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Sunday January 29th, 2023

Sri Lanka expects to acquire Sinopharm, Pfizer, Moderna, Sinovac COVID-19 vaccines in July

ECONOMYNEXT – Sri Lanka expects to receive a range of vaccines against COVID-19 in July in varying numbers of doses, officials said, amid uncertainty about the second dose of the AstraZeneca vaccine and doubt about the efficacy of certain vaccines against the highly transmissible Delta variant.

One million more doses of the Chinese Sinopharm COVID-19 vaccine will arrive on July 06, State Ministry of Production, Supply and Regulation of Pharmaceuticals Secretary Dr Saman Ratnayake told Economy Next.

Ratnayake said Sri Lanka has also sent a schedule to acquire the Russian Sputnik V vaccine, with a consignment expected to arrive in due course, though a date has yet to be confirmed.

So far Sri Lanka has obtained 1,264,000 doses of the AstraZeneca Covishield vaccine, 130,000 doses Sputnik V and 3.1 million doses of Sinopharm.

Ratnayake said a consignment of the Pfizer-BionTech jab is also expected to arrive on July 05, though the number of doses has yet to be finalised.

State Minister of Production, Supply and Regulation of Pharmaceuticals Channa Jayasumana told reporters on June 27 that Sri Lanka will receive Sinovac, the other China-manufactured COVID-19 vaccine, in the first two weeks of July. A batch of the US-manufactured Moderna jab is also expected to arrive in the same period, he said.

Minister of Health Pavithra Wanniarachchi told parliament on June 23 that the government has allocated 129.35 million US dollars for Sputnik V, 33.7 million US dollars Pfizer, 52.5 million US dollars for Covishield and 210 million US dollars for Sinopharm.

Meanwhile Sri Lankan pharmaceutical company Kelun Life Science said their manufacturing plant in the Kandy export processing zone will be dedicated for filling the Sinovac vaccine in Sri Lanka in the near future.

Kelun Life Science Quality Assurance Manager Gayathri Ariyasinghe told the privately owned Derana network that the solution of the vaccine will be imported from China in bulk and will be filled into vials in Sri Lanka.

“At the moment we are doing trial runs with the machine,” Ariyasinghe said.

Kelun Life Science Quality Control Manager Sajani Wijeratne said that upon receiving the solution in bulk by the State Pharmaceutical Corporation (SPC), it will be sent to the Kelun plant and will go through a quality testing process before sent for filling.

“Sinovac is the vaccine that is being tested for most variants of the COVID-19 virus” Wijeratne claimed.

However, Reuters reported June 25 quoting a Chinese disease control centre official that antibodies triggered by the two Chinese COVID-19 vaccines including Sinovac are less effective against the Delta variant compared with other strains but the shots still offer protection.

Sri Lanka has detected five cases of the deadly strain in the community so far.

Wijeratne said in July a specialist team from the World Health Organisation (WHO) will be coming to Sri Lanka to inspect and audit the filling process to give the approval to continue filling.

“We expect to produce 6 million doses by August, 2021 and 7 million dose by September,” Wijeratne said.

“By bringing in bulk we have a great advantage economically. We will save around 30 percent of the cost we spend to bring in doses and also we won’t need to wait for a vaccine,” he added.

Sri Lanka currently uses three COVID-19 vaccines in the country’s COVID-19 immunisation drive.

So far the second dose of the Covishiled vaccine has been given for only 372,868 out of 925,242.

Minister Wanniarachchi said some 582,000 more are awaiting the second dose of the vaccine.

The first dose of Sinopharm meanwhile has been administered to 1,533,780 people so far, while 492,850 have received the second dose as of June 27.

The first dose of Sputnik V has been given to 114,795 so far, while 14,425 have received the second dose as of June 27.

So far Sri Lanka has spent 41.5 million rupees for COVID-19 vaccination, official data shows. (Colombo/June27/2021)

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Sri Lanka exporters bring back nearly 100-pct of proceeds: CB Governor

ECONOMYNEXT – Sri Lanka exporters are bringing back almost all export proceeds, based on data generated from a monitoring mechanism, Central Bank Governor Nandalal Weerasinghe said.

Sri Lanka tightens rules on exporters and also on importers whenever the central bank prints money to mis-target interest rates and triggers forex shortages.

The rule requiring exporters to bring back dollars was put in August 2021, to his recollection, Governor Weerasinghe said.

The monitoring mechanism was put in July 2021, with some officials also claiming that there appeared to be a discrepancy between reported export numbers and conversions, firing public anger against the country’s export businesses.
“We have data from the time we started the monitoring mechanism,” Governor Weerasinghe said.

“Based on that we see that exporters have brought back almost 100 percent of proceeds as foreign exchange.”

Governor Weerasinghe was responding to a question by a Washington based agency which had claimed that there was large scale under-invoicing by businessmen who had kept money abroad.

Similar and even larger estimates had been made against other countries, he said.

Mis-invoicing is a matter for Sri Lanka Customs over had authority and not the central bank he explained.

“If anyone has any information that can reported to the Financial Intelligence, action can be taken against illegal money transfers using anti-money laundering laws,” he said.

While exporters are targeting by activists after forex shortages came, the usual accusation is that importers are under-invoicing.

Importers under-invoice to avoid excessive tax protection given to nationalist businessmen with political connection.

Protected business rake in the taxes which would otherwise have gone to the state but they escape censure. (Colombo/Jan28/2023)

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Sri Lanka operators seek higher renewable tariffs, amid exchange rate expectations

ECONOMYNEXT – Sri Lanka’s renewable companies say they need tariff of 40 to 45 rupees a unit to sell power to the Ceylon Electricity Board and the agency owes them tens of billions of rupees for power sold in the past.

