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Tuesday May 30th, 2023

Sri Lanka opposition leader bemoans at social media critics; alleges of defeating him in 2019 polls

Leader of the Opposition Sajith Premadasa and UNP Leader Ranil Wickremesinghe during the 2019 Presidntial campaign

ECONOMYNEXT – Sri Lanka opposition leader Sajith Premadasa strongly expressed his discontent at those who criticize him and his policies in social media and accused such critics of defeating him in the 2019 presidential polls against ousted president Gotabaya Rajapaksa.

Premadasa is facing increased social media criticism over his speeches and policies since his party has started campaigning for March 9 Local Government polls.

He was criticized by social media users this week for his criticism over President Ranil Wickremesinghe government bending to implement all the requests by the International Monetary Fund (IMF) for a $2.9 billion loan.

Speaking at a campaign rally in Matale district on Thursday, Premadasa said he and his polices are mocked by a small group of people through social media. He said some of his comments in 2019 were posted after using only certain parts of the speech.

“During the presidential elections, the social media personas cut the (speech) part I was going to the footsteps of the public and mocked us which led to the win of Gotabaya,” Premadasa, the opposition leader and the chief of center-right Samagi Jana Balawegaya (SJB) told the gathering at a election campaign meeting.

“The result of it is country is bankrupted, no money in the hands of people. People are skipping food,
everywhere poverty is emerging,” he said referring to the wrong economic policies by former leader Gotabaya Rajapaksa who was later ousted due to strong public protests in July last year. Ranil Wickremesinghe became the president through a parliament vote.

“A minority of the country who does not know our proposals have started mocking us via hypocritical
social media practices likewise they did in the 2019 presidential elections,” Premadasa said referring to the latest criticism over his party policies which he had been explaining to the public.

Teaming against own leader

Premadasa, 56-year old son of slain former president Ranasinghe Premadasa, split with the current President Wickremesinghe’s center-right United National Party (UNP) before the 2020 parliament polls and became the second largest party in the parliament with 54 seats in 225-member parliament.

President Wickremesinghe’s UNP won only one seat through a wildcard method. Wickremesinghe himself lost the election, though he became a legislator through the only one seat his party got.

Premadasa who has been in the parliament since 2000 is considered to become a strong candidate in the next presidential election. His party as well as some political analysts believe that the SJB has an opportunity to win the upcoming local government polls by a landslide if the polls take place as scheduled.

He has stated that a government under his party will not oblige to back the ongoing IMF deal or any other international deals because President Wickremesinghe and the current government have no mandate to sign such agreements.

His comments drew strong criticism in social media.

“Honestly, they are playing to the ignorant masses and I find this so infuriating,” a tweep said responding to Premadasa’s IMF criticism.

“Seriously, can’t you politicians see beyond the next election?” another tweep questioned.

“Sad to see still planning the same old cheap politics. Proves that these idiots will never change.”

Premadasa has also proposed ‘Sister city project’ to develop each local government bodies in the country, which also was criticized by social media users by sharing negative posts on the proposal. He said those who are unable to keep their election promises only mock him via social media.

“These are new proposals. The rival parties are scared of these proposals. So they take a few
words from what I say and make posts out of them. It is the incapable ones who keep on mocking our proposals on social media platforms,” he said.

“We are going to implement rooftop solar projects for every local government if the SJB wins.

Unfortunately, social media is mocking those projects as well. There are strange cattle (puduma
harak) on these social media platforms.”

“The millions of money owned by political parties are utilized for social media promotions. It was done in 2019 and they are going to fool the people in 2023 as well.

I should say one thing: we don’t spend millions of money on social media, we have sacrificed millions of money only for the education of school children and the health sector.” (Colombo/Feb03/2023)


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  1. a.senarath says:

    Though we get IMF funds we will be a bankrupt country for years till we start to pay back our debts. So, what is the real meaning of IMF funds? Up to now, we have had no plan to boost our exports. Where are we going to implement this money? If we get more loans for day-to-day expenses, we will be surely like Argentine a bankrupt country for years and years.

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  1. a.senarath says:

    Though we get IMF funds we will be a bankrupt country for years till we start to pay back our debts. So, what is the real meaning of IMF funds? Up to now, we have had no plan to boost our exports. Where are we going to implement this money? If we get more loans for day-to-day expenses, we will be surely like Argentine a bankrupt country for years and years.

Sri Lanka rupee at 296.75/297.25 to dollar at open, bond yields steady

ECONOMYNEXT – Sri Lanka’s rupee opened at 297 /297.50 against the US dollar in the spot market on Monday, while bond yields were steady, dealers said.

The rupee closed at 296.75 /297.25 to the US dollar on Monday after opening around 296.50 /297.50 rupees.

A bond maturing on 01.09.2027 was quoted at 26.50/75 percent steady from Friday’s close at 26.50/65 percent.

