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Monday April 22nd, 2024

Sri Lanka bans travellers from Europe as Coronavirus toll climbs

VIRUS TRANSMISSION: Sri Lanka is denying entry to travallers from Italy and several other nations. Italy has been linked to four out of six cases of confirmed cases of Coronavirus confirmed so far.

ECONOMYNEXT – Sri Lanka is denying entry to travelers from nine nations in Europe as well as Iran and Korea from March 14 and 15 for two weeks as a Coronavirus toll in the island climbed, authorities shut schools, universities and public events were cancelled.

Sri Lanka reported two new cases Saturday. One was a 44 year old male returnee from Italy who was under quarantine.

The second, also an Italian returnee was found from Nathandandiya, and was not among those quarantined, Director General of Health Anil Jasinghe said.

Related

Sri Lanka Coronavirus toll goes to 09, public gatherings banned

Sri Lanka reported three cases Friday, with two from among quarantined returnees from Italy, and another who had visited Germany recently.

Sri Lanka is now treating seven persons for the Wuhan Coronavirus in hospital, while a Chinese woman who was the first had already been discharged.

Worldwide about 140,000 had contracted the Wuhan Coronavirus and over 5,000 had died so far.

Contact Tracing

Six out of 08 confirmed cases of the Coronavirus in Sri Lanka are connected to Italy.

The first was a tour guide linked to an Italian tour group and the second, a colleague who had lodged with him.

Authorities were also tracking contacts of the two domestically transmitted infections.

Up to Friday 60 contacts of the first tour guide had been traced, the state information office said. Five of them were in hospital were being investigated,health authorities had said.

Officials had also traced 25 contacts of the second guide and eight of them were in hospital being investigated.

By March 14, 103 persons were in hospital under investigation.

About 1000 people were in several quarantine sites.

Authorities were also monitoring 3035 Sri Lankans who had arrived before quarantine began and 1,153 Chinese nationals.

Denied Entry

Sri Lanka’s Civil Aviation Authority said entry to travelers from France, Spain, Germany, Switzerland, Denmark, Netherlands, Sweden and Austria will be denied from midnight March 15 for two weeks. Entry will be denied to travelers from Italy, Korea and Iran from March 14.

“President explaining the current global situation said the virus is rapidly invading many countries in Europe,” the President’s office said.

“The situation is rather serious in some countries such as France and Italy.

“Considering this development, President instructed officials to suspend issuing visa to people from European countries for two weeks

Sri Lanka military will help disinfect public transport the President’s office said.

The epidemic, which started in China was not made public until tens of thousands had already been infected.

Sri Lanka was also getting information from China on how they handled the epidemic.

Children less sick from Coronavirus, as 140,000 cases confirmed.

Related

Children less sick from Coronavirus, as 140,000 cases confirmed

Sri Lanka finds three Coronavirus patients among returnees from Italy, Germany

Sri Lanka to ban travellers from eight European nations from March 15 over Coronavirus

Panic Buying

Mild panic buying was seen at supermarkets in the capital Thursday.

Others were buying up drugs.

“There is currently enough stock to meet three months of normal demand and we will make sure that the supply chain is not disrupted,” Kasturi Chellaraja, Chairperson of the Sri Lanka Chamber of Pharmaceutical Industry (SLCPI) said in a statement.

“We need to be sensible and judicious in our reaction to the current situation and not panic.”

Lines built up at petrol stations in the capital.

“There is no shortage of fuel in the country,” the energy ministry said in a statement. “There is no need to have any fear.

Sri Lanka’s stocks plunged triggering circuit breakers three times over the last week. Stock are down 20 percent so far this year.

Cancelled Events, Online Services

Organizers of Sri Lanka Construction Expo said they were cancelling the event, as people were urged to avoid large gatherings

The Wuhan virus alos bowled out an England cricket tour of Sri Lanka.

Related

#NextGenSL wants parties to limit political rallies

Sri Lanka pharma firms say no shortage of drugs, not to panic buy

Sri Lanka stocks down 20-pct in 2020 as S & P Index hits time low on Coronavirus fears

Corona kills the England Test series

A group of young politicians from all political parties in Sri Lanka has political parties to refrain from holding large rallies and gatherings for the next two weeks over the Wuhan Coronavirus.

Sri Lanka’s opposition leader has asked for the parliament, currently dissolved over pending elections in late April to be recalled.

Authorities asked people to avoid large gatherings and wash hands frequently.

President Gotabaya Rajapaksa had asked officials to look into the possibility of providing state services and schools and universities using the internet.

The government also wanted to see how 150,000 masks made everyday in the country could be domestically would be better distributed.

Sri Lanka slaps price controls on medical supplies, which analysts say could lead to shortages and leave less supplies available to most needed.

