An Echelon Media Company
Wednesday June 19th, 2024

Harsha says Sri Lanka must look to South India for growth, acknowledges president’s successes

ECONOMYNEXT — Sri Lanka can achieve 10 percent growth in 10 years if it dismantles the walls around its economy and starts building bridges instead, particularly to rapidly growing neighbouring regions like South India, opposition MP Harsha de Silva said, also acknowledging that President Ranil Wickremesinge has made some difficult achievements.

“Can we bring 10 percent growth in 10 years? Yes, we can. How we do it is the question. What would be the programme? Break down the walls surrounding the country and build bridges. That’s number one. Nothing can be done without it,” the MP said at a press conference on Wednesday May 15.

The main opposition Samagi Jana Balawegaya (SJB) legislator said South India is a notable example.

“Look at South India and its growth. The Tamil Nadu economy is projected to grow to 1 trillion US dollars by 2030. Now, because I said this, some man had gone and said ‘Harsha de Silva said the country should join Tamil Nadu’. What two-bit politicians are these if they can’t understand such a concept?”

The five South Indian states of Tamil Nadu, Andhra Pradesh, Karnataka, Kerala and Telengana are collectively the most rapidly developing region in the world, de Silva said.

“These may not be countries, but they are as big. Cities like Chennai may have a population comparable to ours. These fives states are developing rapidly. We’re above 20 kilometres south of this region. What are supposed to do?”

Growth in South India will accelerate over a period of 10 to 15 years, de Silva, the SJB’s top economic policymaker, said, adding that Sri Lanka must cash in.

“So what do we do? Do we hate them? Do we laugh at them? Do we criticise them? Or do we work together with them and get something out of it for ourselves? That’s what I propose.

“If it is our neighbour that is developing the fastest, why on earth should we not benefit from that?” he said.

The MP’s comments come amid growing pushback from leftist parties and nationalist outfits on proposed Indian investments in the Sri Lankan economy, particularly in the energy sector.

Insisting that he is a pragmatic person, de Silva said that achieving 10 percent growth is entirely within the realm of possibility.

“No one can tell me this cannot be done,” he said.

Responding to questions from reporters, de Silva that political parties cannot keep making statements with the election in mind.

“I’m not Sajith nor Aruna. I’m Harsha.

“You can’t keep saying things looking at the election. Difficult things have to be done. For example, President Ranil Wickremesinghe has done a lot of difficult things. We have to accept that,” he said.

Rival opposition party leader Anura Kumara Dissanayake has ackowledged that Wickremesinghe has “crossed half the suspension bridge” and must keep moving with the International Monetary Fund (IMF).

“What did they say before? They said no country that worked with the IMF succeeded. But what did we say? We said from the get go to go to the IMF,” said de Silva. (Colombo/May17/2024)

Leave a Comment

Your email address will not be published. Required fields are marked *

Leave a Comment

Leave a Comment

Cancel reply

Your email address will not be published. Required fields are marked *

Central banks expect to increase gold reserves after buying 1,037 tonnes in 2023: Survey

ECONOMYNEXT – About 29 percent of central banks in the world intended to increase their gold reserves in 2023, up from 24 percent in 2023 and just 8 percent in 2019, a survey by the World Gold Council showed.

“The planned purchases are chiefly motivated by a desire to rebalance to a more preferred strategic level of gold holdings, domestic gold production, and financial market concerns including higher crisis risks and rising inflation,” the WGC said.

About 81 percent of 70 central banks that responded to the survey expected global central bank holdings of gold to go up, from 71 percent in 2023.

While in prior years, gold’s “historical position” was the top reason for central banks to hold gold, this factor dropped significantly to number five this year.

This year, the top reason for central banks to hold gold is “long-term store of value / inflation hedge” (88%), followed by “performance during times of crisis” (82%), “effective portfolio diversifier” (75%) and “no default risk” (72%).

Concerns about sanctions were listed as by 23 percent of emerging market central banks (0 advanced).

De-dollarization as a reason to hold gold gained ground, but was not among the main reasons.

About 13 percent of emerging market central banks listed de-dollarization as one of the reasons to buy gold up from 11 percent last year and 6 advanced nations said the same from zero last year.

Around 49 percent of central banks expected gold reserves to be moderately lower five year from now in the 2024 survey, against 49 percent in 2023 and 38 percent in 2022.

About 13 percent of central banks surveyed said US dollar reserves would be significantly lower in the 2024 survey, up from 5 percent in 2023 and 4 percent in 2022. (Colombo/June18/2024)

Continue Reading

Sri Lanka rupee closes weaker at 304.75/305.40 to US dollar

ECONOMYNEXT – Sri Lanka’s rupee closed weaker at 304.75/305.40 to the US dollar Tuesday, down from 304.15 to the US dollar Friday, dealer said, while some bond yields edged up.

