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Wednesday June 7th, 2023

Climate Insecurity is a Collective Challenge, South Asia Needs a Common Policy

One third of Bangladesh’s landmass will go under water if current predictions on climate change stay true, forever erasing her present-day coastline. In Pakistan, areas that hardly ever know a monsoon, experienced rains and floods in 2022. The unfamiliar weather pattern led to thousands of deaths and displacement, and loss of livestock.

Yet, the region continues to place more weightage on geo-political issues instead of banding together to find solutions to climate change, which, is no longer a threat of the distant future, noted panelists who participated in ‘Climate Change in South Asia: The Impact on Livelihoods & Mitigation Strategies’ webinar.

It is time, notes Dr Bishnu Raj Upreti, Executive Chairperson, Policy Research Institute, Nepal for a ‘common South Asian climate policy, as climate insecurity is a collective challenge.’  He points out that the threats posed to South Asian nations by climate change is large enough to warrant laying aside border tensions to ‘build a common South Asian political voice.’ Acknowledging that though minimal, some behaviour patterns in the global south too add to climate change, Dr Upreti argues that South Asia must hold the stronger hand when negotiating with those nations whose carbon footprint is much bigger.

The webinar organised by the Friedrich Naumann Foundation (FNF) South Asia on February 15, was moderated by Shruti Sinha, Policy Outreach Manager, Chintan, India. Others on the panel were Syeda Rizwana Hasan, Executive Director of the Bangladesh Environmental Lawyers Association (BELA) and Afia Salam, a member of the Climate Change Council, Pakistan.

Bangladesh is home to 2.2 per cent of the world’s population as per the country’s 2022 statistics, and is the 8th most populated in the world. Forty-two million of the Bangladeshi population is found along her 19 coastal districts.  Bangladesh also has one of the world’s largest fresh water fishing industries.

Rising sea levels and other ecological changes are impacting the lifestyles of fishermen and farmers resulting in inward migration, says Hasan.  What’s more, the increasing challenges in accessing clean water is driving women to using birth control pills, she explains.

Bangladesh experienced two cyclones and major floods in 2022, monsoon season sans rain, and an outbreak of Dengue even in the winter, explains Hasan. And over use of chemicals by the farming sector has made a bad situation worse.  Even as the alarming situation must be discussed, raising awareness on the issue is scaring off the younger generation, she says adding that in years to come the map of Bangladesh will be quite changed.

Regionally, the environmental challenges are common, Hasan points out, adding that India, Bangladesh and Nepal, as well as India, Pakistan and China, share common rivers. However, the political integration seen in the European Union is missing in South Asia.  Even though the South Asian Association of Regional Cooperation (SAARC) has a climate change agenda, there has hardly been any activity , Hasan says.

Use of fossil fuel is a common threat to all in the region, yet, despite a discussion to phase it out, as Bangladesh proposes, India plans to phase down. ‘India can do better about being responsible on common issues,’ she says. Echoing Dr Upreti, Hasan too calls for rising above narrow political issues, and working on a common agenda. ‘Can we come together to share our water resources? Will our politics allow that?’ The EU is made up of nations that have fought each other for decades, and are, even today, not on the same page on some matters, however, they have been able to come together as a region. South Asia, meanwhile, concentrates on political differences while pertinent livelihood matters are overlooked, points out Dr Upreti.  Either political leaders must come to this realisation on their own, or society must bear pressure on them, he adds.

Signs of environmental damage have been visible for nearly a decade, and predictions are already coming true, yet, some segments of society have not been negatively impacted says Salam, who states that society must get used to seeing these concerns from the other’s perspective. A majority of those impacted are not financially capable of putting in the necessary protective measures. As well, owing to their social status, women are disproportionately affected, as are children and seniors.

She explains that given the length, breadth and geographical features of both India and Pakistan, ecological issues wary from area to area. While the main concern for Bangladesh is rising sea levels affecting the coastal people, India and Pakistan must deal with glacial melt, increased volume of water in the rivers, and colliding monsoon patterns. In 2022 Pakistan did not experience a Spring, and this year too, though its just February, temperatures are rising and the weather feels more like late April or early May. Agriculture is affected and ‘more people at the bottom of the line are pushed to further poverty.’  Also impacted are habitat laws and biodiversity.  ‘Fences on the border block off even animals from accessing their habitats.’

The 2022 floods have left residual water in areas where infrastructure was not up to the mark. Regions that don’t usually receive rain, were caught unawares, and lives and livestock were lost, simply because the people did not know what to do when the rains came. Moving them from their ancestral lands is not easy, and they need help navigating legal issues. The situation is complex, Salam says, adding that given the uncertainties of Mother Nature today, the people are wary about where the next monsoon would hit.

Salam also says media has a big role in raising awareness on adapting to environmental threats and the broader issues that come with it.  Except for a few who report on environmental issues, most mainstream media only cover disasters, she says, adding that they must go beyond that to inform audiences about adaptability measures and negotiating skills.

Acknowledging that SAARC is not utilised as it should be, Salam is nevertheless hopeful more collaborative methods could be implemented. When Karachi was hit by a heatwave, India’s Ahmedabad model was adapted, she says, adding that the latter was crafted with transboundary organisations working together.

