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Friday February 23rd, 2024

Sri Lanka to ban import, use of fertilizer, agro-chemicals to save foreign exchange

ECONOMYNEXT – Sri Lanka will ban import and use of fertilizer, insecticide and weedicide on which hundreds of millions of dollars and give subsidies to farmers for cross losses, according to President Gotabaya Rajapaksa, a statement said.

Though massive amounts are spend on chemical fertilizer, weedicide and insecticide there is no qualitative growth in agriculture, President Rajapaksa had said at a meeting

Sri Lanka will ban chemical fertilizer, insecticide and weedicide but will give financial support to boost organic fertilizer.

“The use of chemical fertilizers and pesticides pollutes rivers and streams and poses a serious challenge to quality drinking water supply,” the President was quoted as saying.

“The Government expenditure with regard to a number of non-communicable diseases, including kidney disease and cancer, is rising every year.

“The loss of livelihoods of the people living in rural areas, deteriorating health conditions and the declining of people’s productivity have become challenges the country is facing today.

“Reduced yields as a result of infertility of soil and the destruction of biodiversity can be witnessed.”

The government the money spent on fertilizer subsidies to cover any crop losses of the farmers. About 50 billion rupees was spent on fertilizer subsidies a year.

“Farmers may assume that giving up on chemical fertilizers will reduce the yield,” the statement said.

“If it does, the President guaranteed that the Rs. 50 billion spent annually on chemical fertilizers will be used to recover their loss.”

Sri Lanka has spent 221 million US dollars on fertilizer imports in 2019. With the rise in oil prices the cost of imported fertilizer could rise to 300 to 400 million US dollars the statement said.

The entire state machinery should be mobilized the population for this objective, President had said.

There could be objections from farmers as it was a sensitive matter for most engaged in agriculture.

Basil Rajapasksa, the head of the Presidential Task Force for Economic Revival had noted that the goal could be “easily accomplished through the contribution of religious leaders, organizations affiliated to farmers, professionals, researchers, government officials, the media and all other relevant parties.”

Sri Lanka is facing foreign exchange shortages in the wake of unprecedented money printing under so-called Modern Monetary Theory.

Sri Lanka has faced forex shortages from shortly after a Latin America-style central bank with a soft-pegged exchange regime was set up in 1950 allowing money to be printed for open market operations or to finance the budget deficit.

From then on most economic programs have failed as policy was directed to ‘save foreign exchange’.

When money is printed to push up domestic credit imports exceed dollar inflows and it is no longer possible to hold the exchange rate.

The soft-peg has made the rupee vulnerable Federal Reserve money printing (rising commodity prices) as money is printed to subsidize oil or other commodities, and also to eventual Federal Reserve tightening as domestics rates are not raised in step, analysts have shown.

The Fed is now printing money driving up commodity prices.

Analysts and economists have called for laws to restrain discretionary domestic operations of the central bank and control its discretionary powers so that it cannot trigger monetary stability and it is possible to engage in ordinary economic activities.

Sri Lanka’s monetary instability started to worsen from around 2015 with ‘flexible’ inflation targeting and a ‘flexible’ exchange rate involving fully discretionary policy, critics have said. (Colombo/April30/2021)

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Sri Lankans may need to wait for Monetary Board meeting minutes despite new Act

ECONOMYNEXT – Sri Lankans may have to wait more time to read the meeting minutes of the Central Bank’s Monetary Board, a top official said, despite a new act that has made the central bank to be more transparent and accountable for its decisions.

Many central banks including the United States’ Federal Reserve, India’s Reserve Bank, and Bank of Mexico release the minutes of their monetary policy meeting to ensure transparency.

The new Central Bank Act passed by the Parliament in line with the guidance by the International Monetary Fund (IMF) includes measures for Sri Lanka’s central bank to be more transparent and accountable.

These measures include releasing the Monetary Policy Report every six months and the first such report was released on February 15.

However, the central bank has not taken a decision to release the minutes of the Monetary Board meetings on the monetary policy.

“Going forward, one day this could happen,” Chandranath Amarasekara, Assistant Governor at the Central Bank told reporters on Wednesday (21) at a media briefing.

“Right now, we have just started working on the new Central Bank Act. We are not there yet. There is no such decision on releasing minutes yet.”

The central bank in the past printed billions of rupees to keep the market interest rates artificially low and provide cheap funding for successive governments to propel a debt-driven economy.

It’s decision, however, led Sri Lanka into an unprecedented economic crisis in 2022 with sovereign debt default.

It also propped up the rupee currency artificially in the past to maintain a stable exchange rate at the expense of billions of US dollars. The move also contributed for the economic crisis and later the central bank was forced to allow over 60 percent depreciation in the rupee in March 2022.

However, none of the top central bank officials was held responsible for wrong decisions to hold interest rates artificially low with money printing and propping up the rupee. (Colombo/Feb 23/2024)

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Amid mass migration, Sri Lanka to recruit volunteers as English teachers

ECONOMYNEXT- Sri Lanka is planning to appoint foreign and expatriate volunteers to teach English for Sri Lanka students, the Ministry of Higher Education said, amid thousand of teachers migrating to other countries after the island nation’s unprecedented economic crisis.

Over five thousand teachers have left the country with the Education Ministry permission using the government’s circular of temporarily leaving state jobs while tens of thousands of teachers have left the country without informing the relevant authorities, Education Ministry officials say.

That had led to an acute teacher shortage in the country.

Suren Raghavan, the State Minister for Higher Education said the shortage has aggravated because most of the graduates who have an English degree become writers and join the private sector due to higher salary.

“They do not join government schools. This is a problem all over the country which is why we need to have an online system,” Raghavan told EconomyNext.

Separately he said on Thursday at a press conference that he had spoken to Canadian and Australian High Commissions to get the assistance of where their English teachers who have experience in teaching English as a second language in South Asia.

He also said that there is a number of teachers in the Unite Kingdom have shown interest in teaching English and they have experience in teaching in other Asian countries such as Burma and India while the teaching would be done free of charge.

The new move also comes at a time when the country’s English literacy rate is on the decline, according to the Minister.

President Ranil Wickramasinghe announced the English-for-all initiative three months ago with plans to improve English literacy at school and university level. (Colombo/Feb 23/2024)

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Sri Lanka tea production up 1.4-pct in Jan 2024, exports up 6.8-pct

ECONOMYNEXT – Sri Lanka’s tea production was up 1.4 percent to 18.73 million kilograms in January 2024, with high growns falling and low and mid growns rising, industry data shows.

High grown tea in January 2024 was 3.56 million kilograms, down from 3.36 million, medium growns were 2.6, up from 2.5 million kilograms and low growns were 12.56 million, up from 12.32 million kilograms last year.

Exports, including re-exports were up 6.88 percent to 18.76 million kilograms, industry data published by Ceylon Tea Brokers show.

Export earnings were reported at 102 million US dollars, up from 99.5 million dollars last year. The average FOB price was 5.45 US dollars a kilo down from 5.67 dollars last year.

Tea in bulk was 8.5 million kilograms valued at 12.79 billion rupees, tea in packets was 7.8 million kilograms valued at 13.1 billion rupees and tea in bags was 1.8 million kilos, valued at 5.06 billion rupees.

The top buyer was Iraq with 2.5 million kilos, up from 2.1 million last year followed by the UAE with 1.99 kilos, up from 1.86 million last year.

Russia bought 1.98 million kilos, down from 2.0 last year, Turkey bought 1.72 million kilos, from 2.3 million last year, while Iran bought 1.32 million, up from 614 million last year. (Colombo/Feb23/2024)

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