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Tuesday November 29th, 2022

Loss making SriLankan completes MRO service for Oman’s Salam Air

ECONOMYNEXT – State-run SriLankan Airlines’ Engineering unit completed a Maintenance, Repair and Operations (MRO) project to Salam Air, the budget airline of Oman, the local carrier said on Friday.

“The heavy maintenance C check was performed on a Salam Air A320 neo aircraft at SriLankan Engineering’s dedicated European Aviation Safety Agency (EASA) approved A320 hangar, as part of a series of C checks that has been awarded to SriLankan Engineering,” SriLankan said in a statement.

“Over the years, SriLankan Engineering has etched a solid track record for providing high quality MRO services,” it said.

“Having the necessary human and technical resources; the airline’s hub strategically located in the Indian Ocean; and necessary international certifications and approvals have given the impetus to secure new high-value contracts from the region and beyond.”

The loss-making SriLankan Airlines has been resolute in building strategic partnerships and acquiring MRO projects from other airlines since 2020, the company said.

The Airlines, which was a profitable venture under Emirates management from 1998-2007,  has includes signed five new contracts with other airlines and leasing companies in Asia and the Middle East to provide services in relation to aircraft MRO activities in the past 12 months, it said.

However, it did not provide any information on the revenue it earned so far since it started MRO projects.

Prime Minister Ranil Wickremesinghe last month proposed SriLankan to be privatised though its losses should have to be borne by the 22 million people of the country.

He said the national carrier’s loss was 45 billion rupees in the financial year 2020/20 while its total losses were 372 billion rupees by March 31 last year. (Colombo/June 03/2022)

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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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