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Tuesday November 29th, 2022

Sri Lanka Navy seizes Kerala cannabis worth 65 mn rupees in Jaffna

ECONOMYNEXT – Sri Lanka Navy (SLN) has seized Kerala cannabis worth a total of 65 million rupees in Jaffna in 20 days, the navy said.

The latest haul was cannabis with a street value of 27 million rupees that was seized on Saturday August 19 in the northern peninsula. Over 93kg of it was found on the beach at Saukkadi, Madagal in Jaffna, stuffed in 40 packs kept in a shrimp weir.

The stock is in SLN custody until further investigations.

The navy said it suspects that smugglers might have left behind the consignment in the shrimp weir, being unable to bring it ashore, due to naval operations in the area.

On August 03, 49kg and 380g (wet weight) of Kerala cannabis was seized during a search operation conducted near the Mannar sandbanks. The cannabis was in 20 packs that were found buried in the area by smugglers. The gross street value of the seized cannabis is believed to be about 14 million rupees, the navy said.

Another operation conducted by the Navy at Mannar Sand Banks on the evening of 02nd August 2022, led to the seizure of about 47kg and 240g (wet weight) of Kerala cannabis. The gross street value of seized Kerala cannabis is believed to be around 14 million rupees.

On August 04, SLN had fished out 34kg and 38g (wet weight) of Kerala cannabis floating in the seas between Kayts and Punguduthive Islands in Jaffna, stuffed in eight packs. The gross street value of seized cannabis is believed to be about 10 million rupees.

Navy Spokesman Captain Indika Silva told EconomyNext that most of the cannabis being arrested is suspected to be smuggled into the country for the consumption of locals while Sri Lanka is sometimes used as an exchange point for other narcotics circulating in the region.

“We have arrested about one ton of heroin this year. However, the smuggling of heroin seems to have reduced these days,” said Silva.

“However, cannabis seems to be coming in because there are no reports of arrests while it’s smuggled out of the country.”

Police Spokesman SSP Nihal Thalduwa was unavailable for comment. (Colombo/Aug20/2022)

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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 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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Sri Lanka new CB law to cabinet soon as IMF prior action

ECONOMYNEXT – Sri Lanka’s new central bank law will be submitted to the cabinet as a prior action of International Monetary Fund with clauses to improve governance and legalize ‘flexible’ inflation targeting, Central Bank Governor Nandalal Weerasinghe said.

Under the new law members of the monetary board will be appointed by the country’s Constitutional Council replacing the current system of the Finance Minister making appointments.

“It will be a bipartisan approach,” Governor Weerasinghe told an investor forum organized by CT CLSA Securities, Colombo-based brokerage.

“The central bank’s ability to finance the budget deficit will be taken out. Thirdly the flexible inflation targeting regime will be recognized in the law as the framework.”

The law will also make macro-prudential surveillance formally under the bank.

There will be two governing boards, one for the management of the agency and one to conduct monetary policy.

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