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Thursday June 8th, 2023

Sri Lanka opposition SJB to launch massive farmers’ protest on Nov 16: MP

image – Harin Fernando Facebook

ECONOMYNEXT – Sri Lanka’s main opposition the Samagi Jana Balavegaya (SJB) plans to launch a “massive” farmers’ protest on November 16, SJB MP Harin Fernando said, inviting all workers to join.

Edited to add: SJB MP Dr Harsha de Silva told EconomyNext a short while ago that the protest will be held in Colombo joined by “not just farmers, but many others”.

Farmers in Sri Lanka have been protesting a controversial decision to ban agrochemicals in what experts say is an ill-conceived overnight shift to organic fertilizer.

Related: Sri Lanka president defends controversial agrochemical ban amid mounting opposition

Fernando told reporters on Monday (08) that the objective of the protest will be to see if the government will make good a perceived threat to “grab farmers by the neck”.

Fernando, a vocal critic of President Gotabaya Rajapaksa’s administration, was ostensibly referring to a remark made by Rajapaksa on Saturday (06) that he did not wish to force organic fertilizer on farmers who aren’t receptive to it.

Speaking at a public event, a visibly annoyed Rajapaksa said that the transition to organic fertilizer was always going to be a great challenge.

“Some say they expected a military-style Gotabaya. I could do that, but that would mean, when the farmer is asked to use organic fertilizer, I can go with the army, grab them by the neck and say ‘use this’, but I have no need to do that. Is that what was expected? No.

“Some said that if I won, democracy would disappear. Now they themselves say ‘oh no, this not who we had expected, [we had expected] someone like in the army.’ I can do that if I want. But this is a democratic country,” the president said in Sinhala.

The official English translation of the speech, as released by the President’s Media Division, had the line:  “I can. To tell the farmers to use organic manure by resorting to physical force similar to how they do it in the army. But I have no need to do that.”

Some critics saw, or chose to see, a veiled threat in the president’s words.

“The wave of protests in the country cannot be stopped. On November 16, we plan to start this with a massive farmers protest. The objective of the protest is to see if the protestors can be grabbed by the neck, the way he said they could be. We will take to the streets with the farmers on that day to see if this can be done,” said MP Fernando.

Farmers are not the only group protesting the government.  School teachers and principals were on a strike for a record 100+ days over salary anomalies that have remained unresolved for 24 years. Trade unions only recently returned to work after much back-and-forth with the authorities, but protests continue islandwide with teachers demanding that the cash-strapped government find a solution to their woes fast.

The teachers again took to the streets on Tuesday (09). Meanwhile, health workers too are on a 24-hour token strike over salary anomalies of their own.

Related: Teachers, health workers in Sri Lanka promise TU action on Nov 9 over salary issues

“We believe the people of this country, not just farmers but all workers in the country can come out,” said Fernando. (Colombo/Nov09/2021)

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Sri Lanka’s shares slip on profit taking and selling pressure

ECONOMYNEXT – Sri Lanka’s shares closed lower on Wednesday after four consecutive gains in previous sessions spiraled into selling interest and profit taking, an analyst said.

The main All Share Price Index was down 0.28 percent or 24.39 points to 8,722.06, this is the lowest the index has been since May 02, while the most liquid index S&P SL20 was down 0.40 percent or 9.92 points to 2,468.44.

“The market was gaining in the previous sessions and there is selling and profit taking present today, due to continuously being on green,” an analyst said.

In the previous sessions the market was seeing gains, due to lowered policy rates and low inflation stimulating buying interest and driving the sentiment up, an analyst said.

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.

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.

“There are gradual improvements in the market sentiment, with positive sentiments coming in from lowered policy rates and inflation,” an analyst said.

The market generated foreign inflows of 12 million rupees and received a net foreign inflow of 18 million rupees, due to low share prices and discounted shares followed by a dividend announcement.

The market generated a revenue of 554 million rupees, this is the lowest the turnover has been since May 10, while the daily turnover average was 1 billion rupees. From the total generated revenue, the banking sector contributed 120 million rupees, Diversified Banks contributed 115 million rupees and the Capital Goods Industry generated 78 million rupees.

Top losers during trade were Sampath Bank, Commercial Bank and Aitken Spence. (Colombo/June06/2023)

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Sri Lanka Treasuries yields plunge, 12-month down 318bp

ECONOMYNEXT – Sri Lanka’s Treasuries yields plunged across maturities at Wednesday’s auction with the 12-month yield falling 318 basis points, in one of the biggest one day falls, data from the state debt office showed.

The 3-month yield fell 244 basis points to 23.21 percent.

The 6-mont yield fell 339 basis points to 21.90 percent, along with the 12 months to 19.10 percent.

The short-term yield curve is inverted.

The central bank last week cut its policy rate 250 basis points in a signaling move but is not printing money to enforce the rate cut.

The debt office sold all 140 billion rupees of offered securities. (Colombo/June07/2023)

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Sri Lanka forex reserves rise US$722mn in May 2023

ECONOMYNEXT – Sri Lanka’s foreign reserves grew 722 million US dollars to 3,483 million US dollars in May 2023 from 2,761 million US dollars in April, official data showed as deflationary policy and weak credit reduced ‘above the line’ outflows.

Sri Lanka lost almost all its reserve in over two years as the central bank sold reserves and printed money to keep rates down (sterilized reserves sales) including borrowed dollars from India.

Gross official reserves fell to a low of 1,705 million US dollars in September 2022.

Sri Lanka’s central bank hiked rates in April 2022 to slow credit and also stopped printing money after it ran out of borrowed Asian Clearing Union dollars from India.

Sri Lanka’s gross official reserves are made up of both monetary reserves of the central bank and any balances of the Treasury account from loans or grants it gets.

The central bank’s net foreign reserves are still negative after busting up borrowed reserves to suppress rates. By April (before the collection of reserves in May) the central bank’s net reserves were negative by 3.7 billion US dollars.

In May alone 662 million US dollars were bought from the market, Central Bank Governor Nandalal Weerasinghe said.


No pre-determined level to stop Sri Lanka rupee appreciation: CB Governor

Borrowing dollars through swaps and busting them up, was invented by the US Federal Reserve as it was printing money and breaking the Bretton Woods system in the early 1970s.

Sri Lanka received a 350 million US dollar tranche from the Asian Development Bank and 331 million US dollars from the IMF to the Treasury for budget support.

The loans can be sold to the central bank by the government to generate rupees and spend. However, since credit is weak, not all the inflows go out of the country particularly as the central bank is conducting deflationary open market operations on a net basis.

By allowing the rupee to appreciate unlike in previous episodes of recovery in an IMF program, after a bout of money printing, the central bank is bringing down inflation – in some cases absolute prices – and restoring confidence and easing the ‘pain’ of ‘monetary policy’ or stimulus.


Why is Sri Lanka’s rupee appreciating?

Though exports are falling, tourism revenues are also picking up.

The budget support loans, tourism receipts less the reserve collected will widen the trade deficit. Building foreign reserves involves lending money to the US or other western nations and is similar to repaying foreign debt. (Colombo/June07/2023)

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