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Sunday October 1st, 2023

Sri Lanka budget deficit to expand to 5.4 to 5.6-pct in 2019

ECONOMYNEXT – Sri Lanka’s budget deficit may reach 5.6 percent of gross domestic product in 2019, Treasury Secretary R H S Samaratunga said, which would be around the same levels as in 2018.

The revised deficit could be 5.4 to 5.6 percent, Samaratunga said.

Sri Lanka was originally targeting 4.4 percent of GDP for 2019.

But the 5.6 percent out-turn would be around the same levels as the 5.4 to 5.6 percent seen in the last three years.

Up to July 2019 Sri Lanka’s revenues fell 4.4 percent to 1,031.9 billion rupees from 1,079.0 percent in 2018.

Current spending grew 10 percent to 1,218.9 percent, pushing the deficit to round 4.4 percent of GDP.

Samaratunga said in September there were signs of a recovery in revenues.

Revenues generally move up in the second half of the year. In the first half of the year arrears are also sometime settled and state salary hikes and other new spending also occurs.

Sri Lanka’s credit and import has collapsed amid monetary instability triggered by a highly unstable soft-peg with contradictory money (liquidity management, rates) and exchange (convertibility undertakings).

Under the latest reincarnation or ‘flexible exchange rate’ a call money rate is targeted with sudden large injections of printed money until the peg comes under pressure, and convertibility undertakings are delayed until a ‘disorderly fall’ occurs.

However large volumes of dollars are bought including from the Treasury at a convertibility undertaking at market prices with no’ disorderly’ rise.

The central bank also injects base money in using forward dollar contracts of the type used by speculators to hit East Asian currencies, with Treasury as the counterparty, critics have said.

The rupee collapsed from 153 to 182 from the latest ‘flexible exchange rate’ crisis, involving injections from both speculative swaps and injections from lender of last resort windows.

Money was injected in 2018, just as the credit system was recovering from another crisis in 2015/2016 triggered by sustained releases of liquidity and money printing to depress short term rates as the economy was recovering from yet another crisis in 2012/2013.

In the 2015/2016 flexible exchange rate crisis the rupee fell from 131 to 150 to the US dollar.

In 2012 crisis when liquidity management was worse, but convertibility undertakings were tighter, the rupee fell from around 113 to 131 to the US dollar.

Under the flexible exchange rate, the gap between crises is becoming narrower, critics have warned.

There have been calls to reform the central bank to reign in its ability to practice discretionary or flexible policy and move to a consistent peg or an inflation targeting framework with a genuine floating rate to that the country will have longer periods of stability and will be able to practice free trade.

Nixon shock-style trade restriction were slammed in 2018, in the wake of monetary instability and the state revenues, economic output are under pressure. In April matters were further complicated by a Easter Sunday blasts which hit tourism. (Colombo/Oct04/2019)

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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)

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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)

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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)

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