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Wednesday June 7th, 2023

Fake news scares, vested interests delaying Sri Lanka govt decision making: Harsha

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ECONOMYNEXT – Sri Lanka’s government decision making gets delayed as it has to grapple with vested interests and public agitation stirred by rumor and false facts which ignore scientific evidence, a key policymaker, deputy minister Harsha De Silva said.

Agitation caused by rumour-mongering has forced the government to spend time and effort to tackle a range of issues from opposition to free trade deals, to a fake sterilization scare and fears about oil palm cultivation, he told the annual meeting of the Palm Oil Industry Association.

He recalled how he was slandered for his efforts to introduce a state-sponsored emergency ambulance service funded by India that is now widely used without any fusss.

“I was attacked mercilessly, thrown buckets of mud at and attacked personally when I started the 1990 Suva Sariya pre hospital care ambulance service,”  said de Silva, Deputy Minister of National Policies and Economic Affairs.

“…vested interest, sometimes are so strong, they protest, even lifesaving services.

“So here I see a classic problem, a wicked problem as some people say; you present one set of facts and somebody else presents another set of facts. Whose facts are correct?”

De Silva referred to the mass sterilization scare where a Muslim doctor was alleged to have sterilized Sinhala-Buddhist women which turned out to be a fake story spread by the doctor’s own hospital colleagues and the police in the area.

“(The) case is irresponsible journalism,” he said.

Another recent example was the MCC (Millenium Challenge Corporation) grant by the United States where it was alleged the government was going to build a corridor from Colombo to Trincomalee.

“It was alleged that on either side of this corridor, one kilometer each, we will want to fence it, we were going to divide this nation into north of Colombo-Trincomalee highway and South of Colombo-Trincomalee highway,” de Silva said.

“The Singapore Free Trade Agreement, how much false information that spread around that,” he added.

“It was rumored that the Singapore Free Trade Agreement would bring in plane loads of Singaporeans to take our jobs. It was absolute bunkem.”

The palm oil industry in Sri Lanka has gained a lot of bad coverage due to a report published by Central Environmental Authority (CEA) which the industry officials says is baseless.

A draft study by the CEA, on which much of the opposition is based, was not signed by four of seven members of the panel which prepared it and contained several wrong conclusions, according to Asoka Nugawela, a professor in the faculty of agriculture and plantation management at the University of Wayamba.

De Silva drew conclusions from these issues saying, “It is a problem that we, as a society face. The way to go about it is evidence. Unless you are able to scientifically, and economically present the evidence.

“Take the discussion away from those who want to profit or perhaps for whatever vested interest they have to stop it and give the decision to be made on an evidence based transparent mechanism,” de Silva said.
(COLOMBO, 27 August 2019)


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Sri Lanka’s shares slip on profit taking and selling pressure

ECONOMYNEXT – Sri Lanka’s shares closed lower on Wednesday after four consecutive gains in previous sessions spiraled into selling interest and profit taking, an analyst said.

The main All Share Price Index was down 0.28 percent or 24.39 points to 8,722.06, this is the lowest the index has been since May 02, while the most liquid index S&P SL20 was down 0.40 percent or 9.92 points to 2,468.44.

“The market was gaining in the previous sessions and there is selling and profit taking present today, due to continuously being on green,” an analyst said.

In the previous sessions the market was seeing gains, due to lowered policy rates and low inflation stimulating buying interest and driving the sentiment up, an analyst said.

Sri Lanka’s inflation in the 12-months to May 2023 has eased to 25.2 percent from 35.3 percent a month earlier according to a revised Colombo Consumer Price Index calculated by the state statistics office.

The central bank cut the key policy rates by 250 basis points to spur a faltering economic growth as inflation was decelerating faster than it projected.

“There are gradual improvements in the market sentiment, with positive sentiments coming in from lowered policy rates and inflation,” an analyst said.

The market generated foreign inflows of 12 million rupees and received a net foreign inflow of 18 million rupees, due to low share prices and discounted shares followed by a dividend announcement.

The market generated a revenue of 554 million rupees, this is the lowest the turnover has been since May 10, while the daily turnover average was 1 billion rupees. From the total generated revenue, the banking sector contributed 120 million rupees, Diversified Banks contributed 115 million rupees and the Capital Goods Industry generated 78 million rupees.

Top losers during trade were Sampath Bank, Commercial Bank and Aitken Spence. (Colombo/June06/2023)

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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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