Economy

Sri Lanka’s foreign reserves in line with IMF targets despite August dip: official

Monday September 11, 2023 3:00 pm

ECONOMYNEXT – Sri Lanka’s foreign reserves, which are now at 3.6 billion dollars following a dip in August, is still a significant improvement from negative reserves just last year and are in line with targets, State MInister of Finance Ranjith Siyamabalapitiya said.

The state minister said Sri Lanka may have to manage its existing reserves and use it to appreciate the rupee and to service some debt.

“Though it is said we’re not repaying loans at the moment, that’s only true for bilateral loans. Other debt is being repaid. In such instances, we have to manage our reserves in different ways,” he said.

The Central Bank of Sri Lanka (CBSL) in August repaid a swap borrowed from Bangladesh’s central bank.

“Last year, we were among countries with the lowest levels of state revenue,” said Siyambalapitiya.

“We had negative reserves. We now have 3.6 billion US dollars in reserves. This has moved us closer to our targets and to our agreements with the International Monetary Fund (IMF),” he said.

Commenting on spending the reserves, he said: “We need not panic about that. What we need to find out is the difference between where we were and where we are now. It is significant that we’ve come to 3.5 from negative.”

Official data showed that Sri Lanka’s forex reserves dropped 164 million US dollars in August 2023 to 3,598 million US dollars, ending several months of steady reserve gains. Foreign reserves grew 38 million US dollars to 3,762 million in July 2023 up 1 percent from a month earlier. (Colombo/Sep11/2023)

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Economic Crisis

ADB USD200mn loan for Sri Lanka economic stabilization efforts

Saturday December 9, 2023 9:00 pm

ECONOMYNEXT – The Asian Development Bank (ADB) has approved a US 200 million dollar concessional loan to Sri Lanka to help stabilize the country’s finance sector.

The Financial Sector Stability and Reforms Program comprises two subprograms of IS 200 million dollars each, according to a statement by the ADB.

“The program’s overarching development objective is fully aligned with the country’s strategy of maintaining finance sector stability, while ensuring that banks are well-positioned for eventual recovery,” ADB Country Director for Sri Lanka Takafumi Kadono was quoted as saying in the statement.

“The expected development outcome is a stable financial system providing access to affordable finance for businesses in various sectors of the economy.”

The ADB statement continues:

“Subprogram 1 targets short-term stabilization and crisis management measures that were implemented in 2023, while subprogram 2 is planned to be implemented in 2024 and focuses on structural reforms and long-term actions to restore growth in the banking sector.

The program will help strengthen the stability and governance of the country’s banking sector; improve the banking sector’s asset quality; and deepen sustainable and inclusive finance, particularly for women-led micro, small, and medium-sized enterprises.

According to the International Monetary Fund’s (IMF) latest review, Sri Lanka’s economy is showing tentative signs of stabilization, although a full economic recovery is not yet assured.

The program is a follow-on assistance from ADB’s crisis response under the special policy-based loan that was approved for Sri Lanka in May 2023.

It is aligned with the fourth pillar of the IMF’s Extended Fund Facility provided to Sri Lanka to help the country regain financial stability.

It is also in line with the government’s reform agenda, including strengthening the operational independence of the Central Bank of Sri Lanka (CBSL) and its designation as the country’s macroprudential authority.

In designing this subprogram 1 loan, ADB has maintained close coordination and collaboration with the IMF to design targeted regulatory reforms for the banking sector—including the asset quality review—and with the World Bank on strengthening the deposit insurance scheme.

“The loan is accompanied by a $1 million grant from ADB’s Technical Assistance Special Fund to provide advisory, knowledge, and institutional capacity building for Sri Lanka’s Ministry of Finance and CBSL.”
(Colombo/Dec9/2023)

Energy

Sri Lank in blackout as power grid hit by cascading failure

Saturday December 9, 2023 7:48 pm

ECONOMYNEXT – Sri Lanka suffered a blackout as Saturday evening as the state-run Ceylon Electricity Board grid was hit by a cascading power failure.

The cascading failure is believed to have been triggered by the failure of the Kothmale-Biyagama transmission line.

“The Ceylon Electricity Board wishes to inform our customers that due to the failure of Kotmale – Biyagama main transmission line, an island wide power failure has occurred,” CEB Spokesman Noel Priyantha said.

“Step by step restorations are underway and it may take few hours to completely restore the power supply.”

With hydro plants running flat out, a outage of the line tends to create a big imbalance in the demand and supply, leading to tripping of more lines and generators.

Lines can trip due to lightening strikes, or equipment failures.

Sri Lanka last suffered a cascading failure in December 2021, due to the failure of the same transmission line.

Agriculture

Sri Lanka to host regional Food and Agriculture Organization conference

Saturday December 9, 2023 7:33 pm

ECONOMYNEXT – Sri Lanka will host the 37th session of the Asia Pacific Regional Conference (APRC) of the United Nations Food and Agriculture Organization (FAO), from February 19-22, 2024 in Colombo.

The Conference will bring together agriculture ministers and officials from 46 countries across the region to discuss challenges in food and agriculture.

“The 37th APRC will provide a vital platform for regional collaboration, benefitting the agricultural landscape, fisheries sector and environment of Sri Lanka,” Minister Mahinda Amaraweera said at a press briefing on Friday (8) to announce the conference.

FAO has had an active presence in Sri Lanka for over 40 years. “FAO has supported the country in the implementation of Good Agricultural Practices (GAP), and the development of the fisheries sector for growth and climate resilience,” Vimlendra Sharan, FAO Representative for Sri Lanka and the Maldives said.

“The APRC conference will be an opportunity to highlight the innovative approaches introduced in partnership with the government.”

By hosting APRC, Sri Lanka hopes to demonstrate the country’s dedication to the growth of sustainable agriculture, and showcase its commitment to sustainable agricultural development.

The APRC agenda will include a forum on agritourism, especially requested by the Sri Lankan government.
(Colombo/Dec9/2023)