Lanka seeks to settle India ACU debt, credit lines over 5-years

ECONOMYNEXT – Sri Lanka has requested India to settle payments due to the country under the Asian Clearing Union mechanism and credit lines given in 2022 over 5 years, Indrajit Coomaraswamy, an advisor the island’s government said.

Sri Lanka is negotiating with India to settle the money over a 5-year period, Coomaraswamy, a former central bank governor told an online forum hosted by the Central Bank.

“Our request from the Indians is to settle it over five years,” he said. “That I think is still in the early stages of negotiation. The same with the one billion line of credit.”

Sri Lanka’s central bank owed the ACU 2.0 billion US dollars to the Asian Clearing Union according to a year end debt statement, issued by the Finance Ministry.

Sri Lanka owned India, 1,621 million dollars according to ACU data by year end, excluding interest.

India has given a 1 billion US dollar credit line to Sri Lanka as well a credit line for petroleum.

Sri Lanka in March 2024 has paid 121 million US dollar out of a 331 million US dollar IMF tranche to settle an Indian credit line.

Indian credits were given after the country defaulted in April 2022 as budget support/import when most other bilateral lenders halted giving money. (Colombo/Mar26/2023)

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Sri Lanka coconut auction prices up 1.16-pct

ECONOMYNEXT- Sri Lanka’s coconut auction prices went up by 1.16 percent from a week ago at an auction on Thursday, data showed.

The average price for 1,000 nuts grew to 83,219.45 from 82,260.58 a week earlier at the weekly auction conducted by Sri Lanka’s Coconut Development Authority on March 23.

The highest price was 92,500 rupees for 1,000 nuts up from the previous week’s 90,600 rupees, while the lowest was 76,500 also up from 70,000 rupees.

The auction offered 900,010 coconuts and 583,291 nuts were sold. (Colombo/Mar 26/2023)

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Sri Lanka in talks for billion dollar equivalent Indian rupee swap

ECONOMYNEXT – Sri Lanka is in talks with India for a billion US dollar equivalent Indian rupee central bank swap, to facilitate trade, Indrajit Coomaraswamy, ad advisor to the government said.

“The amount is still uncertain it could be up to the equivalent of a billion US dollars,” Coomaraswamy told an online forum hosted by Sri Lanka’s central bank.

The money will be used to facilate India Sri Lanka trade, he said.

India has been trying to popularize the use of Indian rupees for external trade and also encouraged Sri Lanka banks to set up Indian rupee VOSTRO accounts.

However the first step in popularizing a currency for external trade is to get domestic agents, especially exporters, to accept their own currency for trade, like in the case of the US or EU, analysts say.

India’s billion US dollar credit to Sri Lanka given during the 2022 crisis is settled in Indian rupees (transaction need).

However the Indian government itself has chosen to denominate it in US currency for debt purposes (future value).

In most South Asian nations, receivers of remittances are willing to accept domestic currencies, leading to active VOSTRO account transactions.

Sri Lanka is expected to repay a 400 million US dollar swap with the Reserve Bank of India next year under an International Monetary Fund backed program for external stability and debt re-structuring.

Central bank swap proceeds sold to banks, which are then sterilized with inflationary open market operations, can trigger forex shortages and currency crises, analysts warn.

Sri Lanka went to the International Monetary Fund after two years of inflationary monetary operations by the central bank’s issue department (money printed to suppress interest rates) triggered the biggest currency crisis in its history and external sovereign default.

Sri Lanka had gone to the IMF 16 times with similar external troubles except for the April 2003 extended fund facility under Central Bank Governor A S Jayewardene which was a purely reform-oriented program with the World Bank (PRGF/PRSP) program at a time when he was collecting reserves with deflationary monetary policy and perhaps the lowest inflation since the Bretton Woods collapsed. (Colombo/Mar26/2023)

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