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Monday December 5th, 2022

Sri Lanka Central Bank Governor asks markets to remain calm

ECONOMYNEXT- Sri Lanka’s Central Bank Governor W. D. Lakshman called on financial institutions to not speculate and cause panic in the markets while passing on the benefits of lower lending rates to customers after an emergency policy rate and statutory reserve ratio (SRR) cut over the coronavirus pandemic.

“We have requested all financial institutions led by licensed commercial banks to pass to the market the full benefit of the cumulative reduction of 75 basis points in policy interest rates thus far during the year as well as the reduced cost of funds through the reduction in SRR without any delay,” he said.

“We have also requested financial institutions to refrain from engaging in speculative activity which could lead to panic in the financial market.”

The government declared Monday through Thursday as holidays, although banks, food distribution and essential services such as health continue to operate.

Lakshman said the Sri Lankan economy has begun a turnaround due to fiscal and monetary stimulus following the presidential election, after a long period of subdued growth.

“However, it is increasingly evident that domestic economic activity during the year 2020 would continue to be affected by the spread of the pandemic,” he said.

On Monday, the central bank in an emergency move cut the policy rates by 25 basis points.

Further, the SRR was cut by 1 basis point, which could add another 50 billion rupees in liquidity to money markets unless a 40 billion rupee liquidity injection on Friday is not mopped up.

The central bank and Treasury are coordinating efforts to ensure the economic impact from the pandemic is mitigated, and are observing the local and global developments closely.

He also said the central bank is ensuring that cash and electronic transactions are not disrupted, and liabilities of the state and central bank are settled normally.

So far, 29 coronavirus cases have been reported in Sri Lanka, including the first case of a Chinese national who had recovered and departed in February. (Colombo/Mar17/2020)

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Time right for elections, Sri Lanka Podujana Peramuna ready to face any poll: Basil

File photo: SLPP national organiser Basil Rajapaksa

ECONOMYNEXT — The time has come for an election in Sri Lanka and the ruling Sri Lanka Podujana Peramuna (SLPP) is ready to face any election, SLPP national organiser Basil Rajapaksa said, dismissing claims that the party has come to fear elections in the face of growing unpopularity and increased factionalisation.

Speaking to reporters at an event held in Colombo Monday December 05 morning to mark the fourth anniversary of the party’s media centre, Rajapaksa handwaved off assertions that the SLPP has splintered in the wake of the mass protests that ousted his brother and former President Gotabaya Rajapaksa.

“No, our party hasn’t fragmented, not the way this cake was cut,” he said, pointing to the cake that was cut to celebrate the media centre’s anniversary.

“There may be some [dissenters], but we are with the people,” said Rajapaksa.

Political analysts, however, note that the once mighty SLPP has indeed fractured to at least four or five distinct factions. One group, according to party sources, is with President Ranil Wickremesinghe who is keen to involve younger SLPP legislators in his economic reform agenda. The second is with former Media Minister Dullas Alahapperuma who launched an unsuccessful bid for the presidency and was roundly defeated by Wickremesinghe at the July 19 presidential vote in parliament. The third group now sits as independent MPs in parliament, while a fourth faction are with former President Mahinda Rajapaksa, the SLPP patriarch.

There is another group that remains loyal to Basil Rajapaksa, though all but one SLPP legislator voted for the 21st amendment to the constitution that prohibited dual citizens from entering parliament. Rajapaksa, a dual citizen with US passport, recently returned to the island after a private visit to his second home.

The former finance minister, who resigned after a wave of protests that demanded his departure along with that of his presidential brother, for their alleged role in Sri Lanka’s prevailing currency crisis, the worst in decades, was in a jovial mood at the anniversary event on Monday and was seen heartily indulging reporters who were throwing loaded question after loaded question at him.

Asked about future plans of the SLPP, Rajapaksa quipped that they couldn’t be revealed to the media at this stage.

“However, time has come for an election. It’s difficult to say how it will be at present, but as a party, we’re ready to face any election,” he said.