In his Keynote address, Dr Om Katel of the Royal University of Bhutan said that while seventy per cent of the South Asian population in engaged in agriculture dependant livelihoods, they are also the most affected by climate change. Therefore, they need better access to reliable and equitable energy resources. Climate induced migration means loss of labour resources, he points out.

Better soil protection methods must also be introduced, and crop diversification is necessary. However, the challenge is to have farmers thinking long-term rather than for the short-term, which they are more prone to.

There is a lack of commitment in implementing policies at local level, for instance sustainable farming methods, even though at the higher administrative levels, well developed documents are available.

Climate justice must be inclusive in implementation. Not everyone contributes to climate change in the same manner, and responses must take all that into account.  All side must be heard. It is important to respect the fact that ‘eco systems have no boundaries,’ says Dr Katel. (Colombo/Feb23/2023)

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Sri Lanka Treasuries yields plunge, 12-month down 318bp

ECONOMYNEXT – Sri Lanka’s Treasuries yields plunged across maturities at Wednesday’s auction with the 12-month yield falling 318 basis points, in one of the biggest one day falls, data from the state debt office showed.

The 3-month yield fell 244 basis points to 23.21 percent.

The 6-mont yield fell 339 basis points to 21.90 percent, along with the 12 months to 19.10 percent.

The short-term yield curve is inverted.

The central bank last week cut its policy rate 250 basis points in a signaling move but is not printing money to enforce the rate cut.

The debt office sold all 140 billion rupees of offered securities. (Colombo/June07/2023)

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Sri Lanka forex reserves rise US$722mn in May 2023

ECONOMYNEXT – Sri Lanka’s foreign reserves grew 722 million US dollars to 3,483 million US dollars in May 2023 from 2,761 million US dollars in April, official data showed amid weak credit and better inflows.

Sri Lanka lost almost all its reserve in over two years as the central bank sold reserves and printed money to keep rates down (sterilized reserves sales) including borrowed dollars from India.

Gross official reserves fell to a low of 1,705 million US dollars in September 2022.

Sri Lanka’s central bank hiked rates in April 2022 to slow credit and also stopped printing money after it ran out of borrowed Asian Clearing Union dollars from India.

Sri Lanka’s gross official reserves are made up of both monetary reserves of the central bank and any balances of the Treasury account from loans or grants it gets.

The central bank’s net foreign reserves are still negative after busting up borrowed reserves to suppress rates. By April (before the collection of reserves in May) the central bank’s net reserves were negative by 3.7 billion US dollars.

In May alone 662 million US dollars were bought from the market, Central Bank Governor Nandalal Weerasinghe said.


No pre-determined level to stop Sri Lanka rupee appreciation: CB Governor

Borrowing dollars through swaps and busting them up, was invented by the US Federal Reserve as it was printing money and breaking the Bretton Woods system in the early 1970s.

Sri Lanka received a 350 million US dollar tranche from the Asian Development Bank and 331 million US dollars from the IMF to the Treasury for budget support.

The loans can be sold to the central bank by the government to generate rupees and spend. However, since credit is weak, not all the inflows go out of the country particularly as the central bank is conducting deflationary open market operations on a net basis.

By allowing the rupee to appreciate unlike in previous episodes of recovery in an IMF program, after a bout of money printing, the central bank is bringing down inflation – in some cases absolute prices – and restoring confidence and easing the ‘pain’ of ‘monetary policy’ or stimulus.


Why is Sri Lanka’s rupee appreciating?

Though exports are falling, tourism revenues are also picking up.

The budget support loans, tourism receipts less the reserve collected will widen the trade deficit. Building foreign reserves involves lending money to the US or other western nations and is similar to repaying foreign debt. (Colombo/June07/2023)

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SriLankan Airlines expects $50 mln profit in FY 2023/24 

ECONOMYNEXT – Sri Lanka’s loss making national carrier is aiming to earn a profit of 50 million US dollars, its Chief Executive Officer said, after it incurred a loss of nearly 500 million US dollars in the previous financial year.

“I think the outlook for next year is even stronger,” Richard Nuttall, CEO at SriLankan said in an interview with Channel News Asia.

“Assuming that the world stays the same in the year ahead, we expect Sri Lanka’s economy to rebound and tourism to come back, we are forecasting $50 million profit next year,” he said.

‘The Airlines incurred a whopping loss of 168.6 billion Sri Lanka rupees in the financial year 2021/22 ended in March 31, 2022, compared to the loss of 49.7 billion rupees in the previous year, the Sri Lankan has said in the past.

SriLankan Airlines is one of the 52 loss making state enterprises that the International Monetary Fund had recommended for restructuring. President Ranil Wickremesinghe’s government has been considering absorbing the cumulative losses of more than $1 billion and privatizing the national career.

Nuttall said though the currency depreciation did not have any impact on the profitability last year, the country’s short supply of jet fuel hurt the airline.

“So if you look at the year we just had, the year started with the economic challenges in the country in Sri Lanka. We had travel advisories. and the country ran out of jet fuel in July and August. I have never worked for an airline which does not have jet fuel in its home country before,” he said.

“So everything had to stop in India. We lost payload.” (Colombo/June 07/2023)

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