In line with World Health Organization guidelines Sri Lanka does not ask everyone to wear masks, but only those who are feeling sick and others like health professionals who come into contact with sick people. (Colombo/Mar14/2020 – Updated with new data Saturday – toll raised to 08)

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Sri Lanka motor racing crash claims 7 lives, 4 critical

ECONOMYNEXT – A deadly accident at motor Race Sri Lanka’s hill country town of Diyathalawa has claimed at least 7 lives police said, after a racing vehicle, in the seasonal Fox Hill Super Cross ploughed in to spectators after running off the track.

Another 21 spectators were injured Sunday, and hospitalized and at least four were critical, police said.

Thousands of people come to watch the Fox Hill Super Cross race, which is usually held in April, as large numbers of people head to the cooler climes in the hills.

According to footage taken by spectators one car overturned on the side of the track.

Sri Lanka’s Newsfirst television said Marshalls were waving flags to caution other vehicles, when another car went off the track and crashed into spectators. (Colombo/April21/2024)

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Widespread support for Sri Lanka debt workout, reform progress at IMF/WB meet: Minister

ECONOMYNEXT – There was widespread support for Sri Lanka’s debt restructuring and acknowledgement of progress made under an International Monetary Fund program, at meeting of the fund and World Bank, State Minister for Finance Shehan Semasinghe said.

“The strides made in our economic recovery and financial stability have been acknowledged as significant advancements towards our country’s prosperity by our stakeholders and international partners,” Minister Semasinghe said in an x.com (twitter) post after attending the meetings.

“Further, it was heartening to note the widespread appreciation and support for Sri Lanka’s debt restructuring process.

“We remain steadfast in our commitment to reaching the restructuring targets and confident of smooth progress in the continued good-faith engagements for a speedy debt resolution that will ensure debt sustainability and comparability of debt treatment.”

Sri Lanka ended a first round of talks with sovereign bondholders in March without striking a deal but some agreement on the basis for a deal.

An initial deal with bilateral creditors have been reached, but they may be awaiting a deal with private creditors to sign formal agreements.

International partners have appreciated reforms made under President Ranil Wickremesinghe, Minister Semasinghe said.

“It was great to engage in productive bilateral discussions with all of whom appreciated the recent economic developments, progress in debt restructuring, strengthening of tax administration, and ongoing governance reforms,” he said.

Sri Lanka’s rupee has been allowed to re-appreciate by the central bank amid deflationary monetary policy, bringing tangible benefits to people in the form of lower energy and food prices, unlike in past IMF programs.

Electricity prices were cut as a strengthening currency helped reduce the cost of coal imports.

Related Sri Lanka central bank mainly responsible for electricity price cut

The currency appreciation has also allowed losses to the Employment Provident Fund imposed to be partially recouped, helping old workers near retirement, as well as raising disposable incomes of current wage earners on fixed salaries.

Related Sri Lanka EPF gets US$1.85bn in value back as central bank strengthens rupee

The IMF, which was set up after World War II to end devaluations seen in the 1930s after the Fed’s policy rate infected other key central banks, started to actively encourage depreciation after a change to its founding articles in 1978 (the Second Amendment).

The usefulness of money as a store of value, or a denominator of current and future values then decline, leading to loss of real savings, real wages and increases in social unrest.

Before that, members who devalued more than 10 percent after printing money for growth or any other reason, faced the threat of suspension from the organization as punishment.

Sri Lanka’s rupee has appreciated to around 300 to the US dollar now from 370 after a surrender rule was lifted in March 2023.

But there is no transparency on the basis that economic bureaucrats are allowing the currency to gain against the US dollar (the intervention currency of the central bank).

The rupee is currently under pressure, despite broadly prudent monetary policy, due to an ‘oversold position’ in the market after recent appreciation made importers and banks to run negative open positions as the usefulness of the currency as a denominator of future value declined with sudden strenghtening. (Colombo/Apr21/2024)

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Sri Lanka choices recalled in Vietnam debate on monetary and fiscal options to target output

FIRST SIGNS: Fuel queues and shortages were developing in Vietnam in 2022 with a BOP deficit of $15.6bn in 3Q when rates were hiked to stop inflationary sterilization. Photo/Vietnamnet.vn

ECONOMYNEXT – Vietnam can grow 6.0 percent in 2024, with ‘policy support’ but there is a debate whether it should be done through fiscal (widening deficits/worsening debt or state spending) or monetary means, a top International Monetary Fund official said.

The IMF projects 6.0 percent growth for Vietnam in 2024 “as it rebounds from a challenging 2023,” Krishna Srinivasan, Director of the Asia and Pacific Department told reporters during the Spring Meetings in Washington.

Western Statism

“Now, in the case of Vietnam, I would say that there’s an issue about policy mix, whether you could get more support from the fiscal and rely less on monetary,” Srinivasan said.

“So there is an issue of policy mix which we’re talking, which we’ve been engaging the authorities with.

