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Thursday December 7th, 2023

Sri Lanka unemployment hits 10-year high in 2020 March quarter

ECONOMYNEXT – Sri Lanka’s unemployment hit 5.7 percent in the March 2020 quarter, levels not seen since 2009 at the end of a 30-year war, in 2009 when the unemployment rate spiked over 6 percent, data from the state statistic office showed.

Sri Lanka’s tourism sector took a hit with Coronavirus from the first quarter of 2020, but the airport was closed in March 19 and curfews started shortly after.

Sri Lanka’s economic output is expected to contract absolutely in the second quarter, for which data is not yet out.

Sri Lanka’s unemployment hit 6 percent levels at the end of a 30-year war and came down rapidly.

The data is based on statistical surveys which have error margins. Pre-war data may also not be directly comparable as the statistics office was not active in the North and the East earlier.

After the war, there was a construction boom, partly financed by China, which injected demand into the economy.

However, greater monetary instability hit the country from around 2012, with balance payments crises coming in quick succession amid worsening proc-cyclical money printing from the central bank, which ended the relative monetary stability seen in the country from 2000 to 2011.

Sri Lanka’s unemployment rate has been edging up from around mid 4 percent levels over the past three years amid greater monetary instability, price controls, rapid policy and tax fluctuations which made for an uncertain business environment (regime uncertainty).

Sri Lanka’s Import and Export Control Department, which was a key driver of the 1970s economy, a midnight gazette and the Consumer Affairs Authority are key sources of regime uncertainty.

The last administration also set up a new price control authority, the National Medicinal Drugs Authority, instead of reforming the central bank. The NMRA now gives periodic controlled price hikes when the central bank prints money or depreciates the currency for de facto or explicit REER targeting, analysts have said.

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In 2011, Sri Lanka expropriated private firms including Board of Investment approved companies through an ad hominem law and in 2015 a ‘super gains’ and several expropriation taxes were slammed further worsening property rights, policy stability and just rule of law.

The policy has also deteriorated with trade restrictions which worsen whenever the central bank prints money and triggers currency trouble.

Large numbers of Sri Lankans went to work abroad, including under difficult conditions in the Middle East from the 1980s as the rupee collapsed, helping reduce domestic unemployment numbers which hit close to 20 percent during the period of trade restriction in the 1970s.

2020 also started with more regime uncertainty with tax reversals and a debt moratorium just as the economy was starting to recover from a 2018 balance of payments crisis.

Meanwhile, the statistics office said the total employed population fell to 8.02 million in the first quarter of 2020, down from 8.12 million a year earlier.

Agriculture workers had grown from 2.01 million to 2.12 million, while those in the industry fell from 2.31 million to 2.17 million.

Service sector workers fell from 3.85 million to 3.71 million.
Among the unemployed, female unemployment was sharply higher at 9.6 percent, compared to males at 3.7 percent.

Unemployment below GCE A/L qualified persons was 2.7 percent for males and 5.4 percent for females.

Among those with GCE A/L and above unemployment was 10.1 percent, with 5.5 percent among males and 14.7 percent among females.

“Survey results further show that the problem of unemployment is more acute in the case of educated females than educated males, which was observed consistently over the results of previous survey rounds as well,” the statistics office said. (Colombo/July20/2020 – Update II-sb)

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COP28 sees new era for climate action with $57 bln pledge; Sri Lanka’s proposals need approval

ECONOMYNEXT – The 2023 United Nations Climate Change Conference (COP28) has witnessed governments, businesses, investors, and philanthropies announcing support of over $57 billion across the climate agenda in just the first four days of the global event with eight pledges and declarations receiving historic support.

After a historic deal to operationalize a fund for climate impact response on the first day, announcements have poured in across the entire climate agenda, including on finance, health, food, nature, and energy.

On climate finance, the COP28 host United Arab Emirates launched a $30 billion catalytic fund, ALTÉRRA, with an emphasis on unlocking private finance across the Global South.

The host nation also has announced $200 million for SDRs and $150 million for water scarcity.