Sri Lanka’s rupee has weakened amid unsterilized excess liquidity from earlier dollar purchases.

Excess liquidity fell from as high as 200 billion rupees, helped by some sales of maturing bills and also allowing some term contracts to run out.

However the central bank has started to inject liquidity again below its policy rate to suppress interest rates.

On Tuesday 30 billion rupees was printed overnight at an average yield of only 8.73 percent.

Separately another 25 billion rupees was printed till June 25 at 8.09 percent to 9.05 percent, which was still below overnight the policy rate of 9.5 percent.

Nobody has so far taken the central bank to court for printing money beyond overnight at rates lower than the overnight rate.

Sri Lanka operates an ad hoc exchange rate regime called ‘flexible exchange rate’ which triggers panic among market participants, as the central bank stays away when spikes in credit either creates import demand or unsterilized credit is used up.

“If large volumes of unsterilized liquidity is left, the exchange rate has to be closely defended to prevent speculation involving early covering of import bills and late selling of exports proceeds,” EN’s economic columnist Bellwether says.

“Just as an appreciating or stable exchange rate leads to late covering of import bills, a falling rates leads to immediate covering of import bills.

“Keeping exchange rates stable is a relatively simple exercise but it is difficult to do so if short term rates are also closely targeted with printed money, as liquidity runs out, as if the country had a free float and no reserve target.”

“When there is a large volume of excess liquidity remaining (except those voluntary deposited for long periods by risk averse banks) the the interest rates structure is under-stated compared to the reported reserves.

“Interest rates would be a little higher than seen in the market if the liquidity was mopped up and domestic credit and imports were blocked to prevent the reserves from being used up.”

In East Asia there is greater knowledge of central bank operational frameworks, though International Monetary Fund driven flawed doctrine are also threatening the monetary stability of those countries, critics say.


Vietnam selling SBV bills to stabilize the Dong, as Sri Lanka rupee also weakens

Sri Lanka’s rupee started to collapse steeply after the IMF’s Second Amendment in 1978 along with many other countries as flawed operational frameworks gained ground without a credible anchor.

A bond maturing on 15.12.2026 closed at 10.10/30 percent up from 10.05/30 percent Friday.

A bond maturing on 15.10.2027 closed at 10.60/57 flat from 10.60/80 percent.

A bond maturing on 01.07.2028 closed at 11.15/35 percent, up from 11.05/20 percent.

A bond maturing on 15.09.2029 closed at 11.80/90 percent unchanged.

A bond maturing on 15.10.2030 closed at 11.90/12.00 percent.

A maturing on 10.12.2031 closed at 11.95/12.10 percent.

A bond maturing on 01.10.2032 closed at down at 11.95/12.10 percent, down from 12.00/10 percent. (Colombo/Jun14/2024)

Continue Reading

Sri Lanka’s Ceylon Chamber links up with Gujarat Chamber

ECONOMYNEXT – The Ceylon Chamber of Commerce has signed an agreement with the Southern Gujarat Chamber of Commerce and Industry (SGCCI) to increase trade cooperation between India and Sri Lanka.

The MOU was signed by CCC CEO Buwanekabahu Perera, SGCCI President Ramesh Vaghasia, in the presence of Dr Valsan Vethody, Consul General for Sri Lanka in Mumbai, India.

“With the signing of the MoU, … the Ceylon Chamber of Commerce and SGCCI aim to facilitate trade between the two countries via initiatives such as trade fairs and delegations, business networking events, training programmes,” the Ceylon Chamber said in a statement.

“This partnership will open doors for Sri Lankan businesses to explore opportunities in Surat’s dynamic market and enable the sharing of expertise and resources between the two regions.”

Established in 1940, SGCCI engages with over 12,000 members and indirect ties with more than 2,00,000 members via 150 associations. It promotes trade, commerce, and industry in South Gujarat.

The region’s commercial and economic centre Surat has risen to prominence as the global epicenter for diamond cutting and as India’s textile hub, and is ranked the world’s 4th fastest growing city with a GDP growth rate of 11.5%

Surat’s economic landscape is vibrant and diverse. As India’s 8th largest and Gujarat’s 2nd largest city, it boasts the highest average annual household income in the country.

The nearby Hazira Industrial Area hosts major corporations like Reliance, ESSAR, SHELL, and L&T. (Colombo/Jun18/2024)

Continue Reading