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Monday April 22nd, 2024

Creative industries remain an untapped sector in Sri Lanka

ECONOMYNEXT – The power of creative economies as an accelerator of Gross Domestic Product (GDP) has been harnessed in many countries around the world.

Creative industries create employment, income, increase export earnings, promote innovation and contribute to societal wellbeing (United Nations Publications, 2002).

The creative industry sector generated USD 2,250 billion in revenues and amounted to 3% of the global GDP in 2015, a study conducted by Ernst & Young and presented jointly by UNESCO and CISAC (the International Confederation of Authors and Composers Society) showed.

The “creative economy” encompasses all industries relying on creative activities and akin to the “knowledge economy” is a key driver of endogenous growth through investment in human capital.

The United Nations Conference on Trade and Development (UNCTAD) defines creative industries as cycles of creating, producing and distributing goods and services that use creativity and intellectual capital as primary inputs.

They compromise a set of knowledge-based activities that produce tangible goods and intangible or artistic services with creative content, economic value and market objectives.

Globally, creative economies are a feasible development option in developing economies (United Nations Publications, 2002).

UNCTAD estimates that in 2020, creative goods and services represented 3% to 21% of total merchandise and services exports and it employed more young people than any other industries and accounted for more than 50 million jobs worldwide.

In 2020 main export products in creative goods were design products, new media products, art crafts, visual arts, publishing and performing arts.

In South Asia, India leads in creative goods exports.

Creative Services vastly exceed exports in creative goods but are more difficult to measure.

A White Paper published by the World Economic Forum identified the following factors in enabling a creative economy:
a) Enhancing the local strengths through academic, research and cultural centres to allow ideas and people to mingle.
b) Enabling technological platforms to enable creative ventures to be launched from any location to scale.
c) Inspiring entrepreneurs – highlighting successful individuals to inspire and train other creative entrepreneurs.
d) Governmental regulation and incentives to create the right conditions for creativity to flourish
e) The power of place – making the locality a place people want to live due to location and amenities.

The paper highlights how Chinese governments focus on developing creative clusters including an art zone and creative village with more than 1,000 artists from around the world has led to Beijing becoming a leading creative economy hub in Asia (The World Economic Forum, 2016).

Creative economies recognise and value to interplay between human creativity, ideas, intellectual property, knowledge and technology (United Nations Publications, 2002).

The United National Generation Assembly Resolution 74/198 highlighted that the creative economy is contributing to the Sustainable Development Goals (SDGs) in multiple ways, especially in Goal 1(no poverty), 5(gender equality), 8(decent work and economic growth), 9 (industry, innovation and infrastructure), 10 (reduced inequalities), 11 (sustainable cities), 12 (sustainable consumption and production pattern), 15 (peaceful and inclusive societies) and 17 (means of implementation and global partnerships).

As we navigate the narrow and perilous path of economic revival in Sri Lanka in an unstable and uncertain world, thought should be given to whether enough is being done by both the policy makers and private enterprise to foster the creative economy in Sri Lanka.

In this context the work being done by local arts organisations bear special examination.

The author is a patron of the arts. (Colombo/Jan18/2024)

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IMF official: Sri Lanka’s road ahead is challenging, critical to keep up with reform momentum

ECONOMYNEXT –International Monetary Fund’s First Deputy Managing Director Gita Gopinath said Sri Lanka’s future with many reforms are challenging, but it is critical to keep up with the reform momentum.

Gopinath stated this after meeting the island nation’s State Finance Minister Shehan Semasinghe Central Bank Governor Nandalal Weerasinghe, and Treasury Secretary Mahinda Siriwardena on the sideline of the IMF/World Bank Spring Meetings in Washington.

“I commended them on hard-won economic gains in the past year. The road ahead is challenging and it’s critical to keep up with the reform momentum,” Gopinath wrote on her X platform.

Under IMF programme, President Ranil Wickremesinghe has implemented a raft of hard reforms including higher taxes.

Sri Lanka agreed to the IMF programme after it declared bankruptcy with sovereign debt default in April 2022.

Semasinghe after the meeting tanks Gopinath for acknowledging Sri Lanka’s economic progress.

“Our discussion was insightful and productive, and we appreciate the opportunity to delve into the challenges and opportunities ahead,” the State Finance minister said in his X platform.