The World Bank has announced an increase of $9 billion annually to finance climate-related projects, while the first two days of COP28 saw $725 million in pledges after a historic response to loss and damage was operationalized.

Eight new declarations have been announced which are expected to help transform every major system of the global economy.

These include the first ever declarations on food systems transformation and health, plus declarations on renewable energy and efficiency, as well as initiatives to decarbonize heavy emitting industries.

The eight declarations are:

  • The Global Renewables and Energy Efficiency Pledge has been endorsed by 119 countries.
  • The COP28 UAE Declaration on Agriculture, Food, & Climate has received endorsements from 137 countries.
  • The COP28 UAE Declaration on Climate and Health has been endorsed by 125 countries.
  • The COP28 UAE Declaration on Climate Relief, Recovery & Peace has been endorsed by 74 countries and 40 organizations.
  • The COP28 UAE Declaration on Climate Finance has been endorsed by 12 countries.
  • The Coalition for High Ambition Multilevel Partnerships (Champ) Pledge has been endorsed by 64 countries.
  • The Oil and Gas Decarbonization Charter has been endorsed by 51 companies, representing 40 percent of global oil production.
  • The Industrial Transition Accelerator has been endorsed by 35 companies and six industry associations, including World Steel Association, International Aluminium Institute, Global Renewable Alliance, Global Cement and Concrete Association, Oil and Gas Climate Initiative, International Air Transport Association.

Three additional declarations will be announced in the coming days on hydrogen, cooling, and gender. The number of countries supporting these declarations and pledges is growing and demonstrates an unprecedented level of inclusivity at this COP.

Sri Lanka President Ranil Wickremesinghe announced three new proposals: Climate Justice Forum (CJF), Tropical Belt Initiative (TBI), and International Climate Change University in Sri Lanka.

However, the proposals are yet to get approval from the general UN body though the island nation’s authorities expect wide support for the moves.

“What we have done is to talk to countries about the initiatives and launch them. Next step is for them to be formally recognized by the main body,” Ruwan Wijewardena, the Senior Advisor to President Wickremesinghe on Climate change, told Economy Next.

Breakdown of financial pledges and contributions so far:

  • Loss and Damage: $725 million
  • Green Climate Fund: $3.5 billion (increasing second replenishment to $12.8 billion)
  • Renewable Energy: $2.5 billion
  • Technology: $568 million
  • Methane: $1.2 billion
  • Climate Finance: Over $30 billion from UAE (plus $200 million in Special Drawing Rights and an increase of $9 billion annually from the World Bank)
  • Food: $2.6 Billion
  • Nature: $2.6 Billion
  • Health: $2.7 billion
  • Water: $150 million
  • Relief, Recovery and Peace: $1.2 billion
  • Local Climate Action: $467 million (Dubai/Dec 6/2023)
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Sri Lanka to start international tourism branding campaign

ECONOMYNEXT – Sri Lanka will soon start a tourism international marketing campaign under the theme ‘You will come back for more,” Tourism Minister Harin Fernando said.

“We have not had a branding campaign for 15 years,” Fernando told parliament. “A campaign has been developed by Ogilvy.

“It will help us reach the target of 2.3 million tourists next year.”

This year Sri Lanka is expecting a 1.5 million tourists with close to 1.3 million reached by November.

About 6,000 tourists are now coming each day, at the moment he said.

On December 10, three cruise ships are due. (Colombo/Nov06/2023)

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Sri Lanka 3-month Treasuries yields fall

ECONOMYNEXT – Sri Lanka’s Treasury bill yields eased across maturities with the tree month yield falling 19 basis points to 14.67 percent, data from the state debt office showed.

A total of 185 billion rupees in bills were sold, with sharply lower than offered volumes in 12-months sold.

The debt office offered 55 billion rupees of 3 -month bills and sold 87 billion.

92 billion rupees of 6-month bills were sold after offering 60 billion at 14.38 percent down 14 basis points.

Only 5.2 billion rupees of 12-month bills were sold after offering 70 billion rupees, at 12.88 percent, down 01 basis point. (Colombo/Dec06/2023)

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