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Tuesday May 30th, 2023

Sri Lanka president proposes long neglected laws for gender equity, women empowerment 

ECONOMYNEXT – Sri Lanka President Ranil Wickremesinghe has proposed a new bill on gender equality and women’s empowerment to be submitted to Parliament soon in the island nation where violence against women are not considered a serious crime amid lethargic responses from law enforcement authorities for such violences.

Despite many decisions to empower women in the past, public at the grassroots have yet to see some changes in the violence against women. Many women victims harassed by men are reluctant to seek justice in Sri Lanka because most men are gender insensitive, analysts say.

Wickremesinghe urged the women’s parliamentarians’ forum to prepare the bill and emphasized that women’s representation should be increased not only in the Parliament but also in other sectors and the public sector as well as the private sector should focus their attention in this regard.

“We are drafting two acts related to Gender Equality and Women Empowerment. It is also proposed to establish an independent commission under the name of the National Women’s Commission to give leadership and make recommendations to the Parliament to intervene in matters relating to gender equality and women empowerment,” Wickremesinghe told the parliament during the Committee Stage debate for the Ministry of Women and Children.

Despite Sri Lanka being the first country to produce the first woman prime minister and president, most women are reluctant to join politics in the island nation in a patriarchal society despite more than half of the population being women.

Women are not only considered equal under the existing practices, but their rights are also usually violated by men due to gender insensitiveness, analysts say. There are only a handfuls of women at the higher level of top corporates.

The island nation has only 12 lawmakers in the 225-member legislature. Most women politicians say they are not given opportunities by their party’s counterpart men due to the patriarchal nature of the society.

Wickremesinghe’s last 2015-2019 government enacted a law to mandatorily allocate 25 percent of the local government seats to women from 2018 local government polls. However, no women were given opportunities for decision making.

“When we look at the estate sector, and garment factories, most of the employees are females but there is not a single woman director in them. Not only the Private sector but the government sector too has made the same mistake, as the scenario in the Corporations are the same,” Wickremesinghe said in his capacity as the Minister of Women Affairs and Children.

“We can address it by way of law. However, where the education sector, health and administrative sector are concerned, female representation is higher. But in the private sector, we don’t find this development and it should be improved. But when we look at the numbers receiving education, more than 50 per cent are female which is not reflected at the higher level of employment.” (Colombo/Dec01/2022)

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Sri Lanka rupee at 296.75/297.25 to dollar at open, bond yields steady

ECONOMYNEXT – Sri Lanka’s rupee opened at 297 /297.50 against the US dollar in the spot market on Monday, while bond yields were steady, dealers said.

The rupee closed at 296.75 /297.25 to the US dollar on Monday after opening around 296.50 /297.50 rupees.

A bond maturing on 01.09.2027 was quoted at 26.50/75 percent steady from Friday’s close at 26.50/65 percent.

Sri Lanka’s rupee is appreciating amid negative private credit which has reduced outflows after the central bank hiked rates and stopped printing money. (Colombo/ May 29/2023)

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Sri Lanka rupee appreciation squeezes exporters

ECONOMYNEXT – Sri Lanka’s recent appreciation is starting to squeeze apparel exporters as their domestic costs including wages and energy, were hiked over recent months, when the rupee fell steeply, an industry official said.

Companies had raised salaries and emoluments at rates averaging 25 percent for workers while transport costs have also gone up but not has come down, Yohan Lawrence Director General of the Join Apparel Association Forum said.

Apparel factories in particular also provide transport and some meals for workers.

Electricity prices have also been hiked, based on the rupee which was weaker. A tariff cut is expected from June after the rupee appreciated and imported fuel prices fell.

Sri Lanka’s rupee collapsed in 2022 from 200 to 360 to the US dollar as interest rates were suppressed with liquidity injections and a failed attempt was made to float the rupee with surrender requirement in place.

From the second half of 2022, with higher interest rates and negative private credit, the central bank has avoided printing money under conditions which are generally accepted to be difficult, and is broadly running deflationary open market operations, triggering a balance of payments surplus and putting the rupee under upward pressure.

Central bank net credit to government which was 3,302 billion rupees in September in 2022, was down to 3,209 billion rupees by March 2023, part of which was due to rollovers, analysts say.

Market pricing of fuel and electricity by the Ministry of Energy and also spending controls and tax hikes buy have also helped contain domestic credit.

Sri Lanka also has mandatory conversion rules, imposed on exporters, which is a concern for exporters.

“We believe rupee should be at its natural level, but with forced conversions you won’t get the correct picture,” Lawrence said.

Sri Lanka has to release a plan to remove import controls, exchange controls and other restrictions imposed in the period where policy rates were suppressed with liquidity injections (so-called multiple currency practices and capital flow measures) by June under the IMF program.

Apparel exporters have also seen orders fall amid tighter conditions in Western markets.

The central bank has to peg (intervene actively in forex markets and create money) to meet reserve targets under an IMF program and cannot free float (avoid creating money through international operations) the rupee.

The newly created money has generally been absorbed in an overnight liquidity shortage.

There have also been foreign purchases of rupee Treasuries. Amid a contraction in credit, the inflows also do not turn into imports fast as the money if the money is spent.

By making purchases a little below what is allowed by the contraction in domestic credit, the rupee can be allowed to appreciate, analysts say.

The central bank has so far allowed the rupee to appreciate to around 300 to the US dollar from 360 levels under a transparent guidance peg up to February.

Except after the 2008/2009 currency crisis, Sri Lanka’s central bank has not previously allowed to the rupee to appreciate under IMF programs where the first year in particular sees balance of payments surpluses, before private credit and domestic investments picks up again.

One of the considerations used by third world central banks are Real Effective Exchange Rate indices.

The REER of the Sri Lanka rupee based on a basket of currencies calculated by the central bank was 61.12 points in February before the rupee was allowed to appreciate by lifting a surrender rule.

In March the index went up to 69.55 points, but remained steeply below 100. Real effective exchange rates are calculated also taking into account inflation in counterpart trading nations.

Sri Lanka’s inflation index had hardly risen since September amid rupee gains. Falling food prices can help contain pressure for further wage hikes, analysts say. (Colombo/May30/2023)

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Sri Lanka forum to discuss central bank independence vs sound money

ECONOMYNEXT – Central bank independence and sound money will be under discussion at a public event organized by the Sri Lanka chapter of the Bastiat Society today, May 30, as island is recovering from the worst episode of monetary instability since independence.

The forum will feature Lawrence H White, Professor of Economics at George Mason University in the US, and W A Wijewardene, former Deputy Central Bank Governor, of the Central Bank of Sri Lanka.

“The discussion will compare the current system against alternative systems and explore the relationship between such banking systems and sound money,” the organizers said.

White specializes in the theory and history of banking and money. He is the author of “The Clash of Economic Ideas” (2012), “The Theory of Monetary Institutions” (1999), “Free Banking in Britain” (2nd ed., 1995), and “Competition and Currency” (1989).

Wijewardene has been speaking on central bank independence in Sri Lanka long before it became a topic of wider discussion, but also on accountability.

In April, a Central Bank Independence and Other Matters, which includes a collection of his orations on the subject over the years as well a recent development was published.

The discussion comes as independent central banks in the West have created the worst inflation since the 1970s and early 1980s and are apparently unaccountable to parliaments and the public.

The early 1980s also saw the first wave of external debt crises in so-called soft-pegged countries in Latin America and Eastern Europe in particular as the US and UK tightened policy to end the Great Inflation.

The discussion will be held at 7.00 pm at the Lakmahal Community Library and those interested can register online, the organizers said. (Colombo/May30/2023)

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