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Sunday October 1st, 2023

Sri Lanka not keen to enact draft monetary law

ECONOMYNEXT – Sri Lanka may not enact draft legislation to change the monetary law governing the central bank which seeks to establish ‘flexible’ inflation targeting, but the new administration is committed to price stability, a top official said.

“I do not think we would be keen to pass it,” Senior Economic Advisor to the Finance Minister and Prime Minister, Nivard Cabraal said.

“But we are committed to price stability.”

Inflation targeting was part of an overall goal of maintaining economic and price stability, he said, and not the only goal.

“Inflation is a key goal certainly, and we have done that even in the past,” Cabraal who was also a former central bank governor said.

Sri Lanka has been following a so-called flexible inflation targeting, a type of discretionary targeting of a high domestic anchor (consumer price index) as high as 8.0 percent, while also targeting an exchange rate (external anchor) to build up foreign reserves (injecting reserve money through dollar purchases), triggering dual anchor conflicts.

Under the ‘flexible exchange rate’ the rupee collapsed from 153 to 182 to the US dollar in 2018. The rupee was also depreciated in 2017 despite weak private credit.

Under a program with the International Monetary Fund, now in effect the inflation target ceiling (upper band) is 8.0 percent for March 2020, with an inner bank upper limit of 6.5 percent.

Analysts have raised concerns that the ‘flexible’ inflation targeting along with a ‘flexible exchange rate’ a highly unstable non-credible peg, did not eliminate the dual anchor conflicts that had triggered balance of payments trouble and IMF bailouts in the past.

The rupee collapsed in 2018, with the ‘flexible exchange rate’.

There had been warning that the domestic anchor was too high to prevent monetary instability.

Successful inflation targeting central banks have target of around 2 percent with a fully floating exchange rate (no reserve money is injected or taken away through foreign exchange operations to alter the monetary base).

Once an inflation targeting law is passed, a target is jointly set in consultation with the finance ministry.

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Analysts have called for genuine inflation targeting or a consistent peg with market determined short term rates, to avoid currency trouble and provide monetary stability with low interest rates.

The draft law also did not propose to eliminate a Treasury presence in the central bank, as originally expected. (Colombo/Dec04/2019)

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Sri Lanka National Christian Council opposes Online Safety Bill

ECONOMYNEXT – The National Christian Council of Sri Lanka (NCCSL) in a statement on the Online Safety Bill, said that the existing legal regime is adequate to deal with instances of harmful speech, making it unjustifiable to enact such “stringent laws”.

The Council called upon the government to withdraw the bill immediately.

The body expressed “deep concern” over the proposed bill, detailing its potential to curtail freedom of speech and how, according to the Council, the piece of legislature is inconsistent with the principles of democracy.

“The bill proposes the establishment of an entity named the Online Safety Commission without provisions to guarantee its independence and impartiality,” the statement said.

Chapter 3 imposes restrictions on online communication of certain statements, many of which are vague and overbroad, leaving room for executive control and the curtailing of legitimate criticism and dissent that are basic features of democracy, the statement said.

“The laws granting wide discretion to the executive and its investigative agencies with expansive reach have been misused in the past.”

The Council said that the bill was not drafted with the process of public consultation and discussion, which might have ensured the bill would be less draconian in nature.

“The National Christian Council of Sri Lanka calls upon the government to withdraw this anti-human rights and anti-democratic bill immediately.” (Colombo/Sep30/2023)

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Sri Lanka to implement new vehicle revenue licence issuing system

ECONOMYNEXT – A new system of issuing vehicle licences called eRL 2.0 is to be implemented in 5 provinces, excluding the Western Province, from 3 October onwards.

The new system is to be implemented beginning in the North West, South, North Central, Central and Sabaragamuwa provinces, respectively. The existing vehicle licence issuing system eRL 1.0 will continue to be used in the Western Province.

The issuing of revenue licences islandwide at Department of Motor Traffic head offices and regional branches will be temporarily halted on October 2.

The facility of obtaining vehicle permits online will also be temporarily halted on 6 October till midnight.

The Sri Lanka Information and Communication Technology Agency (ICTA) and the Provincial Motor Traffic Departments are working to modernize the current vehicle revenue license issuance system.

The implementation of the new eRL 2.0 system is expected to be an important step in the digitalisation of Sri Lanka. (Colombo/Sep30/2023)

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Sri Lankan Airlines flights cancelled as aircraft grounded

ECONOMYNEXT – State-run SriLankan Airlines has apologized to passengers who were stranded as multiple aircraft were grounded at the same time.

The airline said it has strict procedures which requires aircraft to be grounded when technical issues are discovered.

“Unfortunately, in this case we suffered a number of groundings at the same time,” the airline said.

“We apologize for the disruption and inconvenience caused and assure all our loyal customers that we are working diligently to minimize such occurrences moving forward.”

The airline said it was booking passengers on other airlines while some have been accommodated at hotels. (Colombo/Sept30/2023)

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