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Wednesday March 29th, 2023

Sri Lanka warned against ‘Hitler’ wish by German envoy

ECONOMYNEXT – German Ambassador Holger Seubert has warned Sri Lanka against wishing for a ‘Hitler’ after a minister expressed a wish for President Gotabaya Rajapaksa to act more like Hitler, on top of a similar call by a Buddhist monk earlier.

“I‘m hearing claims that “a Hitler” could be beneficial to Sri Lanka today,” Seubert said in a message.

“Let me remind those voices that Adolf Hitler was responsible for human suffering and despair beyond imagination, with millions of deaths. Definitely no role model for any politician!”

Strong Man

Hitler came to power in the wake of money printing, hyperinflation and socialist policy confusion of the post-World War I Germany’s Weimar Republic and later stabilization efforts by the Heinrich Brüning administration which increased unemployment on top of a depression triggered by the US Federal Reserve.

The illiberal socialist policy confusion of the Weimar Republic led to the call of a ‘strong man’ to come to power.

State Minister Dilum Amunugama claimed that people expected President Rajapaksa to run a dictatorship to some extent (yum tharamakerter).

“The Buddhist clergy also said it is ok to be a Hitler, that is good,” Minister Amunugama said. “Now criticism of the government is due to not being a Hitler. I also accept that.

“I do not think the President has a liking to become a Hitler immediately. If he is pushed to towards that, he will become a Hitler and the people will stop blaming him. Things will then happen well.”

Hitler rode to power on the strongly nationalist, anti-minority platform of the National Socialist (Nazi) party which killed and incarcerated millions of Jews, gypsies, homosexuals and later took land (Lebensraum) from Slavs in Eastern Europe and Russia (Generalplan Ost) killing millions more in the process.

He had support from sections of the Lutheran church, some big businesses hit by Weimar instability, and banned all NGOs except some churches.

However Hitler also printed money, primarily through Mefo bills, a mechanism to circumvent a ban on money printing by Reichsbank – Germany’s then central bank.

The scheme involving the discounting of contractor bills through a third party agency was cooked up by economy minister Hjalmar Schacht.

Schacht had been at the Reichsbank during the Weimar Republic.

Sri Lanka’s central bank in addition to printing money indirectly by discounting contractor bills has engaged in the biggest outright money printing exercise in the history of modern Sri Lanka.

The Mefo bills discounting led to forex shortages in Germany as early as 1934 and Hitler promoted a Nazi autarchy (autarky) or what is now known as ‘self-sufficiency’ amid widespread import controls under his Wehrwirtschaft economic policy.

Self-sufficiency was also driven by the Allied naval blockade during World War I.

Hitler engaged in ‘import substitution’ long before the term became popular among Latin American nations which printed money through Argentina-style central banks and ran out of forex.

The German industrial complex went so far as to produce synthetic fuel, cellulose fibres and synthetic rubber, as forex shortages intensified.

Hitler also made a famous ‘Export or Die’ speech, a slogan used by Sri Lanka’s leaders during the 1980s money printing and currency depreciation.

He by-passed the parliament through an Enabling Act (Ermächtigungsgesetz) and ran the country through gazettes appropriating plenary powers as part of the dictatorship.

After Hitler was defeated by the Allies and which included the Soviet Union at the time, liberals came back to power.

Germany then became a global economic power under the Ordoliberals who started their economic program by setting up a new central bank, the Deutsche Bundesbank, which laid the foundation for the German Economic Miracle (Wirtschaftswunder) defying the Keynesian ideology of depreciation and state spending.

Germany rapidly outpaced Britain, which won World War II but continued to print money under Keynesian ‘stimulus’ and only ended foreign exchange controls 40 years later after Margarat Thatcher came to power applying Austrian economic principles. (Colombo/Apr13/2021)

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Sri Lanka stocks recover with banking and finance sectors leading the way

Stock Market. Free public domain CC0 image.

ECONOMYNEXT – Sri Lanka’s stocks edged up on Wednesday recovering from the two-day loss, with banking and finance sectors pushing up the market as buying interest returned for the day, easing selling pressure, brokers said.

The main All Share Price Index (ASPI) closed up 0.42 percent or 39.03 points to 9,272.43.

The market was on a downward trend since last week as investors are adopting a wait-and-see approach until more clarity is given regarding local debt restructuring after the International Monetary Fund approved the extended loan facility.

“Buying interest has renewed and selling pressures are wearing off,” Ranjan Ranatunga of First Capital Holdings said.

Shares at Lanka IOC was gaining during the following week on the news that the Sri Lanka cabinet has granted approval for three oil companies from China, the United States, and Australia in collaboration with Shell Pl to lease 150 fuel stations for each company to operate in the local market.

However, sudden price revision of fuel by the Energy Ministry has hit the shares dragging it down, analysts said.

A crossing was seen by Horana Plantations, with a 51 percent stake change coming into play, the crossing had generated 700 million rupees from the total turnover, Ranatunga said.

The market saw a net foreign inflow of 32.8 million rupees, and the total offshore inflows recorded so far in 2023 are 3.3 billion rupees.

The most liquid index, S&P SL20, closed 0.64 percent or 16.95 points up at 2,673.25.

The market saw a turnover of 1.4 billion on Wednesday, below this year’s daily average of 1.8 billion rupees.

Top gainers were Sampath Bank, Vallibel One and DFCC Bank.(Colombo/March29/2023)

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Rupee closes weaker at 328.50/329.50 against the US dollar, Bond yields steady

ECONOMYNEXT – Sri Lanka’s treasury bond yields were down and the rupee closed weaker in the spot market on Wednesday following an undersubscribed treasury bill auction, dealers said.

A 01.07.2025 bond closed at 31.25/30 percent on Tuesday, steady from 31.20/60 percent on Tuesday.

A 15.09.2027 bond closed at 28.25/29.00 percent, unchanged from Tuesday.

A one-year bill closed at 24.00/30 percent, down from 24.25/25.00 percent.

Sri Lanka rupee closed at 328.50/329.50 rupees against the US dollar weakened, from 325/328 rupees from a day earlier. (Colombo/ March29/2023)

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Sri Lanka tuk tuk, bus fares to be cut on lower fuel prices

CROWDED: An overloaded bus in a suburb of Colombo, leaning sideways with passengers clinging to foot boards.

ECONOMYNEXT – Sri Lanka’s bus fares will be cut from 12.9 percent from midnight onwards, a public transport regulator said while tuk tuk drivers said they are cutting their free market fares with immediate effect.

“The minimum rate will be cut to 30 rupees from tonight,” Lasantha Alagiyawana acting Transport Minister told reporters Wednesday. 

The minimum bus fare was previously 35 rupees. 

Three wheeler association President, Lalith Dharamsena said the first kilometer is charged from 100 rupees and 80 rupees for the second kilometer.

The price of Petrol 92 Octane will be slashed by 15 percent or 60 rupees to 340, Petrol 95 Octane 95 will be reduced by 26.5 percent or 135 rupees to 375, Auto Diesel by 19.8 percent or 80 rupees to 325, and kerosene by 3.3 percent or 10 rupees to 295.

Wijesekera said on President Ranil Wickremesinghe’s advice and in line with the price formula agreed with the International Monetary Fund (IMF), the prices will be reduced from midnight today. (Colombo/Mar29/2023) 

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