“I would say that policy support should be more favorable and that should, and along with external demand, help raise growth to 6 percent.”

Sri Lanka used both fiscal and monetary mix to boost growth from December 2019, triggering an external default two and a half years later.

Vietnam’s forex reserves fell below 3 months of imports in 2022 after the State Bank kept policy rates down by inflationary sterilization of forex market interventions.

The currency was then stabilized with rapid fire rate hikes and credit controls to dial back inflationary policy, just as long fuel ques started to form at petrol sheds, with angry riders already hit by rising prices due to Dong weakness. 
The return to market interest rates averted wider social unrest from being triggered by depreciation and further losses at state energy utility EVN, due to fixed prices amid soaring coal prices.

The State Bank of Vietnam later cut rates and relaxed credit controls as the BOP shifted to a surplus.

The government has since cut value added taxes. Public sector salaries are set to rise further this year, possibly as much as 30 percent, after earlier wage restraint. (Related Link: Public employee’s salaries to increase by 30 per cent from July 1: Minister)

State Driven Growth Options

The IMF also said in an Article IV consultation report released in October 2023, that fiscal metrics should be effectively undermined for ‘growth’ but more through income redistribution, and possible support for a fallout from a weak property sector.

Some Vietnamese property companies are reeling from expansion during earlier low rates and Covid-linked construction delays, which could also hit banks.

“Building on successful fiscal consolidation in recent years, there is fiscal space to provide further support,” an IMF Article IV consultation report released in October 2023 said.

“The government could scale up social safety nets that would boost growth and protect the most vulnerable households.

“Given the slowdown and the constraints faced by monetary policy, going forward, fiscal policy can take a leading role in supporting aggregate demand.

“For instance, the government could scale up social safety nets—and consider cash transfers to provide swift relief to poorer households.

“If the current turmoil proves more damaging to the economy and the financial sector, targeted support could be considered, including to help real estate developers restructure.”

Dong on thin ice

In 2023, Vietnam’s balance of payments was only marginally in surplus by 1 to 3 billion dollars a quarter, indicating that credit was still resilient after a successful ‘soft-landing’, and any further shocks from macro-economists can destabilize the external sector easily.

In the fourth quarter of 2024, Vietnam’s BOP was only 2.4 billion dollars in surplus.

Any extra spending or tax cuts which boosts the deficit due to attempts to engage in ‘macro-economic policy’ and expand government borrowings would lead to money printing under a fixed policy rate, reversing gains made by the State Bank over 2023, and pushing the Dong down, analysts say.

Western macro-economists believe that expanding government action (through the Treasury or central banks) to tinker with ‘aggregate demand’ can boost growth numbers instead of giving a chance for people and businesses to engage in real production of goods and services by providing monetary stability.

Collapsing currencies and external imbalances are then blamed on ‘current account deficits’ and ‘structural deficiencies’.

Such Keynesian and post-Keynesian beliefs have worsened since quantitative easing was normalized in the US after the Great Recession and ‘stimulus’ re-captured Western media attention despite the hard lessons of the 1960s and 1970s, critics say.

In Sri Lanka, the IMF taught a central bank that had already busted the currency from 4.70 to 131 to the dollar to calculate ‘potential output’ just as the country was barely recovering from a 30-year civil war.

Sri Lanka defaulted within 7 years of ‘data driven monetary policy’ (flexible inflation targeting with output gap targeting) and three currency crises later in peacetime amid increasingly aggressive macro-economic policy as consecutive stabilization programs reduced growth numbers.

Aggressive Macro-economic Policy

After using higher deficits and inflationary rate cuts in 2015 amid low inflation, inflationary rate cuts despite tax hikes in 2018 (fiscal policy is tight therefore monetary has to be loose mantra), macro-economists took a proverbial Keynesian bull by the horns and cut both taxes and rates from December 2019 saying there was a ‘persistent output gap’.

Related Sri Lanka fiscal stimulus to close output gap

Analysts say there is no real choice between monetary or fiscal deterioration to achieve macroeconomic policy desires of interventionists, in a country with a bureaucratic interest rate.

A policy rate, unless hiked, will automatically result in inflationary monetary operations as domestic credit picks up, irrespective of whether it is driven by private or state credit.

Any so-called ‘fiscal support’ can only be given without harming the exchange rate in a country that has a reserve collecting central bank with a policy rate, by liquidating any sovereign wealth funds or borrowing abroad and pushing up net external debt, analysts say.

By worsening external net debt levels, desires of macro-economists can be satisfied without harming monetary stability and the living standards of the population in general or nutrition of the children of the poorest sections of society by so-called exchange rate flexibility or debasement.

In Sri Lanka, potential output is now written into a brand new IMF-backed monetary law even before the first default workout is complete. Potential output is mentioned in every monetary policy statement, not stability. (Colombo/Apr20/2024)

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