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Monday February 6th, 2023

Cyclone Burevi to reach Sri Lanka coast Dec 02 night – Updated

ECONOMYNEXT – Cyclonic storm Burevi is moving closer to Sri Lanka and is likely to reach Sri Lanka’s Eastern and North-eastern coast on the night of December 02, the met office said, warning of a storm surge, flash floods and damage to roofs and power lines on land.

“The system is very likely to move west-northwestwards and cross north-eastern coast of Sri Lanka between Trincomalee and Point-Pedro, close to Mullaithivu around tonight(within 7.00 p.m-10.00 p.m on 02 December ),” the met office said.

“This Cyclonic storm with a wind speed of 80-90 kmph gusting up to 100 kmph is very likely to move nearly westwards thereafter, emerge into Gulf of Mannar by tomorrow morning (December 03).

By 1430hours on December 03, Cyclone Burevi was 110 kilometres off Trincomalee and moving at 15 kilometres per hour, the Indian met office said.

The storm is expected to be around 50 kilometres off Trincomallee by 1730 hours and hit land by 2330hours, Sri Lanka’s met department said.

A torm surge of about 1 meter height above the astronomical tide is likely to inundate low lying coastal areas extending from Trincomalee to Kankasanthurai and in Pooneryn to Puttalam, the agency said.

Strong winds of 80 to 100 kilometres per hour is forecasted for December 02 and 03 in the Northern, North-Central, Eastern, North Western, Western, Central and Sabaragamuwa provinces. .

DAMAGE EXPECTED

Damage to huts, temporary shelters and light structures

Destroy the roof tops/ sheets etc.

Damage to power and communication lines.

Breaking of tree branches and uprooting of large avenue trees.

Damage to paddy crops, banana, papaya trees and orchards.  Damage to harbor yachts  Flash flood

Sea water inundation in low lying areas in the near coast.

ACTIONS SUGGESTED

For the Land area:

Coastal hutment dwellers are advised to move to safer places. Other people in the affected areas to remain indoors.

Beware of fallen trees and power lines.

Avoid using wired telephones and connected electric appliances during thunderstorms.

General public is requested to be vigilant regarding impending extreme weather situation.

For emergency assistance contact the local disaster management authorities.

Requested to be attentive about future advisories issued by the Department of Meteorology in this regard.

Heavy rains of up to 200 millimeters are forecast for some areas in Northern, North Central, Eastern and North Western provinces.

“Naval and fishing communities are warned not to venture to the sea areas around the island until further notice,” the warning said.

“Those who are out at aforementioned sea regions are advised to return to coasts or moved safer areas as soon as possible.

The Indian met office said a storm surge of about one metre may hit the low lying areas in the Eastern coast as Burevi makes landfall.

(Colombo/Dec02/2020)

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  1. Leel says:

    covid-19 and then cyclone. (ගහෙන් වැටුණු ගොටගේ ආණ්ඩුවට ගොනෙකුත් අනින්නයි යන්නෙ.)

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  1. Leel says:

    covid-19 and then cyclone. (ගහෙන් වැටුණු ගොටගේ ආණ්ඩුවට ගොනෙකුත් අනින්නයි යන්නෙ.)

Sri Lanka’s banks may have to re-structure loans caught in progressive tax

ECONOMYNEXT – Sri Lanka’s banks should explore restructuring loans of salaried employees hit by progressive tax, Central Bank Governor Nandalal Weerasinghe said as progressive income taxes were imposed at lower thresholds amid high inflation following a sovereign default.

There have been complaints mainly by picketing state enterprise executives and also other workers of such agencies such Sri Lanka Port Authority that high progressive taxes were putting their bank accounts into overdraft after loan installments were cut.

“Yes, they have mentioned that,” Governor Weerasinghe said responding to questions from reporters.

“We have told the banks earlier as well. Because the interest rates are high and their business being reduced, the SME sector, the repaying capability has reduced.

“We have told them to explore their repaying capabilities and restructure their loans in order to safe guard both sides. At this time also we are asking the banks to do that.”