Rajapaksa’s apparent confidence in facing an election is in direct contrast to speculation that the SLPP is banking on President Wickremesinghe’s refusal to dissolve parliament anytime soon. Opposition lawmakers have accused Wickremesinghe of providing sanctuary and promising security to the deeply unpopular party by not calling early elections.

“We have won every election we faced so far. We are thankful to the Sri Lankan people for that. If we were unable to meet their expectations 100 percent, we regret that. We will correct any shortcomings and will work to fulfill the people’s aspirations,” said Rajapaksa.

Asked if he is going to remain in active politics despite the blanket ban on dual citizens, the former minister said, again with a chuckle: “Active politics… well, I’m not in governance anymore. Governance [for me] has been banned by the 21st amendment. So no, I’m not in governance, but I am in politics,” he said.

Pressed about possibly entering parliament again, he said: “How can I?”

Nor is Rajapaksa saddened by the development, he claimed. “No, I’m happy about it,” he said.

The former two-time finance minister, noted for his clash of views with Wickremesinghe when the latter was invited by then President Gotabaya Rajapaksa for a round of discussions on economic recovery, was cautiously complimentary when asked about the new president. It was the SLPP’s backing that guaranteed Wickremesinghe his lifelong ambition.

“I think that selection was the correct one. We have maintained from the start that all of us in government or opposition must be able to freely engage in politics,” he said, referring to assurances that the president has purportedly given SLPP parliamentarians that they will not face the kind of retaliatory mob violence that engulfed the nation on May 09 after alleged SLPP goons attacked peaceful anti-government protestors in Colombo.

A reporter asked if Rajapaksa believes the incumbent president is capable of taking the country on the right path to recovery?

“The first task was accomplished, by allowing us to engage in politics and to get on the streets. There are economic and other issues, and we have high hopes that they will be resolved,” he said. (Colombo/Dec05/2022)

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Sri Lanka proposed power tariff not to recover past losses: Minister

ECONOMYNEXT – The government has not proposed a power tariff increase to recover past losses, Minister of Power and Energy Kanchana Wijesekera in response to a statement attributed the head of the power regulator commission.

“The proposal that was presented was for an automatic cost reflective tariff mechanism to be implemented to supply uninterrupted power & to recover the current cost of power supply,” Minister Wijesekera said in twitter.com message.

“Govt has not proposed to recover past loses of CEB from a tariff revision…”

The cabinet of ministers had given the nod tariff revisions twice a year to prevent large losses from building up as in the past.

The Public Utilities Commission has disputed costs protected for the power utility saying the petroleum utility was keeping large margins in selling fuel.

The government in a budget for 2022 also proposed to tax surcharge to recover losses.

The regulator also disputed power demand forecasts.

Also read; Sri Lanka regulator disputes CEB costs, demand projections for 2023

The PUCSL cannot increase tariffs to recover past losses, Chairman Janaka Ratnayake said. (Colombo/Dec05/2022)

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Sri Lanka’s shares gain in mid market trade

ECONOMYNEXT – Sri Lanka’s shares edged up in mid day trade on Monday (05), continuing the positive run for seven straight sessions on news over a possible debt restructuring from Paris Club, analysts said.

All Share Price Index gained by 0.69% or 60.10 points to 8,829, while the most liquid shares gained by 0.96% or 26.59 points to 2,801.

“The market was pushed up over the news of a potential 10 year debt moratorium,” analysts said.

The Paris Club group of creditor nations has proposed a 10-year debt moratorium on Sri Lankan debt and 15 years of debt restructuring as a formula to resolve the island nation’s prevailing currency crisis. 

Related – Paris Club proposes 10-year moratorium in 15-year Sri Lanka debt re-structure: report

The market generated a revenue of 2.1 billion rupees.

Top gainers during 1130 hours were Expolanka, Browns Investment and LOLC.  (Colombo/Dec05/2022)

 

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