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Sunday December 10th, 2023

Sri Lanka Parliament instructs CBSL to come up with a plan to help entrepreneurs

ECONOMYNEXT-The Parliamentary Committee on Public Finance (CPF) has asked the Central Bank of Sri Lanka (CBSL) to come up with an innovative strategic plan for the betterment of local entrepreneurs and the general economy.

The Chairman of the committee Anura Pradharshana Yapa directed the officials of the CBSL to submit new development strategies to the CPF especially targeting local entrepreneurs when they met last week.

Yapa said that the Monetary Board should fulfil its responsibilities properly and that maintaining financial discipline is a fundamental factor for any country.

The Committee also said that the CBSL should not to act like the state or commercial banks that are pursuing profits and ratings.

These instructions were given when the bank officials said at the meeting that the CBSL has recently managed to maintain a large savings balance of USD 323 million by 19 February 2021 under a scheme to open a special deposit account in order to protect local cash reserves in the face of the COVID -19 pandemic situation.

The Committee pointed out that such good deposit schemes introduced by the CBSL should be publicized as this savings special deposit account earns an interest of 2-pct per annum interest which is beneficial to the country as well as Sri Lankans abroad.

State Minister Vidura Wickramanayake and MP Nalin Fernando also pointed out that the harsh criticism levelled at the government over the losses incurred due to the sugar tax revision measures has been a black mark on the government and did not benefit the consumers as expected.

The committee chairman said that the committee had not yet received the report called by the Public Finance Committee in this regard and that the Department of Import Control should be able to submit analytical comments with data on these gazette amendments.

The Committee approved the regulations issued on that day regarding the issuance of brown sugar licenses and recommended that a full explanation be given on March 09 with the participation of all relevant Ministries and Institutions.

The Committee approved two Extraordinary Gazette Notifications regarding the extension of the duration of two projects under the Strategic Development Act No. 14 of 2008 submitted by the Ministry of Finance. One such project is a 75-room city hotel located at No. 116, Galle Road, Colombo 3.

State Minister Susil Premajayantha pointed out that the project had failed at the outset. Sri Lanka Insurance Corporation, Litro Gas and the Employees Provident Fund have spent about Rs 20 billion, of which Rs 4 billion has been spent on settlement payments to a Malaysian company.

The state minister said the hotel, which currently has only 16 floors, would cost at least another Rs 40 billion to use and could not be expected to be successful.

The Committee stated that the then management of the Sri Lanka Insurance Corporation was directly responsible for the 4–5 year delay in the construction of the Sinolanka Spa Hotel which caused this surplus cost.

The committee chairman pointed out that the Board of Investment (BOI) should have paid attention to this matter and requested that a feasibility study report on this hotel project be submitted to the Committee soon. (Colombo/March03/2021)

Reported by Imesh Ranasinghe

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ADB USD200mn loan for Sri Lanka economic stabilization efforts

ECONOMYNEXT – The Asian Development Bank (ADB) has approved a US 200 million dollar concessional loan to Sri Lanka to help stabilize the country’s finance sector.

The Financial Sector Stability and Reforms Program comprises two subprograms of IS 200 million dollars each, according to a statement by the ADB.

“The program’s overarching development objective is fully aligned with the country’s strategy of maintaining finance sector stability, while ensuring that banks are well-positioned for eventual recovery,” ADB Country Director for Sri Lanka Takafumi Kadono was quoted as saying in the statement.

“The expected development outcome is a stable financial system providing access to affordable finance for businesses in various sectors of the economy.”

The ADB statement continues:

“Subprogram 1 targets short-term stabilization and crisis management measures that were implemented in 2023, while subprogram 2 is planned to be implemented in 2024 and focuses on structural reforms and long-term actions to restore growth in the banking sector.

The program will help strengthen the stability and governance of the country’s banking sector; improve the banking sector’s asset quality; and deepen sustainable and inclusive finance, particularly for women-led micro, small, and medium-sized enterprises.

According to the International Monetary Fund’s (IMF) latest review, Sri Lanka’s economy is showing tentative signs of stabilization, although a full economic recovery is not yet assured.

The program is a follow-on assistance from ADB’s crisis response under the special policy-based loan that was approved for Sri Lanka in May 2023.

It is aligned with the fourth pillar of the IMF’s Extended Fund Facility provided to Sri Lanka to help the country regain financial stability.

It is also in line with the government’s reform agenda, including strengthening the operational independence of the Central Bank of Sri Lanka (CBSL) and its designation as the country’s macroprudential authority.

In designing this subprogram 1 loan, ADB has maintained close coordination and collaboration with the IMF to design targeted regulatory reforms for the banking sector—including the asset quality review—and with the World Bank on strengthening the deposit insurance scheme.

“The loan is accompanied by a $1 million grant from ADB’s Technical Assistance Special Fund to provide advisory, knowledge, and institutional capacity building for Sri Lanka’s Ministry of Finance and CBSL.”

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Sri Lank in blackout as power grid hit by cascading failure

ECONOMYNEXT – Sri Lanka suffered a blackout as Saturday evening as the state-run Ceylon Electricity Board grid was hit by a cascading power failure.

The cascading failure is believed to have been triggered by the failure of the Kothmale-Biyagama transmission line.

“The Ceylon Electricity Board wishes to inform our customers that due to the failure of Kotmale – Biyagama main transmission line, an island wide power failure has occurred,” CEB Spokesman Noel Priyantha said.

“Step by step restorations are underway and it may take few hours to completely restore the power supply.”

With hydro plants running flat out, a outage of the line tends to create a big imbalance in the demand and supply, leading to tripping of more lines and generators.

Lines can trip due to lightening strikes, or equipment failures.

Sri Lanka last suffered a cascading failure in December 2021, due to the failure of the same transmission line.

RelatedSri Lanka power blackout as grid hit by cascading failure

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Sri Lanka to host regional Food and Agriculture Organization conference

ECONOMYNEXT – Sri Lanka will host the 37th session of the Asia Pacific Regional Conference (APRC) of the United Nations Food and Agriculture Organization (FAO), from February 19-22, 2024 in Colombo.

The Conference will bring together agriculture ministers and officials from 46 countries across the region to discuss challenges in food and agriculture.

“The 37th APRC will provide a vital platform for regional collaboration, benefitting the agricultural landscape, fisheries sector and environment of Sri Lanka,” Minister Mahinda Amaraweera said at a press briefing on Friday (8) to announce the conference.

FAO has had an active presence in Sri Lanka for over 40 years. “FAO has supported the country in the implementation of Good Agricultural Practices (GAP), and the development of the fisheries sector for growth and climate resilience,” Vimlendra Sharan, FAO Representative for Sri Lanka and the Maldives said.

“The APRC conference will be an opportunity to highlight the innovative approaches introduced in partnership with the government.”

By hosting APRC, Sri Lanka hopes to demonstrate the country’s dedication to the growth of sustainable agriculture, and showcase its commitment to sustainable agricultural development.

The APRC agenda will include a forum on agritourism, especially requested by the Sri Lankan government.

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