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Saturday June 3rd, 2023

Sri Lanka legislator proposes Cannabis fix for looming debt crisis

ECONOMYNEXT – A Sri Lanka legislator Diana Gamage has suggested fixing the country’s debt crisis with Cannabis and giving Dutch courage to a shaky domestic economy extending hours of bars and off-license wine shops to grow a night economy.

Licenses should be issued to grow and export cannabis, similar to the way tobacco is a legal crop, she said.

She said that cannabis should not be used as a drug but should be used to earn foreign exchange though export.

“Many countries are growing it today,” Legislator Gamage told parliament. “We can grow them very easily in our country. Through that, this country can earn a huge foreign exchange to settle the debts of the country.”

Gamage who was appointed to the parliament by the main opposition Samagi Jana Balawegaya and cross over to support a 20th amendment said it was her proposal.

“I have studied this deeply. This is product that could bring us revenues of 73 billion dollars by 2027.”

Cannabis was widely used in South Asia for cooking, as medicine and recreation. British Colonial authorities did not initially ban it and tolerated it as a traditional cultural practice.

However when Indian workers went to the Caribbean for example, Colonial civil servants in the areas who were unused to the ganja culture were shocked and later banned it, analysts say. The laws then filtered to other areas of the British Empire.

“Cannabis was banned by the white man,” Gamage told parliament. “It was not done by us. We should have the power to change these 19th century ordinances.”

In many areas of the West cannabis has since been legalised.

Night Economy

Meanwhile Gamage said there was no night economy in the country.Sri Lanka can also boost the domestic economy by extending the hours of bars and wine stores (off-license shops) she said.

Gamage said that the people do not have a place to spend their money earned through their businesses and jobs, “so the country needs a night economy,”

“When we look at all the countries which have a night economy all of them are developed countries,” Gamage explained.

The sale of alcohol in restaurants and bars hotels are only permitted till 11 pm and wine stores are open from 9 am to 9 pm at the moment.

“But no one comes to the wine stores at 9 in the morning to purchase liquor,” she said. “So I propose the license should be issued to open from 10 am to 10 pm. We have to change the Excise Act with these amendments.”

She also proposed to open the bars in hotels and restaurants at least till 1 am, as people like foreigners and businessmen who are staying in hotels have less time to spend their money after returning to their rooms at about 9 or 10 in the night.

“They only have one hour to spend money,” she said.

Sri Lankans were also travelling abroad to place with a night economy such in East Asia, she said.

“Since people don’t have a place to spend their money at night as all the places are closed by 9 or 10, our people have got used to going other countries like Singapore, Bangkok and Malaysia to spent their money, to convert our rupees to dollars and spent there,” Gamage said.

“In order to take this country to development, we should get used thinking in a different way and these are methods to save the country if we thought in that way,” she said.

Sri Lanka has been trying to boost exports and ‘non-debt’ inflows after unprecedented money printing de-stabilized the external sector and sent the rupee reeling below 200 to the US dollar. (Colombo/April21/2021)

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Sri Lanka to ramp up weekend fuel deliveries after petrol price cut

More deaths reported at Sri Lanka fuel queues

ECONOMYNEXT – Sri Lanka’s state-run Ceylon Petroleum Corporation will be operating on the weekend to complete all fuel deliveries to end vehicle queues forming outside fuel stations after the price revision earlier in the week, Energy Minister Kanchana Wijesekera said.

“Instructions have been given to CPC and Ceylon Petroleum Storage Terminals to continue fuel deliveries on Saturday and Sunday this week to supply sufficient stocks to all fuel stations,” Minister Wijesekera said in a TWITTER.COM MESSAGE

“To reduce expenses on overtime, CPC and CPSTL have not been operating on Sundays and public holidays in the last 4 months,” Wijesekera said.

“Non-placement of orders by fuel stations from last Saturday, anticipating a price reduction, not maintaining minimum stocks, immediate increase in demand by consumers after the price revision, and quota increase have created shortages in the fuel stations.”

