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Thursday August 18th, 2022

Sri Lanka petrol price hiked to Rs470 a litre, diesel Rs460

SHUT OUT: Many filling stations are closed with restricted fuel distribution.

ECONOMYNEXT – Sri Lanka has raised the petrol price to 470 rupees a litre by 50 rupees and auto diesel to 460 rupees a litre by 60 rupees an energy ministry official said as the country reels from fuel shortages amid money printing.

Prices at both state-run Ceylon Petroleum Corporation and Lanka IOC have been raised by the same proportion.

Petrol Octane 95 was raised by 100 rupees to 550 rupees a litre.

Super diesel was raised by Rs75 to Rs520 per litre.

Sri Lanka’s rupee has collapsed from 200 to 360 to the US dollar in the wake of a botched float with forced dollar sales to the central bank (surrender requirement) and forex shortages are persisting with continued money printing.

Sri Lanka is now under severe fuel shortages with the country unable to find dollars to pay large import bills amid the liquidity injections. (Colombo/June26/2022)

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Immigration on the hunt for Scotswoman who documented protests

EOCNOMYNEXT – Sri Lanka’s Immigration and Emigration Department is attempting to track down Kayleigh Fraser, the Scotswoman who documented the country’s anti government protests.

Fraser was ordered to leave the island on or before Monday August 15 after officials cancelled her visa. She and her lawyer had filed a writ petition against her deportation with the Supreme Court, which was dismissed on the grounds that she was not being deported deported, only had her visa cancelled.

“The learned State Council submits that the impugned document ‘X4’ is not a deportation order as claimed by the petitioner and she confirmed that no deportation order has been made up to date by the authorities against the petitioner,” a court document shared by Fraser said.

Immigration officials stated that the police and SSD were on the lookout for Fraser.

“Her visa was cancelled on August 15, so we are looking to put her in a detention camp until she can get a ticket to leave the country,” the official told EconomyNext, confirming that Fraser was not getting deported but that her visa was cancelled.

“Legally we cannot give her a grace period, but on a humanitarian basis, we can give her the time to get a ticket,” the official said.

Fraser had used her social media to share pictures and videos of the anti-government protests in front of the Presidential Secretariat, and has been vocal against state sanctioned violence against protestors.

“Given what I have witnessed here in Colombo – the chemical weapons attacks on protestors, the government instructing the military to beat and torture protestors, the arbitrary arrests and blackmailing of prominent faces from the protests, intimidation tactics and threats etc – I should not be surprised at what has happened today,” she said, speaking to the Daily Record, a Scottish tabloid.

There were no reports of chemical weapons being used against any protestors in Sri Lanka, and it is unclear whether Fraser was erroneously referring to tear gas which was used to disperse crowds.

Fraser also called out media channels who she claimed had attempted to misrepresent peaceful protests as violent.

“It became very clear to me early on that this was not being reported. There was no international coverage on what was happening, and the media here were very much trying to say that it was violent, but that is the absolute opposite of what I saw,” she said over social media.

“What I saw was a beautiful union [of people] coming together in absolute unity. It was a beautiful movement and I’ve never seen anything like that in my life and that kept me coming back.”

However, Sri Lanka’s authorities maintain that the arrests so far have been legal and that violence did occur on the part of some protestors, though activists and some civil society groups disagree. On May 09, after supporters of then Prime Minister Mahinda Rajapaksa launched an unprovoked attack on peaceful protestors in Colombo, a wave of retaliatory mob-violence erupted across the country which saw the residences of some parliamentarians torched to the ground. One government MP was killed.

Authorities say many of the arrests so far have been of protestors who had violated court orders or had illegally occupied government buildings.

Fraser continues to post on her social media. (Colombo/Aug18/2022)

 

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Selling price in Sri Lanka’s apartments increase by over 47 pct: property tracker

ECONOMYNEXT – Overall selling prices of apartments in Sri Lanka increased by 45.17 percent when compared to June 2021, according LankaPropertyWeb’s housing price index.

