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Wednesday February 1st, 2023

Sri Lanka analysts frown upon Wickremesinghe’s high defence budget 

Image credit: SL Army

ECONOMYNEXT – Sri Lanka’s budget experts raised concerns over higher defence allocation in 2023 budget and said the move gives wrong signal on rationalizing the public spending.

President Ranil Wickremesinghe in his capacity as the finance minister presented 2023 budget in the parliament on Monday (14) which was expected to signal the policies needed to move out of the county’s economic crisis including hard reforms to satisfy the International Monetary Fund (IMF) to help approve an already agreed $2.9 billion loan.

Wickremesighe, who is also the defence minister, allocated 539 billion rupees for both defence and public security, while allocating 322 billion rupees for health and 232 billion for education, the budget document showed.

High defence budget comes when the country’s armed forces are not fighting any external or internal war. Wickremesinghe, however, allowed armed forces personnel, other than special categories, to retire after 18 years of service. The earlier duration for voluntary retirement was 22 years.

“The elephant in the room is defence. We are spending over 500 billion rupees to maintain the triforces and police. That’s a huge amount of money,” Sujeewa Mudalige, the Chief Executive Officer at PricewaterhouseCoopers told a post-budget forum on Tuesday (15).

“It’s 13-years since the end of the conflict. I Think there needs to be a review on this. The quantum of defence doesn’t mean you are secure. If you take 10% of defence at 50 billion rupees to double Samuradhi or imagine health or education getting an additional 50 billion, what transformation will the country get?”

Since the final years of the war, Sri Lanka has always given the top priority to defence and the highest budget allocation had always been given to it because of a large number of armed and police forces, who were mainly recruited during the war.

However, the public have now started to raise questions about if high public resources allocation for the armed forces is rational as there is no war.

“The president spoke of a youth led economy. So imagine what an extra 50 billion would go to the national vocational training? In a few years our defence bill will be at a trillion rupees. We got to review this,” Mudalige said.

“We are happy with one aspect, the military retirement age being brought down to 18 years of service. But I believe it should be further reduced to 10-years because after they are 45 (years), it’s hard to train.”

No politician has antagonized military leaders since the final stage of the war and the military personnel had been highly regarded by the general public despite international probe against their alleged human rights violations in the final stage of the war.

Military since the end of the war has been in forefront in rescue service during time of disasters.

A negative perception about military has been on the rise since armed forces had been allegedly involved in attacking independent protesters in July near presidential secretariat and disperse them from the site where they protested for more than four months.

“Public sector expenditure rationalization is difficult. But my fervent request is we need to look at defence as a starting point,” he said adding that when the economy is contracting, a 64 percent revenue is a very difficult task referring to Wickremesinghe’s tax hike target.

Dushni Weerakoon, Executive Director of the Institute of Policy Studies of Sri Lanka (IPS) said the government should release resources from the expenditure side that is supporting unproductive activities.
“The public sector is number one, whether it’s the armed forces or general public service and reallocates those resources to sectors that drive growth as well as the poorer segments of the population,” she said. (Colombo/Nov15/2022)

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  1. sacre blieu says:

    When in distress or victims of disaster, when people in such dire situations, are to be immensely commended and admired for that humanistic sense of duty. forces never hesitate to come to the rescue of people. But to use these magnificent people for political manipulation or lawless direction, thus denying basic rights is very regrettable.

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  1. sacre blieu says:

    When in distress or victims of disaster, when people in such dire situations, are to be immensely commended and admired for that humanistic sense of duty. forces never hesitate to come to the rescue of people. But to use these magnificent people for political manipulation or lawless direction, thus denying basic rights is very regrettable.

Sri Lanka coconut prices ease at auction

ECONOMYNEXT- Sri Lanka’s coconut auction prices fell in the last auction in January 2023, with average prices going down by 4.1 percent at an auction on January 26, data showed.

The average price for 1,000 nuts fell to 80.811.89 from 84,116.85 a week earlier at the weekly auction conducted by Sri Lanka’s Coconut Development Authority.

The highest price was 87,300 rupees for 1,000 nuts down from the previous week’s 90,200 rupees, while the lowest was 72,500 down from 73,000 rupees.

The auction offered 469,564 coconuts and 300,983 nuts were sold. (Colombo/ Feb 01/2023)

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Sri Lanka shares edge up at close

ECONOMYNEXT- Sri Lanka’s shares edged up on Wednesday pushed as investors bought in to beaten down shares following the previous session’s drop, market analyst said.“

At this price level what we are seeing is a lot of confidence from the investors to collect when the prices drop. So, the market is not falling sharply,” a market analyst said.

Market had also seen buying in Expolanka shares on speculation that the parent company of SG Holdings was buying back into the shares.

All Share Price Index (ASPI) edged up by 0.96 percent or 84.96 points to 8,950.01.

The most liquid index S&P SL20 gained 1.27 percent or 35.02 points to 2,799.53.

Banking and Insurance counters had seen interest on the back of positive sentiments from the IMF.

The central bank has said it could cut interest rates in future when the the country sees fall in inflation, which has already started decelerating.

The market saw a turnover of 1.5 billion rupees today,lower than the month’s daily average of 1.8 billion rupees and nearly half of 2022 average turnover of 2.9 billion rupees.

The bourse saw a flow of net foreign inflow of 45 million rupees extending the net offshore buying to 1.9 billion so far this year.

Top gainers of the day were Commercial Bank, Expolanka, and Ceylinco Insurance. (Colombo/Feb01/2023)

 

 

 

 

 

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Sri Lanka bond yields down at close

ECONOMYNEXT – Sri Lanka’s bond yields were down at close following a bond auction on Wednesday, dealers said while a guidance peg for interbank transactions remained unchanged.

“The rates were steady at the auction,” a dealer said.

“This can be a signal to the market saying the rates will go down in the future.”

A bond maturing on 01.07.2025 closed at 32.40/60 percent, down from yesterday’s 32.60/85 percent.

A bond maturing on 01.05.2027 closed at 29.10/35 marginally down from yesterday’s 29.20/75 percent.

The Central Bank’s guidance peg for interbank US dollar transactions remained unchanged at 362.14 rupees against the US dollar.

Commercial banks offered dollars for telegraphic transfers at 371.38 rupees on Friday, data showed. (Colombo/Feb 01/2022)

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