An Echelon Media Company
Sunday October 1st, 2023

Maldives IMF deal for US$28.9mn approved, says international support needed

ECONOMYNEXT – The International Monetary Fund has approved a 28.9 million US dollar Rapid Credit Facility (RCF) for the Indian Ocean islands of Maldives with the country’s tourism sector badly hit by Coronavirus.

“The COVID-19 pandemic is having a pronounced negative impact on the Maldivian economy and is expected to cause a significant growth contraction,” Tao Zhang, Deputy Managing Director and Chair of the IMF said in a statement.

“Containment measures are adversely affecting domestic economic activity.

“The temporary stop of tourist arrivals, the main source of foreign earnings, has severely weakened the fiscal and external positions, giving rise to large financing gaps.”

“The IMF’s financial assistance will cover part of the financing gap, supporting fiscal rebalancing and the implementation of the anti-crisis plan. Additional support from the international community will be needed.”


Maldives IMF deal to go to Board on April 22, GDP to shrink 8.1-pct on Coronavirus hit

The IMF said the country has acted fast to mitigate the impact of Coronavirus by boosting health spending and taking measures to contain the outbreak.

They have also responded with fiscal and monetary measures to minimize its economic impact, the IMF said.

“The temporary fiscal accommodation is appropriate,” Zhang said. “The authorities will reprioritize and cut capital expenditures, redirecting funds as needed to combat the pandemic and provide temporary and well-targeted support to the most vulnerable households and businesses, while maintaining high standards of transparency and governance.

“The central bank focuses on providing targeted liquidity support to banks and avoiding a credit freeze, through temporary and targeted financial macroprudential easing.”

While providing any real demand for cash or filling a liquidity shortage is appropriate countries that over-provide cash or tries to target a call money rate will end up in currency problems that may result in forex shortages and foreign debt default.

Sri Lanka’s currency is already under pressure due to liquidity injections and call money rate targeting.

Singapore, a country that does not print money and follows classical economic principles of the country’s first finance minister Goh Keng Swee, who went to the London School of Economics where Friederich von Hayek taught.

Any extra spending that cannot be funded through taxes will be funded by forex reserves, Goh had said.

Singapore will use its foreign reserves directly instead of printing money and altering reserve money, triggering a currency panic, scaring foreign investors, losing the ability of even private firms and banks to raise debt abroad.

“We have substantial overseas reserves which can serve this purpose,” Goh had said almost 20 years ago.

“Our economy was and is both small and open. Financing budget deficits through Central Bank credit creation appeared to us as an invitation to disaster.

“There was no effective way of exchange control in an open trading economy like ours to deal with the inevitable balance of payments troubles.”

Singapore President Halimah Yacob approved a 21 billion Singapore dollar draw down from forex reserves on April 09. (Colombo/Apr22/2020)

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 *

Sri Lanka National Christian Council opposes Online Safety Bill

ECONOMYNEXT – The National Christian Council of Sri Lanka (NCCSL) in a statement on the Online Safety Bill, said that the existing legal regime is adequate to deal with instances of harmful speech, making it unjustifiable to enact such “stringent laws”.

The Council called upon the government to withdraw the bill immediately.

The body expressed “deep concern” over the proposed bill, detailing its potential to curtail freedom of speech and how, according to the Council, the piece of legislature is inconsistent with the principles of democracy.

“The bill proposes the establishment of an entity named the Online Safety Commission without provisions to guarantee its independence and impartiality,” the statement said.

Chapter 3 imposes restrictions on online communication of certain statements, many of which are vague and overbroad, leaving room for executive control and the curtailing of legitimate criticism and dissent that are basic features of democracy, the statement said.

“The laws granting wide discretion to the executive and its investigative agencies with expansive reach have been misused in the past.”

The Council said that the bill was not drafted with the process of public consultation and discussion, which might have ensured the bill would be less draconian in nature.

“The National Christian Council of Sri Lanka calls upon the government to withdraw this anti-human rights and anti-democratic bill immediately.” (Colombo/Sep30/2023)

Continue Reading

Sri Lanka to implement new vehicle revenue licence issuing system

ECONOMYNEXT – A new system of issuing vehicle licences called eRL 2.0 is to be implemented in 5 provinces, excluding the Western Province, from 3 October onwards.

The new system is to be implemented beginning in the North West, South, North Central, Central and Sabaragamuwa provinces, respectively. The existing vehicle licence issuing system eRL 1.0 will continue to be used in the Western Province.

The issuing of revenue licences islandwide at Department of Motor Traffic head offices and regional branches will be temporarily halted on October 2.

The facility of obtaining vehicle permits online will also be temporarily halted on 6 October till midnight.

The Sri Lanka Information and Communication Technology Agency (ICTA) and the Provincial Motor Traffic Departments are working to modernize the current vehicle revenue license issuance system.

The implementation of the new eRL 2.0 system is expected to be an important step in the digitalisation of Sri Lanka. (Colombo/Sep30/2023)

Continue Reading

Sri Lankan Airlines flights cancelled as aircraft grounded

ECONOMYNEXT – State-run SriLankan Airlines has apologized to passengers who were stranded as multiple aircraft were grounded at the same time.

The airline said it has strict procedures which requires aircraft to be grounded when technical issues are discovered.

“Unfortunately, in this case we suffered a number of groundings at the same time,” the airline said.

“We apologize for the disruption and inconvenience caused and assure all our loyal customers that we are working diligently to minimize such occurrences moving forward.”

The airline said it was booking passengers on other airlines while some have been accommodated at hotels. (Colombo/Sept30/2023)

Continue Reading