The Minister in April 2023 said all fuel stations would be required to maintain a minimum of 50 percent of stock tank capacity.

“I have asked CPC to review and suspend the license of fuel stations that had not maintained minimum stocks.” (Colombo/ June 02/ 2023)

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Sri Lanka bonds yield up at close, rupee at 291.75/292.50 against the US dollar

ECONOMYNEXT – Sri Lanka’s bonds closed steady on Friday, dealers said, following the central bank’s decision to cut its main policy rate by 250 basis points.

The Spot US dollar closed at 291.75/292.50 rupees, dealers said.

The rupee opened at 290.25/75 to the US dollar Thursday and closed at 292.50/295.50 to the US dollar.

A bond maturing on 15.09.2027 closed at 24.70/90 percent up from 24.50/90 percent a day earlier, dealers said.

A bond maturing on 15.05.2026 closed at 25.75/26.25 percent up from 25.00/26.00 percent a day earlier.

A bond maturing on 01.05.2025 closed at 27.00/30 percent, up from 26.30/27.00 per cent at last close.

A bond maturing on 01.07.2032 closed at 20.25/21.00 percent, up from 20.00/40 per cent at last close.
(Colombo/ June 02/2023)

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Sri Lanka’s shares edge up on positive macroeconomic sentiments

ECONOMYNEXT – Sri Lanka’s shares closed higher in trade on Friday, over positive macro-sentiments encouraging investors to redeem their interest towards buying, an analyst said.

The main All Share Price Index was up 0.72 percent or 62.19 points to 8,753.80,  while the most liquid index S&P SL20 was up 0.68 percent or 16.87 points to 2,487.29.

Sri Lanka’s inflation in the 12-months to May 2023 has eased to 25.2 percent from 35.3 percent a month earlier according to a revised Colombo Consumer Price Index calculated by the state statistics office.

Prior to the Monetary Policy investors were quite optimistic that inflation is to lower and interest rates will decrease and since exp, an analyst said.

Sri Lanka Central Bank is waiting for the government proposal on the domestic debt restructuring (DDR), the central bank governor Nandalal Weerasinghe said amid uncertainty over DDR and speculations over instability in the banking sector.

“On debt restructuring, the borrower is the ministry of finance’s treasury. Certainly we will announce what the strategy will be. We are waiting for a government proposal,” Weerasinghe said.

Sri Lanka’s investors are waiting on assurances to be made on debt restructuring and optimization, Central Bank Governor Nandalal Weerasinghe said, “It is up to the government to clear the uncertainty, because from our side we have done that part.”

The central bank cut the key policy rates by 250 basis points to spur a faltering economic growth as inflation was decelerating faster than it projected.

The speculation of DDR has hit the market and the risk premium has kept the market lending rates well above the central bank’s policy rates. The government has yet to present its plans on DDR.

Weerasinghe said the central bank has done its best to reduce the risk premium through bringing down the market lending rates while keeping the policy rates unchanged.

Sri Lanka’s President Ranil Wickremesinghe has discussed progress of International Monetary Fund program and debt restructuring during a visit of Deputy Managing Director Kenji Okamura, statement said.

“The discussion primarily focused on the progress of the IMF program between Sri Lanka and the IMF,” a statement from President’s office said.

“Attention was also paid to the on-going debt restructuring negotiations.”

However Officials from IMF have said Sri Lanka has to focus on expanding taxes.

“We discussed the importance of fiscal measures, in particular revenue measures, for a return to macroeconomic stability,” Deputy Managing Director Kenji Okamura said in a statement.

The finance ministry this week issued rules requiring everyone above 18 year of age to register to pay income tax.

“I was encouraged by the authorities’ commitment to negotiate a debt strategy in a timely and transparent manner.

The market generated a revenue of 738 million rupees, while the daily average was 1 billion rupees.

Top gainers in trade were Vallibel One, LOLC Finance and Browns Investment. (Colombo/June02/2023)

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