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Sunday October 1st, 2023

Sri Lanka’s population in poverty surges to 31-pct of population: LirneAsia Survey

ECONOMYNEXT – Sri Lanka’s poor has surged by 4 million to 7 million since 2019 to 31 percent of the population in 2023, a survey has found as the country was hit by the worst currency crisis in the history of its central bank.

A 10,000 person survey by LirneAsia, a regional policy research organization, found that 33 percent of the respondents had skipped a meal and 47 percent reduced their meal sizes, after the currency crisis.

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About 27 percent of adults restricted their meals to feed children. The survey was conducted from October 10, 2022 to May 12, 2023.

Sri Lanka started an output gap targeting exercise (Keynesian stimulus) printing large volumes of money and a so-called flexible exchange rate backed by inconsistent policy collapsed in 2022 from 200 to 360 to the US dollar, tearing apart the monetary foundations of families, destroying real salaries and jobs.

Food prices soared partly due to a global commodity bubble fired by the Federal Reserve and also import restrictions from forex shortages and disruption to agriculture from a fertilizer ban.

Agro-chemicals were bannd to ‘save’ 300 to 400 million dollars in foreign exchange, the government said at the time.

Rohan Samarajiva Chair of LirneAsia said he searched for historical data and found a thesis done by one M Salgado, which estimated gross domestic product during the Great Depression.

“He talked about the Great Depression affecting Sri Lanka and how our per capita income, which was about 80 dollars, went down by about half over a period of four years,” Samarajiva told a forum where research findings was released.

The Great Depression was a ‘deflationary collapse’ during the 1930s came in the wake of the Federal Reserve firing the ‘roaring 20s bubble’ after accidentally inventing the policy rate giving power to economists to mis-target interest rates, analysts have said.

Sri Lanka at the time however did not have a central bank to trigger a currency collapse. Food prices fell steeply during the Great depression. In a central bank currency crisis, the worst hit are wage earners whose salaries do not go up as prices rise with a collapse of the value of domestic money.

From March 2023, Sri Lanka central bank has appreciated the currency with deflationary policy, allowing food prices to fall.

In Sri Lanka poverty among Sri Lanka’s plantation worker families was already high at 31 percent by 2019, based on a household income and expenditure survey (HIES 2019) of the state statistics office.

“This has worsened in 2023. Now more than half our estate workers are living below the poverty line,” Tharaka Amarsinghe, a researcher at LIRNEasia said.

“Now more than half our estate workers are living below the poverty line.”

In the rest of rural Sri Lanka poverty has doubled from 15 to 32 percent from 2019 to 2023.

In urban areas, which are densely populated, poverty tripled to 6 to 18 percent.

About 32 percent of families had sold household assets and 50 percent had run down their savings.

Another 6 percent did not send their children to school, indicating that 203,000 children did not attend school. Parents had mentioned that they did not have exercise books and had to make up books from empty pages of old books, according to a panelist.

Sri Lanka has a number of government income support programs, chief among them known as Samurdhi.

The survey found that 1.7 million families got Samurdhi benefits but only 40 percent were poor or below the official poverty line Gayani Hurrulle, Senior Research Manager at LirneAsia said.

About 4 percent were in the richest income decile, 5 percent were in the next.

Only 17 percent who were on Samurdhi benefits have exited the program. Opaque criteria including attending political meetings were used by Samurdhi officials to admit new applicants, respondents to the survey had said.

Sri Lanka is now starting a new program called Aswesuma which will consolidate existing schemes including Samurdhi, an old age benefit scheme and kidney patient’s support.

Applicants would be able to enter and exit based on set criteria.

The new scheme would come into effect from July 01. At the moment applications have closed as the beneficiaries are processed.

But it will be reopened after it starts operating, B Wijayarante, Chairman of Sri Lanka’s Welfare Benefits Board said.

Applicants who are rejected in the first round could appeal. The first round of data was collected by enumerators. In the future applications could be made online.

Classical economists have suggested taking away the power to mis-target rates and depreciate the currency from macro-economists by dollarization or hard-pegging to make it more difficult to tip people into poverty. (Colombo/June98/2023)

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Sri Lanka National Christian Council opposes Online Safety Bill

ECONOMYNEXT – The National Christian Council of Sri Lanka (NCCSL) in a statement on the Online Safety Bill, said that the existing legal regime is adequate to deal with instances of harmful speech, making it unjustifiable to enact such “stringent laws”.

The Council called upon the government to withdraw the bill immediately.

The body expressed “deep concern” over the proposed bill, detailing its potential to curtail freedom of speech and how, according to the Council, the piece of legislature is inconsistent with the principles of democracy.

“The bill proposes the establishment of an entity named the Online Safety Commission without provisions to guarantee its independence and impartiality,” the statement said.

Chapter 3 imposes restrictions on online communication of certain statements, many of which are vague and overbroad, leaving room for executive control and the curtailing of legitimate criticism and dissent that are basic features of democracy, the statement said.

“The laws granting wide discretion to the executive and its investigative agencies with expansive reach have been misused in the past.”

The Council said that the bill was not drafted with the process of public consultation and discussion, which might have ensured the bill would be less draconian in nature.

“The National Christian Council of Sri Lanka calls upon the government to withdraw this anti-human rights and anti-democratic bill immediately.” (Colombo/Sep30/2023)

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Sri Lanka to implement new vehicle revenue licence issuing system

ECONOMYNEXT – A new system of issuing vehicle licences called eRL 2.0 is to be implemented in 5 provinces, excluding the Western Province, from 3 October onwards.

The new system is to be implemented beginning in the North West, South, North Central, Central and Sabaragamuwa provinces, respectively. The existing vehicle licence issuing system eRL 1.0 will continue to be used in the Western Province.

The issuing of revenue licences islandwide at Department of Motor Traffic head offices and regional branches will be temporarily halted on October 2.

The facility of obtaining vehicle permits online will also be temporarily halted on 6 October till midnight.

The Sri Lanka Information and Communication Technology Agency (ICTA) and the Provincial Motor Traffic Departments are working to modernize the current vehicle revenue license issuance system.

The implementation of the new eRL 2.0 system is expected to be an important step in the digitalisation of Sri Lanka. (Colombo/Sep30/2023)

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Sri Lankan Airlines flights cancelled as aircraft grounded

ECONOMYNEXT – State-run SriLankan Airlines has apologized to passengers who were stranded as multiple aircraft were grounded at the same time.

The airline said it has strict procedures which requires aircraft to be grounded when technical issues are discovered.

“Unfortunately, in this case we suffered a number of groundings at the same time,” the airline said.

“We apologize for the disruption and inconvenience caused and assure all our loyal customers that we are working diligently to minimize such occurrences moving forward.”

The airline said it was booking passengers on other airlines while some have been accommodated at hotels. (Colombo/Sept30/2023)

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