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Friday June 2nd, 2023

Sri Lanka searches for Prime Minister

ECONOMYNEXT – Sri Lanka’s President Gotabaya Rajapaksa has promised a Prime Minister within a week with several alternative contenders being put forward if the opposition leader does not take up the post, as the country suffers high inflation and a currency collapse.

Sri Lanka is suffering from the worst currency crisis triggered by the central bank in its 72-year history. Economists in the country by targeting an output gap with the aid of the central bank and its Latin American style intermediate regime, have pushed the island to its first sovereign default.

Ex-Prime Minister Ranil Wickremesinghe met President Rajapaksa on Wednesday, firing expectations that he would take up the post for the time being.

In a dramatic move, firebrand Opposition Samagi Jana Balawegaya legislator Harin Fernando said he would become independent, after insisting internally that Sajith Premadasa should take up the premiership fast.

“I think already there is too much of a delay,” Fernando told reporters. “It may not be the stance of the party. I thought I would act according to my conscience.”

There was speculation that he would back Wickremesinghe as an interim Prime Minister along with some SJB members.

Newly appointed central bank Governor Nandalal Weerasinghe who had already hiked rates to slow credit and limited money printing to stabilize the broken soft-peg, warned he would resign if a government was not formed quickly to provide political stability.

Premadasa had insisted that the President resign to take over the government.

SJB officials say the bitter experience of the United National Party in trying to work with President Chandrika Kumaratunga and Maithripala Sirisena where reforms were blocked, has made them wary of doing it a third time.

However, a senior official said earlier in the week that a deal may be possible if specific timelines were given and there could be exit clauses if the undertakings were not carried out.

President Rajapaksa said in a televised address that he will bring constitutional amendments to go back to the 19th amendment and will also work to end and abolish the executive presidency after stability is restored.

Earlier on Wednesday, Dayasiri Jayasekera, the General Secretary of the Sri Lanka Freedom Party said they would back Premadasa for the PM’s post.

However, ex-President Maithripala Sirisena said later in the evening after meeting other independent party leaders that they had put forward three candidates for the post, with the SJB seen as setting conditions which may be insurmountable.

“When we talked with the opposition (SJB) in their conditions, there was no clear message given to us that they would take over the government,” Sirisena said.

“So we will send names from our group of 53. Actually, we are doing this because the opposition seems not to be taking it up. We are sending three names.”

Reports said Dullas Alahapperuma, Wijedasa Rajapaksa and Nimal Siripala de Silva could be the three nominees.

Another report said the President had also approached Sarath Fonseka. (Colombo/May10/2022)

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Sri Lanka to ramp up weekend fuel deliveries after petrol price cut

More deaths reported at Sri Lanka fuel queues

ECONOMYNEXT – Sri Lanka’s state-run Ceylon Petroleum Corporation will be operating on the weekend to complete all fuel deliveries to end vehicle queues forming outside fuel stations after the price revision earlier in the week, Energy Minister Kanchana Wijesekera said.

“Instructions have been given to CPC and Ceylon Petroleum Storage Terminals to continue fuel deliveries on Saturday and Sunday this week to supply sufficient stocks to all fuel stations,” Minister Wijesekera said in a TWITTER.COM MESSAGE

“To reduce expenses on overtime, CPC and CPSTL have not been operating on Sundays and public holidays in the last 4 months,” Wijesekera said.

“Non-placement of orders by fuel stations from last Saturday, anticipating a price reduction, not maintaining minimum stocks, immediate increase in demand by consumers after the price revision, and quota increase have created shortages in the fuel stations.”

The Minister in April 2023 said all fuel stations would be required to maintain a minimum of 50 percent of stock tank capacity.

“I have asked CPC to review and suspend the license of fuel stations that had not maintained minimum stocks.” (Colombo/ June 02/ 2023)

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Sri Lanka bonds yield up at close, rupee at 291.75/292.50 against the US dollar

ECONOMYNEXT – Sri Lanka’s bonds closed steady on Friday, dealers said, following the central bank’s decision to cut its main policy rate by 250 basis points.

The Spot US dollar closed at 291.75/292.50 rupees, dealers said.

The rupee opened at 290.25/75 to the US dollar Thursday and closed at 292.50/295.50 to the US dollar.

A bond maturing on 15.09.2027 closed at 24.70/90 percent up from 24.50/90 percent a day earlier, dealers said.

A bond maturing on 15.05.2026 closed at 25.75/26.25 percent up from 25.00/26.00 percent a day earlier.

A bond maturing on 01.05.2025 closed at 27.00/30 percent, up from 26.30/27.00 per cent at last close.

A bond maturing on 01.07.2032 closed at 20.25/21.00 percent, up from 20.00/40 per cent at last close.
(Colombo/ June 02/2023)

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Sri Lanka’s shares edge up on positive macroeconomic sentiments

ECONOMYNEXT – Sri Lanka’s shares closed higher in trade on Friday, over positive macro-sentiments encouraging investors to redeem their interest towards buying, an analyst said.

The main All Share Price Index was up 0.72 percent or 62.19 points to 8,753.80,  while the most liquid index S&P SL20 was up 0.68 percent or 16.87 points to 2,487.29.

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.

Prior to the Monetary Policy investors were quite optimistic that inflation is to lower and interest rates will decrease and since exp, an analyst said.

Sri Lanka Central Bank is waiting for the government proposal on the domestic debt restructuring (DDR), the central bank governor Nandalal Weerasinghe said amid uncertainty over DDR and speculations over instability in the banking sector.

“On debt restructuring, the borrower is the ministry of finance’s treasury. Certainly we will announce what the strategy will be. We are waiting for a government proposal,” Weerasinghe said.

Sri Lanka’s investors are waiting on assurances to be made on debt restructuring and optimization, Central Bank Governor Nandalal Weerasinghe said, “It is up to the government to clear the uncertainty, because from our side we have done that part.”

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.

The speculation of DDR has hit the market and the risk premium has kept the market lending rates well above the central bank’s policy rates. The government has yet to present its plans on DDR.

Weerasinghe said the central bank has done its best to reduce the risk premium through bringing down the market lending rates while keeping the policy rates unchanged.

Sri Lanka’s President Ranil Wickremesinghe has discussed progress of International Monetary Fund program and debt restructuring during a visit of Deputy Managing Director Kenji Okamura, statement said.

“The discussion primarily focused on the progress of the IMF program between Sri Lanka and the IMF,” a statement from President’s office said.

“Attention was also paid to the on-going debt restructuring negotiations.”

However Officials from IMF have said Sri Lanka has to focus on expanding taxes.

“We discussed the importance of fiscal measures, in particular revenue measures, for a return to macroeconomic stability,” Deputy Managing Director Kenji Okamura said in a statement.

The finance ministry this week issued rules requiring everyone above 18 year of age to register to pay income tax.

“I was encouraged by the authorities’ commitment to negotiate a debt strategy in a timely and transparent manner.

The market generated a revenue of 738 million rupees, while the daily average was 1 billion rupees.

Top gainers in trade were Vallibel One, LOLC Finance and Browns Investment. (Colombo/June02/2023)

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