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Friday December 9th, 2022

Sri Lanka red hot crop, closed economy get rave views as malnutrition widens

MONETARY FALLOUT: In the 1970s as the economy was closed for self-sufficiency’ amid monetary instability, the Thriposha program was started to reduce malnutrition.

ECONOMYNEXT – Sri Lanka’s farmers are again earning millions growing green chilies Agriculture Minister Mahinda Amaraweera said recalling an import an in the closely economy era as malnutrition widened following a collapse of the rupee.

Sri Lanka’s rupee collapsed from around 182 to 360 to the US dollar in 2022 after two years of money printing by the central bank sending overall inflation soaring over 60 percent over 12 months and food prices close to 100 percent.

Red Hot Crop

Green chili prices have soared amid an overall rise in food prices.

“For the youngsters a good way to earn through cultivation is by growing chilies,” Agriculture Minister Mahinda Amaraweera told reporters in Colombo.

“From one acre there are people who have earned 4 million rupees. There are new mechanisms of farming and hybrid plants and we must encourage the youth to engage in such procedures.”

“You can earn more than the value of the land you own, and we must help in that and we will be focusing on giving relief and incentives for chili cultivation as our next step.”

Rising prices without price controls is the best incentive boost production quickly, analysts say.

Sri Lanka is now facing severe forex shortages due to money printing in probably the worst external trade crisis since the closed economy days of the 1970s.

In the 1970s there were parallel exchange rate due to money printing, but no steep depreciation and the official rate was enforced with the most draconian exchange and import controls since the central bank was set up in 1950.

Money was printed from the late 1960s and an import control law was enacted in 1969 in the lead up to the closed economy of the 1970s.

Closed Economy Nostalgia

Minister Amaraweera said in the 1970s when Sri Lanka’s economy was closed, no chillie was imported at all.

“Back in 70 and 77 we never imported chilies, we cultivated them in Sri Lanka,” he said nostalgically.

“Now unfortunately because of the decisions taken, 99 percent percent of our chilies are imported. Now our green chilies and dried chili expenditure is high.”

While food prices are rising sharply malnutrition is also rising in step with monetary instability triggered by the central bank putting food out of reach of the urban poor in particular.

The United Nations Children’s Fund has said children are going to be hungry in 2022 and the poor are skipping meals.

During the closed economy era of the 1970s, Sri Lankan started a program called Thriposha to reduce protein energy malnutrition (PEM) and other problems, backed by US AID and CARE.

Black markets were rife due to price controls and food shortages and rationing was common.

Maramus and K’woshiokor

A key program target was to eliminate the most acute forms of malnutrition in the form of Kworshiorkor and Marasmus found in several areas within five years.

The lack of a widely available weaning food, poverty and knowledge gaps contributed the problem according to researchers.

The 1970s saw a rise in global prices after the collapse of the gold standard in the wake of money printing by the US Federal Reserve, known as the Great Inflation which only ended in around 1980 with monetary tightening.

Minister Amaraweera claimed imports were to be partly blamed for rising prices.

“We are spending a great sum on importing chilies and that is also a reason why prices are rising,” he claimed.

However Sri Lanka’s tea prices, which are exported, have also soared amid currency collapse despite producing enough to export. Imports on the other had improves supply and will help bring down prices to global levels. (Colombo/Sept04/2022 – Updated)

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Sri Lanka president slams power regulator chief after conflicting with minister

ECONOMYNET – The powers to change the electricity tariff in Sri Lanka is vested with the Minister of Power and not the Public Utilities Commission (PUCSL), President Ranil Wickremesinghe told the Parliament.

The minister of Power and Energy, Kanchana Wijesekara has requested an upward price revision to be implemented in two phases both in January and July next year, saying the recent tariff hike was not enough for the state-run utility provider Ceylon Electricity Board (CEB) to continue uninterrupted power supply.

However, Jaynaka Ratnayake, the Chairman of the PUCSL had said  the recent tariff hike is enough for the CEB to cover the cost of production and it will not allow another price hike. However, he has said a twice a year price revision is necessary though it should be in April and October instead of January and July.

President Wickremesinghe said the PUCSL chief was opposing the tariff hike due to his personal reasons.

“The power is vested with the Minister and me. I am the one who made the PUCSL act and I know what is in it,” Wickremesinghe told the parliament on Thursday. quoting a letter from the Attorney General which mentioned provisions in the island nation’s Electricity Act.

