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Tuesday November 29th, 2022

Sri Lanka arrests four military personnel in connection with rehab centre death

ECONOMYNEXT – Sri Lanka arrested four milliary personnel in connection with the suspicious death of a detainee of the Kandakadu Drug Rehabilitation Centre, Polonnaruwa where a mass escape took place recently, police media reported.

According to a press release by the police, two army officers and two air force officers were arrested on June 01.

The military personnel worked as assistant advisors in the Centre.

They were scheduled to appear in the Polonnaruwa Magistrate Court on Sunday, June 03.

The press release stated that police had found a thick electric wire and two bamboo canes which were allegedly used to beat the deceased, according to the suspects’ statements.

The younger brother and friends of the deceased had identified the body.

The post-mortem to determine the cause of death will be conducted on Thursday 07 June, the press release stated.

Police sources confirmed that out of the nearly 700 detainees who had escaped the Centre on Wednesday 29 June, around 28 more were to be arrested.

The Welikanda Police and Army personnel are working together to round up the remaining detainees, but the Centre has come under fire for its heavy militarisation among other things.

Related: Sri Lanka Human Rights Commission probing rehabilitation centre mass escape

The Human Rights Commission of Sri Lanka is currently conducting an investigation into the mass escape.

Critics are demanding a transparent investigation process, alleging that the incident will be swept under the rug due to the military connections of the institution. (Colombo/Jul03/2022)

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Sri Lanka rubber farmers to get boost from France, Michellin

ECONOMYNEXT – Sri Lanka will start a project supported by France and Michellin group to support 6,000 rubber farmers, cabinet spokesman Minister Bandula Gunawardena said.

Rubber farmers in Badalgama and Medagama in the Moneragala district will be supported improve their capacity and supply chains at a cost of 726,700 Euros.

Financial support will be provided by France’s Michellin group which has a subsidiary in Sri Lanka and the government of France.

The project will be implemented by France’s Ksapa group under the guidance of Ministry of Industries.

The cabinet of ministers had cleared a proposal by the Plantations Industries Minister to enter into an agreement to implement the project. (Colombo/Nov29/2022)

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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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