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Monday December 11th, 2023

Sri Lanka national inflation hits 11.1-pct in November 2021 after money printing

ECONOMYNEXT – Sri Lanka’s nation-wide inflation measured by the National Consume Price Index accelerated to 11.1 percent in November 2021 up from 8.3 percent, after record money printing to maintain low interest rates, despite a surging budget deficit.

The National Consumer Price Index hit double digits for the first time since it started to be compiled from 2014.

The NCPI grew 3.1 percent in November to 155.3 points.

Food prices jumped 5.5 percent in the month.

The food sub-index was up 16.9 percent in the 12-monts to November 2021, while non-foods also rose 1 percent in the months.

Food prices have risen 35 percent since August 2019 when the central bank began inflationary policy buying back bonds from old deficits to inject liquidity as part of ‘output gap targeting’.

In December and January of every year food prices generally rise but in 2021 the rise had been unusually high, amid heavy rains and a fertilizer ban which hit farmers.

From February 2020, record volumes of money was injected through central bank profits transfers, outright deficit finance and Covid-refinance.

Later ceiling prices were placed on bonds auctions, and hundreds of billions of rupees of securties were bought into the central bank balance sheets to general liquidity and balance as the auctions failed.

Sri Lanka authorities have a repertoire of excuses to print money and keep rates down and delay rate hikes until currency crises have been triggered.

Sri Lanka inflation is going up as the Federal Reserve also follows loose policy and fuel and export prices of goods also go up.

However the money printing central bank was set up in 1950 under US advice supposedly to follow ‘independent monetary policy’ and break up the Sterling Area currency boards, according to critics.

Sri Lanka keeps inflation indices down by suppressing market pricing of energy, uses that also as an excuse not to allow rates to go up and then later claims, ‘administered prices’ pushed up inflation.

There have been calls to change the monetary law to block the ability of the Monetary Board create inflation and currency depreciation with discretionary independence. (Colombo/Dec22/2021)

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Sri Lanka’s ousted utilities regulatory chief convinced he’ll be president

ECONOMYNEXT — Sri Lanka’s former public utilities regulatory chief Janaka Ratnayake, who was removed in May following a parliamentary vote, has confirmed that he intends to run for president.

Speaking to reporters on Sunday December 11 in the wake of an hours-long island-wide power outage the previous evening, Ratanayake said he will be the definite winner at a future presidential poll.

“I announced [my intention to run] officially on December 07, my birthday. I’m definitely coming as a presidential candidate. That’s not all, I’m the definite president at a future presidential election,” he said.

Ratnayake, in his first media appearance in months, was responding to questions about newspaper advertisements published on December 07 announcing his future candidacy.

Sri Lanka’s parliament on May 24 opted to remove the former chairman of the Public Utilities Commission of Sri Lanka (PUCSL), with 123 members voting in favour. This marked the first time a head of an independent government commission was sacked by Sri Lanka’s parliament.

Power & Energy Minister Kanchana Wijesekara, who had been at loggerheads with the regulatory chief, said at the time that the official had acted obstinately without the concurrence of fellow commission members.

The minister levelled five charges against Ratnayake, the first twoof  which were based on a February 10 verdict by the Court of Appeal rejecting an application filed by the offiical against an electricity tariff hike. Opposition legislators slammed the decision saying it undermined independent commissions.

Ratnayake’s presidential ambitions have been known for some time. A day before parliament voted to remove him, he told reporters: “If I can change the country, I will definitely join politics, because my intention is to serve the people and what is right.”

Ratnayake had blocked delayed a tariff hike in early 2023, resulting in losses to the state-run Ceylon Electricity Board (CEB), Minister Wijesekara claimed at the time. The PUCSL had als onot enabled tariff hikes for nine years, requiring its governing law to be changed, Wijesekera said.

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Sri Lanka wants university research to lead to commercially viable products

ECONOMYNEXT – Sri Lanka’s ministry of industries wants to ensure commercially-ready products and services are produced by university research, by facilitating partnerships with factories and entrepreneurs.

After a currency crisis, Sri Lanka’s government is in a drive to boost its trade balance by increasing exports.

“Our export basket hasn’t changed recently, partly because our small and medium entrepreneurs don’t have sufficient research and development facilities (like the multinationals) to innovate their products for the export market,” Additional Secretary of the Ministry of Industries, Chaminda Pathiraja said.

“At the same time, state universities and research institutes produce a large amount of research findings yearly, which end up sitting in those institutions; they don’t reach the industry,” Pathiraja said at a press briefing to announce a program on commercialization of new products and research, to be held tomorrow at the Waters Edge.

The networking forum will bring innovators and manufacturers together to focus on the commercialization of research for the value added tea, coir, spice, dairy products, gem and jewellery and packaging products industries.

“We want to encourage collaboration, through programs like our University Business League etc, so that the research output can be commercialized, and what is produced by our factories can increase in quantity and quality. We must focus on the export market.”

The objective of this program, he said, was to reduce the gap in acquiring innovators’ ideas and skills by the investors, and ultimately boost the manufacturing sector’s efficiency in alignment with the export market.
(Colombo/Dec11/2023)

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Sri Lanka rupee opens at 327.00/50 to the US dollar

ECONOMYNEXT – Sri Lanka’s rupee opened at 327.00/50 to the US dollar on Monday, from 327.00/30 Friday, dealers said.

On the Colombo Stock Exchange, both indices opened up: The All Share Price Index 0.28 percent at 10,823, and the S&P SL20 0.35 percent at 3,113.85.

Bond yields were up.

A bond maturing on 01.08.2026 was quoted at 14.05/20 percent from 14.05/15 percent.

A bond maturing on 15.01.2027 was quoted at 14.05/20 percent from 14.10/25 percent.

A bond maturing on 01.07.2028 was quoted at 14.20/50 percent from 14.20/35 percent.
(Colombo/Dec11/2023)

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