Accordingly the Act, the PUCSL would be statutorily obliged to give effect to such policy. It is observed that neither the Act nor the PUCSL Act contains any provisions that empowers the PUCSL to change or act invariant of such policy guidelines.

“The Chairman of the PUCSL is misguiding the general public. I have to meet him and see,” Wickremesinghe said.

WIckremesinghe said the Chairman does not want the tariff hike because he owns one of the highest electricity consuming companies.

“He is the Chairman of the Trillium corporation. It is the firm that takes up the most energy”, he said.

The Trillium group is managed by Janaka Ratnayake and he also holds positions as the chairman and CEO of Trillium Property Management & Services Ltd., City Housing and Real Estate PLC, Trillium Residencies Ltd., Computer Care (Pvt) Ltd., and Rent a Comp Services (Pvt) Ltd., and JR Management Consultants (Pvt) Ltd.

“It means when the electricity bill increases, his expenses increase as well”

He said the CEB still has a loss of 300 billion rupees since 2013 and it needs to be covered.

The CEB issue can be solved only in three ways, either printing more money, increasing value added tax or increasing the tariffm, he said. (Colombo/Dec08/2022)

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Sri Lanka President bemoans over inconsistent LNG deals

ECONOMYNEXT – Sri Lanka President Ranil Wickremesinghe bemoaned over successive governments’ liquefied natural gas (LNG) deal that has brought in all the world powers into the discussion.

Wickremesinghe’s center-right United National Party (UNP) had discussions with India and Japan between 2002-2004 for an LNG project.

“Following dialogues with India and Japan, the UNP government could come to agreements to get two LNG power plants. After we were defeated the successor government, without cancelling those agreements granted it to New Fortress company in USA,” Wickremesinghe told the parliament.

“Thereafter, as they did not like New Fortress, they gave it back to Pakistan and China. So within the same premises, there were China, Pakistan, India, USA, Japan and only Russia was not there.”

“It was wonderful that a world war did not ignited there as there were five main powers in the world.”

“Now there is no LNG or anything here and now they ask me to solve this issue.”

Wickremesighe’s outburst comes as his government is forced to raise tariffs on power prices after successive governments failed to implement cheap and renewable power generation projects.

He said a total loss for the state-run Ceylon Electricity Board since 2013 was 300 billion rupees and a possible drought next year could increase the 2023 electricity cost to 420 billion rupees.

“If it rained, we need Rs. 352 billion while Rs. 295 is required if rained so much to have floods. How are we going to find this money? We would have to print money, but Rupee would depreciate. We would have to increase VAT but it would increase the price of all commodities or to charge it direct.” (Colombo/Dec08/2022)

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Air quality drop forces Sri Lanka to close schools; public warned

ECONOMYNEXT – A rapid drop in air quality in Sri Lanka has forced the Colombo government to close all schools across the country after a deep depression over Southeast Bay of Bengal, officials said.

The Education Ministry, issuing a special notice on Thursday said, it has decided to close all government schools for Friday, after discussing with the officials in Meteorology Department and Disaster Management Center.

An official said the drop was due to the deep depression over Southeast Bay of Bengal carrying the air from India.

Due to the depression over South east Bay of Bengal (370 km east of Trincomalee) has concentrated into a cyclonic storm “Mandous” by Wednesday night.

“Cyclone in the Bay of Bengal that is the prime reason for the increase in the pollution load as we receive more wind from India,” H.D.S.Premasiri, Senior Scientist, Coordinator-Air Quality, noise and vibrations at National Building Research Organization (NBRO) told EconomyNext on Thursday.

Officials said there is a likelihood of the cyclone moving west-northwestwards and further intensify into a severe cyclonic storm tonight and cross North Tamil-Nadu, Puducherry and South Andhra Pradesh coast around midnight of 09 th December and the maximum wind speeds will be 70-90 km per hour and can increase up to 90 in sea areas.

“Hopefully, today we can expect normalization in the environment and the effects of the fog will disappear”.

According to the NBRO’s real time Air Quality Index Indicator, the quality of air in northwestern coastal district of Puttalam has dropped drastically and indicated a particular matter (PM) 132, while Kegalle (85) and Mannar (84) were the districts which had next worst air quality.

According to NBRO, Battaramulla, Polonnaruwa, Dambulla, Kegalle, Mannar and Puttalam indicate a poor quality of air due to higher PM.

“The fog will lead to lung and breathing issues,” Premasiri said.

“So the public is warned to wear a mask when they travel outside. The pollution highly prevails in city areas and has a less impact on the other parts of the areas.” (Colombo/ Dec08/2022)

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