Devaluation of the Sri Lankan rupee against the US dollar which has resulted in shortages of raw materials for construction which has in turn led to skyrocketing costs of construction and rising interest for housing loans, a report said, has prevented the construction of new houses leading to an increase in the purchase of houses and apartments.

The overall asking prices of houses in Sri Lanka had increased by 21.85 percent and prices of apartments for sale in Colombo had increased by 32.9 percent when compared to June 2021.

The Construction Industry Development Authority showed that the average price of a 50Kg cement bag sold by public and private dealers has increased by 187 percent from June 2021 to June 2022.

LankaPropertyWeb’s Development Consultancy and Research Team data showed that the top five searches for apartments for sale were from Colombo 2, Colombo 3, Colombo 5, Colombo 6 and Rajagiriya.

A resident from an apartment in Colombo 06 said, “We moved to this area due to the convenience, we spend less on transport and can go by bus, train or even walk to destinations. This was a massive save for us during the peak of the fuel crisis.”

Sri Lanka’s overall residential land price has dropped by 62.90 percent, a seasoned constructor told EconomyNext. This is because people are no longer interested in investing in lands and are less motivated to build houses because of the high rates of interest for housing and loans and there is value for money, he said.

Geethal Perera, an apartment builder in Colombo said: “Locals are not investing in assets or real estate because of the tumor in the economic conditions. However many overseas are investing because the international value for money on the rupee is favorable.”

The website also recorded a surge in search traffic from countries such as the UK, Australia, the US, Canada, and the UAE, said Tharindu Jayarathne, Head of Research at LankaPropertyWeb. (Colombo/Aug18/2022)

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Sri Lanka economy to shrink over 8-pct in 2022, inflation may peak below 70-pct: CB chief

ECONOMYNEXT – Sri Lanka’s economy is likely to contract more than 8 percent in 2022 and inflation may peak below 70 percent, central bank governor Nandalal Weerasinghe said.

“According to an earlier projection, we thought economic contraction would be 7.5 percent. And it looks like it will be a little more like that and it will probably pass 8 percent this year,” governor Weerasinghe told reporters after holding the policy rate at 15.50 percent but market rates around 25 to 30 percent.

Weerasinghe said at a discussion on Thursday August 15 that the sharper the economic contraction is, the faster the recovery will be.

“If there is a sharper negative growth this year means, we should be able to recover in next year, mainly in the second half,” he said.

Adding that uncertain factors such as changes in global prices of goods and services can affect the situation, Weerasinghe said if Sri Lanka manages to maintain normal economic conditions at current levels, sectors such as tourism will recover faster.

“Due to the decisions we took in the recent past, we see a favorable result now. Especially last time we saw a possibility of inflation rising more than 70 percent. But now we see it won’t go that high and with the electricity tariff being increased we have the hope it will come down going forward,” said Weerasinghe.

“On the other hand, our forex crisis has gotten better than the last time. We have been able to allocate forex for essential items likes petrol, diesel, and medicine due to the decisions we took. Import cost has reduced and exports have increased to a satisfactorylevel.

He said Sri Lanka is at a level of taking care of the basic needs of the country without going for short term loans.

Sri Lanka had to raise rates to stop private credit, reduce outflows and restore the credibility of a peg which was broken by two years of money printing.

As a result of high interest rates, credit growth should be decelerating. There is a purpose of having high interest rates. That is to decelerate private sector credit and reduce the growth in private sector credit, reduce monetary expansion, and then curtail the inflation, said Weersinghe.

There is a strong correction of the external sector with slowing private credit and also inflation.

Sri Lanka’s inflation grew 60.8 percent in the 12 months to July 2022, in the wake of failed float of the currency after two year of money printing, official data showed.

Governor Weerasinghe said inflation may peak around September below 70 percent before showing a downward trend.

“Inflation will be going up until September and we will see a downward trend after that. This is an assumption and no one can say how much it will be exactly.  It will certainly increase gradually to around 70 percent. But we can’t give an exact number,” he said.

“Earlier it was projected to go to around 70 percent but I do not think it will reach that level now. It will peak around 65 and it will trend down,” he said. (Colombo/Aug18/2022)

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