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Wednesday June 19th, 2024

Sri Lanka opposition UNP calls for roadmap for COP26 climate summit outcomes

LEADERLESS – The United National Party headquarters in Pitakotte

ECONOMYNEXT – Sri Lanka must immediately present a roadmap for the country to successfully achieve targets set out at the recent COP26 climate conference in Glasgow, the opposition United National Party (UNP) said.

“This government has taken on an international undertaking, and now has an obligation to fulfil their responsibilities to both the Sri Lankan public and the global community,” the party said in a statement on Tuesday (09) welcoming the pledges made by world leaders at the international summit.

“It is imperative that the president makes a statement in parliament regarding the outcome of the conference,” the UNP added, noting that it is parliament and not a presidential task force that must be responsible for ensuring Sri Lanka fulfils its commitment to the battle against climate change.

The party said that climate change is a global issue and one which threatens the progress and development of Sri Lanka. ‘The Global Methane Pledge’, which aims to limit methane emission levels by 30% by 2030, and ‘The Glasgow Leaders’ Declaration on Forest and Land Use’, which promises to halt and reverse land degradation and forest loss by 2030, are welcome initiatives which will benefit both Sri Lanka and the world, the opposition party said.

“The UNP, who ensured Sri Lanka was a signatory to the Paris Climate Agreement, welcomes the government’s decision to stand in solidarity with the rest of the world in the battle against climate change. It is now imperative that the Government presents a strategy to implement the agreements signed at COP26,” it said.

President Gotabaya Rajapaksa, who spoke at the summit last Monday (01) Sri Lanka is proud to be a co-lead of the “Global Energy Compact for No New Coal Power”.

In September this year, Sri Lanka joined six other countries in pledging a No New Coal Compact, promising to cease the issuance of permits for new unabated coal power plants after the end of the year.

The cabinet office announced on Tuesday (02) that ministers have approved a series of policy guidelines with regard to power generation including a proposal to generate 70 percent of the country’s electricity from renewable sources by 2030. Other proposals include a decision to forego the construction of new coal power plants and to neutralise net carbon emissions from power generation by 2050.

Related: Sri Lanka cabinet nod for electricity policy guidelines; 70pct renewable by 2030

“It is essential that the world’s largest emitters of greenhouse gases fulfil their national commitments and assist developing nations navigate through the climate crisis,” the President’s Office statement quoted Rajapaksa as saying in his address.

Rajapaksa also called on nations to work together in a spirit of true cooperation to overcome the crisis and sustain humanity and the planet.

“Climate change affects all nations, but disproportionately impacts developing island nations. Developing nations that take bold steps towards climate change mitigation and adaptation deserve extensive support,” he said.

“Sri Lanka is deeply aware of the impacts of climate change. Our rich philosophical heritage, shaped by Lord Buddha’s teachings, places great value on environmental integrity,” said Rajapaksa, adding that sustainability is at the heart of Sri Lanka’s national policy framework.

In his speech, the president also defended his controversial agrochemical ban.

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

(Colombo/Nov09/2021)

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Central banks expect to increase gold reserves after buying 1,037 tonnes in 2023: Survey

ECONOMYNEXT – About 29 percent of central banks in the world intended to increase their gold reserves in 2023, up from 24 percent in 2023 and just 8 percent in 2019, a survey by the World Gold Council showed.

“The planned purchases are chiefly motivated by a desire to rebalance to a more preferred strategic level of gold holdings, domestic gold production, and financial market concerns including higher crisis risks and rising inflation,” the WGC said.

About 81 percent of 70 central banks that responded to the survey expected global central bank holdings of gold to go up, from 71 percent in 2023.

While in prior years, gold’s “historical position” was the top reason for central banks to hold gold, this factor dropped significantly to number five this year.

This year, the top reason for central banks to hold gold is “long-term store of value / inflation hedge” (88%), followed by “performance during times of crisis” (82%), “effective portfolio diversifier” (75%) and “no default risk” (72%).

Concerns about sanctions were listed as by 23 percent of emerging market central banks (0 advanced).

De-dollarization as a reason to hold gold gained ground, but was not among the main reasons.

About 13 percent of emerging market central banks listed de-dollarization as one of the reasons to buy gold up from 11 percent last year and 6 advanced nations said the same from zero last year.

Around 49 percent of central banks expected gold reserves to be moderately lower five year from now in the 2024 survey, against 49 percent in 2023 and 38 percent in 2022.