The association has strong exchange rate expectations based on the country’s dual anchor conflicting monetary regimes involving flexible inflation targeting with a reserve collecting target.

“In the coming year of course because of the rupee devaluation, I think the solar energy sector might require tariffs closer to RS 40 or RS 45, hydropower will also require tariffs on that scale,” Prabath Wickremasinghe President of the Small hydropower Developers Association told reporters.

“I think right now what they pay us is averaging around RS 15 to RS 20.”

Some of the earlier plants are paid only 9 rupees a unit, he said. The association there is potential to develop around 200 Mega Watts of mini hydros, 700 to 1000MW of ground mounted soar and about 1,000 rooftop solar.

In addition to the rupee collapse, global renewable energy costs are also up, in the wake of higher oil prices in the recent past and energy disruption in Europe.

The US Fed and the ECB have tightened monetary policy and global energy and food commodity price are now easing.

However in a few years the 40 to 45 rupee tariffs will look cheap, Wickremesinghe pointed out, given the country’s monetary policy involving steep depreciation.

From 2012 to 2015 the rupee collapsed from 113 to 131 to the US dollar. From 2015 to 2019 the rupee collapsed from 131 to 182 under flexible inflation targeting cum exchange rate as the first line of defence where the currency is deprecated instead of hiking rates and halting liquidity injections.

From 2020 to 2022 the rupee collapsed from 182 to 360 under output gap targeting (over stimulus) and exchange rate as the first line of defence.

“The tariffs are paid in rupees,” Wickremasinghe said. With the rupee continuing to devalue in other 5 years 40 rupees will look like 20 rupees.”

Sri Lanka has the worst central bank in South Asia after Pakistan. Both central banks started with the rupee at 4.70 to the US dollars, derived from the Reserve Bank of India, which was set up as a private bank like the Bank of England.

India started to run into forex shortages after the RBI was nationalized and interventionist economic bureaucrats started to run the agency. Sri Lanka’s and Pakistan’s central bank were run on discretionary principles by economic bureaucrats from the beginning.

The Central Bank of Sri Lanka was set up with a peg with gold acting as the final restraint on economic bureaucrats, but it started to depreciated steeply from 1980 as the restraint was taken away.

Now under so-called ‘exchange rate as the first line of defence’ whenever the currency comes under pressure due to inflationary policy (liquidity injections to target an artificially low policy rate or Treasuries yields) the currency is depreciated instead of allowing rates to normalize.

Eventually rates also shoot up, as attempts are made to stabilize the currency which collapses from ‘first line of defence’ triggering downgrades along the way.

After the currency collapse, the Ceylon Electricity Board, finances are shattered and it is unable to pay renewable operators.

Unlike the petroleum, which has to stop delivery as it runs out of power, renewable operators continue to deliver as their domestic value added is higher.

However they also have expenses including salaries of staff to pay.

The CEB which is also running higher losses after the central bank printed money and triggered a currency collapse, has not settled renewable producers.

“In the meantime, we have financial issues with the investors and CEB owns more than 45 million rupees in the industry,” Warna Dahanayaka, Secretary of Mini Hydro Association, said at the conference.

“We can’t sustain because we can’t pay the salaries and we can’t sustain also because of the bank loans. Therefore, we are requesting the government to take the appropriate action for this matter.”

Sri Lanka and Pakistan have identical issues in the power sector including large losses, circular debt, subsidies due to depreciating currencies.

In Sri Lanka there is strong support from the economists outside government for inflationary policy and monetary instability.

The country’s exporters, expatriate workers, users of unofficial gross settlement systems, budget deficits and interbank forex dealers in previous crises have been blamed for monetary instability rather than the unworkable impossible trinity regime involving conflicting domestic (inflation target) and external targets (foreign reserves).

The country has no doctrinal foundation in sound money and there is both fear of floating and hard peg phobia among opinion leaders on both sides of the spectrum regardless of whether they are state or private sector like any Latin American country, critics say.


South Asia, Sri Lanka currency crises; only 2-pct know monetary cause: World Bank survey

A World Bank survey last year found that only 2 percent of ‘experts’ surveyed by the agency knew that external monetary instability was generated by the central bank. Most blamed trade in severe knee jerk reaction. (Colombo/Jan29/2023)

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Sri Lanka top chamber less pessimistic on 2023 GDP contraction

ECONOMYNEXT – Sri Lanka’s top business chamber said it was expecting an economic contraction of up to 2 percent in 2023, which is much lower than projected by international agencies.

“The forecast of 2023 is quite negative in terms of the international forecasters,” Shiran Fernando Chief Economist of Ceylon Chamber of Commerce told a business forum in Colombo.

“Our view is that there will be some level of contraction, may be zero to two percent. But I think as the year progresses in particular the second half, we will see consumption picking up.”

The World Bank is projecting a 4.2 percent contraction in 2023.

In 2022 Sri Lanka’s economy is expected to contract around 8 to 9 percent with gross domestic product shrinking 7.1 percent up to September.

Most businesses have seen a consumption hit, but not as much as indicated, Fernando said.

“Consumption is not falling as much as GDP in sense and we are seeing much more resilient consumer,” he said.

Sri Lanka’s economy usually starts to recover around 15 to 20 months after each currency crisis triggered by the island’s soft-pegged central bank in its oft repeated action of mis-targeting rates through aggressive open market operation or rejecting real bids at Treasuries auctions. (Colombo/Jan28/2023)

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