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Thursday June 8th, 2023

Sri Lanka parliament votes to remove PUCSL chief

ECONOMYNEXT – Sri Lanka’s parliament has voted to remove the chairman of the Public Utilities Commission Chairman Janaka Ratnayake, Speaker Mahinda Abeywardena said.

Out of 225 members 123 voted to remove him while 77 voted against.

This is the first time a head of an independent government commission was sacked by the parliament.

Wijesekara told parliament during a debate proceeding a vote to remove Ratnayake as chairman of the Public Utilities Commission of Sri Lanka (PUCSL) that the official had acted obstinately without the concurrence of fellow commission members.

Five charges were levelled against the PUCSL chief by the minister, the first two which were based on a February 10 verdict by the Court of Appeal rejecting an application filed by Ratnayake against an electricity tariff hike.

“My gut feeling is that I will be removed as a Chairman tomorrow,” Ratnayake told reporters a day earlier.

“If I can change the country, I will definitely join politics, because my intention is to serve the people and what is right.”

Opposition legislators slammed the decision saying it undermined independent commissions.

Ratnayake had blocked delayed a tariff hike in early 2023, resulting in losses to the Ceylon Electricity Board, he claimed. The PUCSL also had not enabled tariff hikes for nine years, requiring its governing law to be changed, Wijesekera said.

“We understand that Janaka Ratnayake and his family have not been able to come to the gallery at parliament and that is to be deplored,” Wickremeratne told parliament. “Even if a person is convicted in a court of law, the person can be present there.”

Wickremeratne said Sri Lanka’s parliament had a bizarre record over independent commissions, undermining good governance.

“The Sri Lankan parliament has a bizarre record on some of these issues,” Wickremeratne said. “We have members in these chambers who voted for independent commissions in the 17th amendment. Then the same people in the 18th amendment voted to abolish the independent commissions.

“Once again we bring a 19th amendment and we bring in independent commissions. Then in the 20th amendment, we bring another amendment in an authoritarian system putting all the power in one individual.

“And then we bring a 21st amendment reintroducing the independent commissions. This is he record of the Sri Lankan parliament and dome of the MPs who have been voting on this. ”

“Today, we plan to undermine an independent commission by removing a chairman of an independent commission.”

Such practices, where democracy (majoritarianism) undermines liberties and freedoms of citizens is called constitutional authoritarianism, political analysts say.

Sri Lanka inherited a law making parliament from British rule as a transplanted political system without a history or tradition in liberal thinking. (Colombo/May24/2023)

Comments (2)

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  1. PHILIP says:

    This is parliamentary thuggery. Defeats the purpose for which a parliament is created. It has become a blood-sucking parasite in the country. Dissolve the parliament and call for elections

  2. NIMLUCKY says:

    Had he sought the services of a psychiatrist sometime ago, this would not have happened to him.

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Your email address will not be published. Required fields are marked *

  1. PHILIP says:

    This is parliamentary thuggery. Defeats the purpose for which a parliament is created. It has become a blood-sucking parasite in the country. Dissolve the parliament and call for elections

  2. NIMLUCKY says:

    Had he sought the services of a psychiatrist sometime ago, this would not have happened to him.

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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