About 13 percent of central banks surveyed said US dollar reserves would be significantly lower in the 2024 survey, up from 5 percent in 2023 and 4 percent in 2022. (Colombo/June18/2024)

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Sri Lanka rupee closes weaker at 304.75/305.40 to US dollar

ECONOMYNEXT – Sri Lanka’s rupee closed weaker at 304.75/305.40 to the US dollar Tuesday, down from 304.15 to the US dollar Friday, dealer said, while some bond yields edged up.

Sri Lanka’s rupee has weakened amid unsterilized excess liquidity from earlier dollar purchases.

Excess liquidity fell from as high as 200 billion rupees, helped by some sales of maturing bills and also allowing some term contracts to run out.

However the central bank has started to inject liquidity again below its policy rate to suppress interest rates.

On Tuesday 30 billion rupees was printed overnight at an average yield of only 8.73 percent.

Separately another 25 billion rupees was printed till June 25 at 8.09 percent to 9.05 percent, which was still below overnight the policy rate of 9.5 percent.

Nobody has so far taken the central bank to court for printing money beyond overnight at rates lower than the overnight rate.

Sri Lanka operates an ad hoc exchange rate regime called ‘flexible exchange rate’ which triggers panic among market participants, as the central bank stays away when spikes in credit either creates import demand or unsterilized credit is used up.

“If large volumes of unsterilized liquidity is left, the exchange rate has to be closely defended to prevent speculation involving early covering of import bills and late selling of exports proceeds,” EN’s economic columnist Bellwether says.

“Just as an appreciating or stable exchange rate leads to late covering of import bills, a falling rates leads to immediate covering of import bills.

“Keeping exchange rates stable is a relatively simple exercise but it is difficult to do so if short term rates are also closely targeted with printed money, as liquidity runs out, as if the country had a free float and no reserve target.”

“When there is a large volume of excess liquidity remaining (except those voluntary deposited for long periods by risk averse banks) the the interest rates structure is under-stated compared to the reported reserves.

“Interest rates would be a little higher than seen in the market if the liquidity was mopped up and domestic credit and imports were blocked to prevent the reserves from being used up.”

In East Asia there is greater knowledge of central bank operational frameworks, though International Monetary Fund driven flawed doctrine are also threatening the monetary stability of those countries, critics say.

Related

Vietnam selling SBV bills to stabilize the Dong, as Sri Lanka rupee also weakens

Sri Lanka’s rupee started to collapse steeply after the IMF’s Second Amendment in 1978 along with many other countries as flawed operational frameworks gained ground without a credible anchor.

A bond maturing on 15.12.2026 closed at 10.10/30 percent up from 10.05/30 percent Friday.

A bond maturing on 15.10.2027 closed at 10.60/57 flat from 10.60/80 percent.

A bond maturing on 01.07.2028 closed at 11.15/35 percent, up from 11.05/20 percent.

A bond maturing on 15.09.2029 closed at 11.80/90 percent unchanged.

A bond maturing on 15.10.2030 closed at 11.90/12.00 percent.

A maturing on 10.12.2031 closed at 11.95/12.10 percent.

A bond maturing on 01.10.2032 closed at down at 11.95/12.10 percent, down from 12.00/10 percent. (Colombo/Jun14/2024)

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Sri Lanka’s Ceylon Chamber links up with Gujarat Chamber

ECONOMYNEXT – The Ceylon Chamber of Commerce has signed an agreement with the Southern Gujarat Chamber of Commerce and Industry (SGCCI) to increase trade cooperation between India and Sri Lanka.

The MOU was signed by CCC CEO Buwanekabahu Perera, SGCCI President Ramesh Vaghasia, in the presence of Dr Valsan Vethody, Consul General for Sri Lanka in Mumbai, India.

“With the signing of the MoU, … the Ceylon Chamber of Commerce and SGCCI aim to facilitate trade between the two countries via initiatives such as trade fairs and delegations, business networking events, training programmes,” the Ceylon Chamber said in a statement.

“This partnership will open doors for Sri Lankan businesses to explore opportunities in Surat’s dynamic market and enable the sharing of expertise and resources between the two regions.”

Established in 1940, SGCCI engages with over 12,000 members and indirect ties with more than 2,00,000 members via 150 associations. It promotes trade, commerce, and industry in South Gujarat.

The region’s commercial and economic centre Surat has risen to prominence as the global epicenter for diamond cutting and as India’s textile hub, and is ranked the world’s 4th fastest growing city with a GDP growth rate of 11.5%

Surat’s economic landscape is vibrant and diverse. As India’s 8th largest and Gujarat’s 2nd largest city, it boasts the highest average annual household income in the country.

The nearby Hazira Industrial Area hosts major corporations like Reliance, ESSAR, SHELL, and L&T. (Colombo/Jun18/2024)

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