“We remain steadfast in our commitment to our reform agenda and eagerly anticipate continued collaboration with the IMF to advance our shared goals.”

Sri Lanka was compelled to go for IMF after the unprecedented economic crisis which was followed by a political crisis that ousted former president Gotabaya Rajapaksa and his government who were legitimately elected.

The IMF programme has included reforms in state-owned enterprises, fiscal sector and financial sectors to ensure debt sustainability.

The global lender also has pledged its support to speed up the island nation’s lingering debt restructuring process with private creditors including sovereign bond holders. (Colombo/April 22/2021)

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Sri Lanka motor racing crash claims 7 lives, 4 critical

ECONOMYNEXT – A deadly accident at motor Race Sri Lanka’s hill country town of Diyathalawa has claimed at least 7 lives police said, after a racing vehicle, in the seasonal Fox Hill Super Cross ploughed in to spectators after running off the track.

Another 21 spectators were injured Sunday, and hospitalized and at least four were critical, police said.

Thousands of people come to watch the Fox Hill Super Cross race, which is usually held in April, as large numbers of people head to the cooler climes in the hills.

According to footage taken by spectators one car overturned on the side of the track.

Sri Lanka’s Newsfirst television said Marshalls were waving flags to caution other vehicles, when another car went off the track and crashed into spectators. (Colombo/April21/2024)

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Widespread support for Sri Lanka debt workout, reform progress at IMF/WB meet: Minister

ECONOMYNEXT – There was widespread support for Sri Lanka’s debt restructuring and acknowledgement of progress made under an International Monetary Fund program, at meeting of the fund and World Bank, State Minister for Finance Shehan Semasinghe said.

“The strides made in our economic recovery and financial stability have been acknowledged as significant advancements towards our country’s prosperity by our stakeholders and international partners,” Minister Semasinghe said in an x.com (twitter) post after attending the meetings.

“Further, it was heartening to note the widespread appreciation and support for Sri Lanka’s debt restructuring process.

“We remain steadfast in our commitment to reaching the restructuring targets and confident of smooth progress in the continued good-faith engagements for a speedy debt resolution that will ensure debt sustainability and comparability of debt treatment.”

Sri Lanka ended a first round of talks with sovereign bondholders in March without striking a deal but some agreement on the basis for a deal.

An initial deal with bilateral creditors have been reached, but they may be awaiting a deal with private creditors to sign formal agreements.

International partners have appreciated reforms made under President Ranil Wickremesinghe, Minister Semasinghe said.

“It was great to engage in productive bilateral discussions with all of whom appreciated the recent economic developments, progress in debt restructuring, strengthening of tax administration, and ongoing governance reforms,” he said.

Sri Lanka’s rupee has been allowed to re-appreciate by the central bank amid deflationary monetary policy, bringing tangible benefits to people in the form of lower energy and food prices, unlike in past IMF programs.

Electricity prices were cut as a strengthening currency helped reduce the cost of coal imports.

Related Sri Lanka central bank mainly responsible for electricity price cut

The currency appreciation has also allowed losses to the Employment Provident Fund imposed to be partially recouped, helping old workers near retirement, as well as raising disposable incomes of current wage earners on fixed salaries.

Related Sri Lanka EPF gets US$1.85bn in value back as central bank strengthens rupee

The IMF, which was set up after World War II to end devaluations seen in the 1930s after the Fed’s policy rate infected other key central banks, started to actively encourage depreciation after a change to its founding articles in 1978 (the Second Amendment).

The usefulness of money as a store of value, or a denominator of current and future values then decline, leading to loss of real savings, real wages and increases in social unrest.

Before that, members who devalued more than 10 percent after printing money for growth or any other reason, faced the threat of suspension from the organization as punishment.

Sri Lanka’s rupee has appreciated to around 300 to the US dollar now from 370 after a surrender rule was lifted in March 2023.

But there is no transparency on the basis that economic bureaucrats are allowing the currency to gain against the US dollar (the intervention currency of the central bank).

The rupee is currently under pressure, despite broadly prudent monetary policy, due to an ‘oversold position’ in the market after recent appreciation made importers and banks to run negative open positions as the usefulness of the currency as a denominator of future value declined with sudden strenghtening. (Colombo/Apr21/2024)

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