In the case of some state enterprises, the Pay-As-You-Earn tax, through which income tax is deducted from salaried employees in the past was not paid by the employee but the SOE.

Bad loans of the banking system overall had risen after the rupee collapsed, reducing the spending power in the economy, while rates also went up as money printing was scaled back, foreign funding stopped and the budget deficit widened.

The rate hike has prevented possible hyperinflation and a bigger implosion of the economy by stabilizing the external sector in the wake of previous mis-targeting of interest rates.

In the current currency crisis a delay in an IMF program due to China not giving debt assurances as well as fears of domestic debt re-structure has kept interest rates elevated.

Sri Lanka’s economic bureaucrats in 2020 cut taxes and also printed money, in a classic ‘Barber Boom’ style tactic implemented by UK economists and Chancellor Anthony Barber in 1971 to boost growth and employment.

The ‘Barber Boom’ ended in a currency crisis (at the time the UK did not have a floating rate and the Bretton Woods system was just starting to collapse under policies of Fed economists) and inflation of around 25 percent in the UK.

The UK implemented a three-day working week to conserve energy after stimulus while Sri Lanka saw widespread power cuts as forex shortages hit.

Read more:

Anthony Barber budget of 1971

Anthony Barber budget of 1972

Similar policies saw a worldwide revival as the US Fed economists injected money during the Covid crisis mis-using monetary policy to counter a real economic shock and boost employment while the government gave stimulus checques.

Now the world is facing an output shock as a hangover the Covid pandemic recedes.

The re-introduction of progressive tax at a maximum rate of 36 percent while tax brackets high jumped with the rupee collapsing from 200 to 360 to the US dollar had reduced disposable incomes further.

Salaries employees were encouraged to get loans in 2020 with the central bank mandating a 7 percent ceiling rate for five years.

However, any borrower who got loans on floating rates long before the scheme are now facing higher rates. (Colombo/Feb06/2023)

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Sri Lanka to address SME tax problems at first opportunity: State Minister

ECONOMYNEXT – Problems faced by Sri Lanka’s small and medium enterprises from recent tax changes will be addressed at the first opportunity, State Minister for Finance Ranjith Siyambalapitiya said.

Business chambers had raised questions about hikes in Value Added Tax, Corporate Income Tax and the Social Security Contribution Levy (SSCL) that’s been imposed.

It should be explored on how to amend the Inland Revenue Act, Siyamabalapitiya said, adding that the future months should be considered as a period where the country is being stabilized.

Both the VAT and SSCL are effectively paid by customers, but the SSCL is a cascading tax that makes running businesses difficult.

In Sri Lanka SMEs make up a large part of the economy, accounting for 80 per cent of all businesses according to according to the island’s National Human Resources and Employment Policy.

(Colombo/ Feb 05/2023)

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Sri Lanka revenues Rs158.7bn in Jan 2023 up 51-pct

ECONOMYNEXT – Sri Lanka’s government revenues were 158.7 billion rupees in January 2023 but expenditure and debt service remained high, Cabinet spokesman Minister Bandula Gunawardana said.

In January 2022 total revenues were Rs104.5 billion according to central bank data.

Sri Lanka’s tax revenues have risen sharply amid an inflationary blow off which had boosted nominal GDP while President Ranil Wickremesinghe has also raised taxes.

Departing from a previous strategy advocated by the IMF expanding the state and not cutting expenses, called revenue based fiscal consolidation, he is attempting to do classical fiscal consolidation with spending restraint.

President Ranil Wickremesinghe has presented a note to cabinet requesting state expenditure to be controlled, Gunawardana told reporters.

State Salaries cost 87.4 billion rupees.

Pensions and income supplements (Samurdhi program) were29.5 billion rupees.

Other expenses were 10.8 billion rupees.

Capital spending was   21 billion rupees.

Debt service was 377.6 billion rupees for January which has to be done with borrowings from Treasury bills, bonds and a central bank provisional advance of 100 billion rupees, Gunawardana said.

Interest costs were not separately given. (Colombo/Feb05/2023)

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