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Tuesday November 29th, 2022

Crisis-hit Sri Lanka aims for USD800 mln from tourism; India-led revival advised

ECONOMYNEXT -Sri Lanka Tourism Development Authority (SLTDA) expects to attract around 800,000 tourists for the rest of the year, with an estimated revenue of 800 million US dollars with Prime Minister Ranil Wickremesinghe instructing to attract Indian tourists amid a worsening economic crisis.

“The Prime Minister has instructed officials to prepare a plan to attract tourists from India for the next six months,” the Prime Minister’s office said in a statement after a meeting between Wickremesinghe and SLTDA officials.

“He also requested the relevant authorities to make arrangements for the resumption of operations of the Palaly Airport,” it said referring to the airport in the former war zone of Jaffna. Palaly airport is expected to attract Indian tourists into Sri Lanka’s culturally-rich North and East.

Sri Lanka witnessed the arrivals of 378,521 foreign visitors to the island nation in the first five months of this year. The Covid-19 pandemic hit 2021 saw 194,495 tourists for the full year.

The tourism industry started to boom in March this year, but the arrivals hit by economic crisis and protest-led political crisis.

Tourism accounted for 5 percent of the GDP in 2018 with 4 billion US dollar earnings, but  fell in 2019 due to the impact of Easter Sunday attack and later due to the Covid-19 pandemic. It has brought 680.7 million US dollars in the first five months of this year.

Sri Lanka is targeting around 2.5 million tourists by 2025 with an expected revenue of $ 3.5 billion and the Prime Minister urged all stakeholders to formulate long-term plans to attract around 1.5 million high-level tourists.

“The Prime Minister also instructed the relevant stakeholders to engage in youth awareness programs as many employees in the hospitality sector have already left for other locations and the number of new recruits to hotel schools in the country has come down drastically,” the prime minister’s office said.

“The Prime Minister also discussed the possibilities of organizing cultural festivals which will provide a unique opportunity to create new employment opportunities and allow the tourists to immerse themselves in the local cultures.”

Meanwhile, Minister of Tourism Harin Fernando said that he had already held discussions with the diplomatic community to compel the relevant countries to lift the existing tourism restrictions on Sri Lanka. (Colombo/June 14/2022)

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  1. sacre blieu says:

    He continues to lie, and the gas crisis is getting worse Even crimes against women and children have also increased a lot. In the Colombo area, some outer districts have ridden with it, is particular eh Dehiwala/Mt. Lavinia area.

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  1. sacre blieu says:

    He continues to lie, and the gas crisis is getting worse Even crimes against women and children have also increased a lot. In the Colombo area, some outer districts have ridden with it, is particular eh Dehiwala/Mt. Lavinia area.

A new Sri Lanka monetary law may have prevented 2019 tax cuts?

ECONOMYNEXT – A new monetary law planned in 2019, if it had been enacted may have prevented the steep tax cuts made in that year which was followed by unprecedented money printing, ex-Central Bank Governor Indrajit Coomaraswamy said.

The bill for the central bank law was ready in 2019 but the then administration ran out of parliamentary time to enact it, he said.

Economists backing the new administration slashed taxes in December 2019 and placed price controls on Treasuries auctions bought new and maturing securities, claiming that there was a ‘persistent output gap’.

Coomaraswamy said he keeps wondering whether “someone sitting in the Treasury would have implemented those tax cuts” if the law had been enacted.

“We would never know,” he told an investor forum organized by CT CLSA Securities, a Colombo-based brokerage.

The new law however will sill allow open market operations under a highly discretionary ‘flexible’ inflation targeting regime.

A reserve collecting central bank which injects money to push down interest rates as domestic credit recovers triggers forex shortages.

The currency is then depreciated to cover the policy error through what is known as a ‘flexible exchange rate’ which is neither a clean float nor a hard peg.

From 2015 to 2019 two currency crises were triggered mainly through open market operations amid public opposition to direct purchases of Treasury bills, analysts have shown.

Sri Lanka’s central bank generally triggers currency crises in the second or third year of the credit cycle by purchasing maturing bills from existing holders (monetizing the gross financing requirement) as private loan demand pick up and not necessarily to monetize current year deficits, critics have pointed out.

Past deficits can be monetized as long as open market operations are permitted through outright purchases of bill in the hands of banks and other holders.

In Latin America central banks trigger currency crises mainly by their failure to roll-over sterilization securities. (Colombo/Nov29/2022)

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Sri Lanka cabinet clears CEB re-structure proposal: Minister

ECONOMYNEXT – Sri Lanka’s cabinet has cleared proposals by a committee to re-structure state-run Ceylon Electricity Board, Power and Energy Minister Kanchana Wijeskera said.

“Cabinet approval was granted today to the recommendations proposed by the committee on Restructuring CEB,” he said in a twitter.com message.

“The Electricity Reforms Bill will be drafted within a month to begin the unbundling process of CEB & work on a rapid timeline to get the approval of the Parliament needed.”

Sri Lanka’s Ceylon Electricity Board finances had been hit by failure to operate cost reflective tariffs and there are capacity shortfalls due to failure to implement planned generators in time. (Colombo/Nov28/2022)

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Sri Lanka new CB law to cabinet soon as IMF prior action

ECONOMYNEXT – Sri Lanka’s new central bank law will be submitted to the cabinet as a prior action of International Monetary Fund with clauses to improve governance and legalize ‘flexible’ inflation targeting, Central Bank Governor Nandalal Weerasinghe said.

Under the new law members of the monetary board will be appointed by the country’s Constitutional Council replacing the current system of the Finance Minister making appointments.

“It will be a bipartisan approach,” Governor Weerasinghe told an investor forum organized by CT CLSA Securities, Colombo-based brokerage.

“The central bank’s ability to finance the budget deficit will be taken out. Thirdly the flexible inflation targeting regime will be recognized in the law as the framework.”

The law will also make macro-prudential surveillance formally under the bank.

There will be two governing boards, one for the management of the agency and one to conduct monetary policy.

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