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Sunday December 3rd, 2023

SriLankan Airlines makes Rs79bn profit after rate mis-targeting ends

ECONOMYNEXT – State-run SriLankan Airlines has reported a 79 billion rupee profit in the first eight months of 2023, official data showed, with exchange gains adding to the bottom line as the central bank stopped mis-targeting rates.

SriLankan and other state enterprises like the Ceylon Electricity Board and Ceylon Petroleum Corporation that have large dollar borrowings, which trigger book losses when the central bank cuts rates with inflationary open market operations and depreciates the currency.

In addition, costs also zoom up as the currency depreciates, driving operational losses if sales are denominated in domestic currency, driving operational losses.

Though some of the profits came from exchange gains, revenues grew 27 percent to 238.9 billion rupees, while expenditure grew at a slower rate of 7.9 percent to 207.5 billion rupees, giving an operating profit of 31.4 billion rupees, against a loss of 4.4 billion rupees last year, Finance Ministry report showed.

SriLankan Airlines had lost 74.6 billion rupees last year amid an economic crisis. In 2022 ex-Colombo ticket prices zoomed amid fuel shortages, and has been gradually coming down.

In 2023 after rate-mistargeting ended and deflationary open market operations began, the currency appreciated to around 330 to the US dollar from 360 after collapsing from 200 to 360 the year before.

SriLanka’s currency has depreciated from 4.70 to 330 to the US dollar after a central bank was set up abolishing a currency board, driving trade controls and exchange controls and later social unrest and out migration.

From the 1980s Sri Lanka started to run un-anchored monetary policy after the International Monetary Funds ‘Second Amemdment’ of articles left the central bank without a working monetary anchor.

Since then various ad hoc regimes which defy laws of nature described by classical economists have been operated as the country lacked a doctrine of sound money.

The country defaulted in 2022 after printing money for growth (potential output targeting) and flexible inflation targeting, the latest ad hoc monetary regime that is peddled to countries by Western Mercantiliss and around found in most of the countriues that are defaulting.

Sri Lanka’s SOEs collectively suffered the biggest loss in their history last year after a float of the currency after rate-mistargeting failed due to a surrender rule amid inflationary open market operations to enforce a bureaucratically decided policy rate.


Sri Lanka top five SOEs lose Rs931bn amid monetary instability

Sri Lanka, world’s poor suffers from Fed’s accidental discovery: Bellwether

G-sec backed open market operations (which allowed inflationists to blame deficits for monetary instability) was accidentally invented by the Federal Reserve.

The bureaucratic policy rate was formalized by the Federal Reserve on April 13, 1923, which later triggered the great depression and academic inflationism in the form of Keynesianism (Cambridge economics) as a knee jerk reaction and the revival of John Law policies as ‘macro-economic policy’ under various labels including potential output targeting, critics say.

Under an IMF backed monetary law, potential output targeting (printing money for growth) is now part of the island’s monetary law. (Colombo/Nov17/2023 – Corrected profits are for the first 8 months not 9)

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Sri Lanka UGC wants to boost number of IT-related degrees

ECONOMYNEXT – Sri Lanka’s University Grants Commission is of the view to boost the number of Information Technology (IT) related degrees in state universities with an aim to pave the way for a digital economy.

Sri Lanka’shigher education system has been producing more graduates in Arts stream while the degrees in highly demanded IT and other engineering services are being looked at only now.

“We do have a high demand for engineering, science, AI, computer and electronical engineering

studies,” Chairman of University Grants Commission, Sampath Amaratunga, told reporters at aa media briefing on Friday

“However, while avoiding neglecting the humanities, we should develop new IT skills.”

Amaratunga confirmed that a student who studied in any stream could obtain an IT degree, including students who studied in the arts stream.

The UGC data show that out of 18,490 engineering technology stream students who sat for their Advanced Levels (A/L) in 2022, 10634 were eligible for university.

“Even streams like agriculture should be encouraged to use technology,” Amaratunga said. (Colombo/Dec 2/2023)

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Sri Lanka leader inaugurates Climate Justice Forum at COP28 in Dubai

ECONOMYNEXT – Sri Lanka President Ranil Wickremesinghe launched Climate Justice Forum (CJF) at the ongoing 2023 United Nations Climate Change Conference (COP28) held in Dubai in a move to gather support for vulnerable nations hit by climate-change led disasters.

This year’s climate summit held in Dubai’s EXPO2020 features a raft of issues for countries working to find common ground in tackling climate change, including whether to phase out fossil fuels and how to finance the energy transition in developing countries.

Wickremesinghe inaugurated the Climate Justice Forum at COP28 on Saturday and emphasized the critical importance of addressing climate issues with a sense of justice and equity.

The President had been in talks with many nations vulnerable to climate change disasters including African and South American countries to get their support for the CJF.

The move is to compel advanced and developed countries to look into the poor nations hit by the climate changes and help them to get over economic and debt burdens by either investing more in green energy initiatives or writing off debts to ease financial pressure.

Sri Lanka, which is now facing an unprecedented economic crisis, has seen increasing losses and damages, both human lives and physical properties due to climate change-led disasters like floods, drought, and earth slips.

In his speech at the COP28 forum, Wickremesinghe on Friday said the Climate Justice Forum will provide a platform for constructive and proactive engagements. (Dubai/Dec 2/2023)

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Sri Lanka IMF review goes to executive board on December 12

ECONOMYNEXT – The first review of Sri Lanka’s International Monetary Fund program is scheduled to go the lender’s Executive Board for consideration on December 12.

Sri Lanka officials were expecting the review to be completed in December as soon as official creditors gave their assurances.

According to the notice Sri Lanka had missed one performance criterion and has requested modifications.

Sri Lanka has outperformed on a number of quantity targets including inflation. In addition to quantity PCs there was also one non-accumulation of arrears.

There would also be re-phasing of access. The review was originally expected around September with another review based on December data, leading to September and March disbursements.

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