Sri Lanka’s rupee is appreciating amid negative private credit which has reduced outflows after the central bank hiked rates and stopped printing money. (Colombo/ May 29/2023)

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Sri Lanka rupee appreciation squeezes exporters

ECONOMYNEXT – Sri Lanka’s recent appreciation is starting to squeeze apparel exporters as their domestic costs including wages and energy, were hiked over recent months, when the rupee fell steeply, an industry official said.

Companies had raised salaries and emoluments at rates averaging 25 percent for workers while transport costs have also gone up but not has come down, Yohan Lawrence Director General of the Join Apparel Association Forum said.

Apparel factories in particular also provide transport and some meals for workers.

Electricity prices have also been hiked, based on the rupee which was weaker. A tariff cut is expected from June after the rupee appreciated and imported fuel prices fell.

Sri Lanka’s rupee collapsed in 2022 from 200 to 360 to the US dollar as interest rates were suppressed with liquidity injections and a failed attempt was made to float the rupee with surrender requirement in place.

From the second half of 2022, with higher interest rates and negative private credit, the central bank has avoided printing money under conditions which are generally accepted to be difficult, and is broadly running deflationary open market operations, triggering a balance of payments surplus and putting the rupee under upward pressure.

Central bank net credit to government which was 3,302 billion rupees in September in 2022, was down to 3,209 billion rupees by March 2023, part of which was due to rollovers, analysts say.

Market pricing of fuel and electricity by the Ministry of Energy and also spending controls and tax hikes buy have also helped contain domestic credit.

Sri Lanka also has mandatory conversion rules, imposed on exporters, which is a concern for exporters.

“We believe rupee should be at its natural level, but with forced conversions you won’t get the correct picture,” Lawrence said.

Sri Lanka has to release a plan to remove import controls, exchange controls and other restrictions imposed in the period where policy rates were suppressed with liquidity injections (so-called multiple currency practices and capital flow measures) by June under the IMF program.

Apparel exporters have also seen orders fall amid tighter conditions in Western markets.

The central bank has to peg (intervene actively in forex markets and create money) to meet reserve targets under an IMF program and cannot free float (avoid creating money through international operations) the rupee.

The newly created money has generally been absorbed in an overnight liquidity shortage.

There have also been foreign purchases of rupee Treasuries. Amid a contraction in credit, the inflows also do not turn into imports fast as the money if the money is spent.

By making purchases a little below what is allowed by the contraction in domestic credit, the rupee can be allowed to appreciate, analysts say.

The central bank has so far allowed the rupee to appreciate to around 300 to the US dollar from 360 levels under a transparent guidance peg up to February.

Except after the 2008/2009 currency crisis, Sri Lanka’s central bank has not previously allowed to the rupee to appreciate under IMF programs where the first year in particular sees balance of payments surpluses, before private credit and domestic investments picks up again.

One of the considerations used by third world central banks are Real Effective Exchange Rate indices.

The REER of the Sri Lanka rupee based on a basket of currencies calculated by the central bank was 61.12 points in February before the rupee was allowed to appreciate by lifting a surrender rule.

In March the index went up to 69.55 points, but remained steeply below 100. Real effective exchange rates are calculated also taking into account inflation in counterpart trading nations.

Sri Lanka’s inflation index had hardly risen since September amid rupee gains. Falling food prices can help contain pressure for further wage hikes, analysts say. (Colombo/May30/2023)

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Sri Lanka forum to discuss central bank independence vs sound money

ECONOMYNEXT – Central bank independence and sound money will be under discussion at a public event organized by the Sri Lanka chapter of the Bastiat Society today, May 30, as island is recovering from the worst episode of monetary instability since independence.

The forum will feature Lawrence H White, Professor of Economics at George Mason University in the US, and W A Wijewardene, former Deputy Central Bank Governor, of the Central Bank of Sri Lanka.

“The discussion will compare the current system against alternative systems and explore the relationship between such banking systems and sound money,” the organizers said.

White specializes in the theory and history of banking and money. He is the author of “The Clash of Economic Ideas” (2012), “The Theory of Monetary Institutions” (1999), “Free Banking in Britain” (2nd ed., 1995), and “Competition and Currency” (1989).

Wijewardene has been speaking on central bank independence in Sri Lanka long before it became a topic of wider discussion, but also on accountability.

In April, a Central Bank Independence and Other Matters, which includes a collection of his orations on the subject over the years as well a recent development was published.

The discussion comes as independent central banks in the West have created the worst inflation since the 1970s and early 1980s and are apparently unaccountable to parliaments and the public.

The early 1980s also saw the first wave of external debt crises in so-called soft-pegged countries in Latin America and Eastern Europe in particular as the US and UK tightened policy to end the Great Inflation.

The discussion will be held at 7.00 pm at the Lakmahal Community Library and those interested can register online, the organizers said. (Colombo/May30/2023)

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