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Thursday March 23rd, 2023

Sri Lanka still has no intention of laying off public sector employees – state finmin

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ECONOMYNEXT – Sri Lanka’s current government has no intention of laying off state sector employees yet, however, the public are concerned about the efficiency of a few workers in the government sector, State Finance Minister Shehan Semasinghe said.

However, analysts have said if the government needs to achieve the International Monetary Fund’s (IMF)  fiscal targets, it will inevitably have to reduce the wage and pension bill for the public sector. This means the government will have no choice, but to lay off employees in the government sector.

Sri Lanka is facing a tough task in managing the state sector to achieve fiscal discipline in line with IMF reforms in return for a $2.9 billion loan.

Top government officials who are aware of the IMF discussions for the loan have said the global lender has not directly asked to reduce the size of the state sector but asked to reduce the fiscal deficit by either raising taxes or reducing state spending.

A large chunk of government expenditure goes to public sector wages and pensions, the official data show.

“Government has no intention of laying off (public sector) employees. But the general public of Sri Lanka who are paying taxes are concerned about the efficiency of this minimum number of people in the state sector,” Minister Semasinghe told EconomyNext in an interview on Wednesday.

“The majority are efficient, but there is a minimum number who are inefficient and they have taken the entire state sector for ransom. So, even now what we could see is the entire population of 22 million are being held on ransom by this limited number of people,” he said referring to those who are leading protests against tax hike.

President Ranil Wickremesinghe has been stubborn on going back on taxes and has refused to revise down the personal income taxes despite repeated threats for continuous protests by state-sector trade unions.

Government officials have said most of the government sector employees are misled and participate in protests demanding to cut taxes of high earning employees who have not paid any levies to the government until the new tax reforms were implemented in January.

“We can see teachers on strike, but they don’t fall into the bracket. We can see postal workers are on strike and they don’t fall into the bracket. So, most of the people who do not fall into the PAYE tax bracket are on the road for trusting misleading comments,” the minister said.

“It is very unfortunate and it’s a pathetic situation. So far, to see the names of those who are behind these disruptions, are the same people who have been disrupting the throughout every government,” Semasinghe said referring to trade union leaders who were behind the recent protests.

The government has already frozen public sector recruitment, reduced the retirement age, allowed voluntary retirement schemes, and permitted public sector workers for leave to work abroad or in the private sector.

Sri Lanka has one public sector employee for every 14 people in the country with 22 million population.

The number of public sector employees has doubled since 2000 due to politicians dumping their supporters in state-owned enterprises without a proper process and qualification. (Colombo/March16/2023)

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Sri Lanka establishes committee to investigate aircraft incidents

An aircraft lands at the Jaffna International Airport, which was opened in October 2019 and promises to push the tourism frontiers in Jaffna.

ECONOMYNEXT: Sri Lanka’s has established an expert committee under the state-run Civil Aviation Authority to investigate aircraft accidents and to implement precautionary methods in the Sri Lankan airspace, an Official said.

“Even if it is only one flight, there is a chance an accident may occur,” Civil Aviation Authority of Sri Lanka, Director General, P. A. Jayakantha said.

“This particular committee is there to investigate aircraft accidents and act as a mechanism to take over if something goes wrong”.

Sri Lanka has encountered around 2,700 minor aircraft accidents and incidents mostly on the ground in the 19 years through 2021, the CAA annual reports showed.

The new committee will analyze the past accidents and take precautionary measures while also conducting investigations and provide independent reports in the future, Jayakantha said.

The team is provided with required training and qualifications by the CAA along with an International organization, free of charge.

“Internationally also it is a requirement to have a team to investigate the aircraft accidents,” Jayakantha added.

“For a long time we have not fulfilled this requirement and that is why we established this team with the cabinet approval. Moreover, recently, Sri Lanka’s two aircrafts, one training aircraft and a commercial aircraft met an accident”

The committee will be on active duty, until the Accident Investigation Act is passed and a proper Aircraft Accident and Incident Investigation Bureau is established. (Colombo/ Mar23/2023)

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Sri Lanka bond yields steady, Rupee 319/325 at close

ECONOMYNEXT – Sri Lanka’s treasury bond yields closed steady on Thursday while rupee closed weaker, dealers said.

A 01.07.2025 bond closed at 30.60/31.00 percent on Tuesday, down from 30.25/75 percent on Wednesday.

A 15.09.2027 bond closed at 27.80/28.10 percent, steady from 27.90/28.00 percent from Wednesday.

Sri Lanka rupee closed at 319/325 against the US dollar depreciating from 318/320 from a day earlier. (Colombo/ March23/2023)

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Sri Lanka shares dive to two-week low on local debt restructuring fears

ECONOMYNEXT – The Sri Lanka market fell for a fourth session to a two-week low on Thursday, led by financials, as worries over domestic debt restructuring continued after the IMF loan was approved earlier this week resulting in investors adopting a wait-and-see approach until further clarity was provided, analysts said.

The main All Share Price Index (ASPI) closed down 1.38 percent or 131.07 points to 9,395.98, lowest since March 02.

Analysts said, majority of the banks have been on slower investment trends on fears of domestic debt restructuring after the IMF approval and waiting for more clarity on the local debt restructuring.

“The market is on muted sentiments despite the IMF loan being approved and is going through a period of consolidation,” Ranjan Ranatunga of First Capital Holdings said.

The market saw a net foreign outflow of 298 million rupees and the total offshore inflows recorded so far in 2023 to 3.3 billion rupees.

The most liquid index, S&P SL20, closed 1.64 percent, or 45.33 points, down at 2,722.94.

The market saw a turnover of 3.4 billion rupees on Thursday, above this year’s daily average of 1.8 billion rupees.

This is the highest turnover generated since March 08, which is when the market was driven off of positive sentiments from International Monetary Fund deal hope after Chinese assurances.

Top contributors to revenue was Agalawatte Plantations, on off board transactions of a stake change, contributing revenue of 1.6 billion rupees, Ranatunga said.

Top contributors to revenue industry wise was Food and Beverage and Telecommunications.

Sri Lanka Telecom has been seeing positive uptrends as the Secretary to the Treasury has informed the Board of Directors of Sri Lanka Telecom PLC (SLT) and Lanka Hospitals PLC that the Cabinet of Ministers has granted approval in principle for the divestment of the stakes held by the Treasury Secretary in the two companies.

Top losers were Sampath Bank, Hatton National Bank and Commercial Bank.

Sri Lanka is looking at options to re-structure domestic debt, or local law local currency debt (LLLC), without harming the banking sector and announce them the International Monetary Fund said in a report.

Banks have been witnessing profit taking and selling pressures after continuous uptrends prior to the IMF loan had been approved.

Analysts said, selling pressures is expected to ease as the IMF hopes to reduce inflationary pressures which will in turn lead to reductions in interest rates. (Colombo/Mar23/2023)

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