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Tuesday November 29th, 2022

Sri Lanka digital banking transactions double in third quarter of 2018

ECONOMYNEXT – Real-time digital transactions on Sri Lanka’s common electronic fund transfer system more than doubled in the third quarter of 2018 from a year ago as use of low-value cheques fell, according to the Central Bank.

The total value of financial transactions on the Common Electronic Fund Transfer Switch (CEFTS) shot up 119 percent to 174 billion rupees in the third quarter of 2018 from 79 billion rupees in the same quarter of 2017, its latest payments bulletin showed.
 
The number of CEFTS members – commercial banks, specialized banks and finance companies – rose 20 percent to 36 over the same period.

In 2017, 274 billion rupees worth of transactions were done on CEFTS, a real-time fund transfer switch enabling customers to do domestic interbank fund transfers more conveniently at any time.

CEFTS is operated by LankaPay, a clearing house owned by the Central Bank and other public and private commercial banks, and allows customers to do domestic interbank fund transfers up to five million rupees in real time.

The bulletin showed that the average volume of CEFTS transactions a day also more than doubled to over 20,000 while the average daily value of trades also rose sharply from less than a billion rupees to almost two billion rupees.

The Central Bank is trying to encourage a shift to digital transactions and away from cash and cheques which can be costly and time consuming.

Cheques remain the most popular non-cash retail payment instrument in Sri Lanka which accounted for 67.5 percent of the value of total non-cash retail payments in the third quarter of 2018.

The total number of cheques cleared during the third quarter of 2018 fell 3.2 percent from the previous year, mainly because of a drop in low value transactions although the number of cheques above 100 million rupees rose eight percent.
(COLOMBO, April 05, 2019-SB)
 

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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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