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Thursday September 21st, 2023

UN Food Programme, FOA warn of a Sri Lanka food ‘shortage’

Sri Lanka had been expecting its worst food crisis in August this year.

ECONOMYNEXT – The Food and Agriculture Organisation (FAO) of the United Nations (UN) and the UN World Food Programme (WFP) has warned Sri Lanka of an acute food shortage due to bad harvest seasons and called for immediate food assistance and livelihood programmes.

In a new report, the FAO and WFP estimate 6.3 million Sri Lankans are facing moderate to severe acute food insecurity due to a 50 percent drop in food grains and a decrease in imports due to foreign exchange shortage.

The organisations expect the situation to worsen mainly during October 2022 to February 2023 if immediate livelihood and life-saving assistance is not provided.

“In order to avert a further deterioration of food security conditions and to support restoration of agricultural production, livelihood assistance targeting smallholder farmers should remain a priority,” Vimlendra Sharan, FAO Representative in Sri Lanka, said in a statement.

“With around 30 percent of the population depending on agriculture, improving the production capacity of farmers will ultimately boost the resilience of the agricultural sector, reduce import requirements amid shortages of foreign currency reserves and avert the rise in hunger.”

However the warning came as farmers complained that farmgate prices were dropping to 100 rupees a kilogram lower than the expected 120 rupees due to a better than expected harvest.

The report has found that the paddy production for 2022 is forecast at 3 million metric tons.

“The lowest level since the 2017 drought-affected harvest, mostly due to low yields following reduced application of fertilizers,” the report noted.

“Months into this crippling economic crisis, families are running out of options – they are exhausted,” Abdur Rahim Siddiqui, WFP Representative and Country Director in Sri Lanka, said.

Siddiqui said more than 60 percent of families are eating less, and eating cheaper, less nutritious food.

“This comes at a time when financial constraints have forced the government to scale back on nutrition programmes, such as school meals and fortified food to mothers and undernourished children,” Siddiqui said.

He added that WFP’s top priority will be to provide immediate food and nutrition assistance to the most at-risk communities to prevent a further deterioration of their nutrition. (Colombo/Sep14/2022)

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Sri Lanka gets 19.23 mn US dollar grant from USA

ECONOMYNEXT – The United States yesterday (20) announced the commitment of more than 19 million US dollars in additional funds to further the development of Sri Lanka.

The 19.23 million US dollar (6.2 billion rupees) is obligated through the Development Objective Grant Agreement between the United States Agency for International Development (USAID) and the Sri Lanka government.

“This development assistance will support economic growth and democratic governance activities and demonstrates the ongoing US commitment to its partnership with Sri Lanka and in building lasting people-to-people ties,” a statement by the Embassy of the United States of America read.

“This investment demonstrates the United States’ ongoing commitment to our partnership with Sri Lanka and our steadfast support to the people of this stunning, opportunity-filled country, as USAID Administrator Samantha Power and President Wickremesinghe discussed in New York,” said Gabriel Grau, USAID Sri Lanka and Maldives Mission Director.

“With these funds we’ll continue to work with the government of Sri Lanka to improve economic growth and democratic governance and advocate for vulnerable populations.”

USAID is an independent agency of the United States government responsible for administering civilian foreign aid and development assistance.

The United States has provided more than 2 billion US dollars (nearly 720 billion rupees) in assistance to Sri Lanka since 1956. (Colombo/Sep21/2023)

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Sri Lanka’s 2022 EPF returns falls to lowest, single digit in near two decades – CB data

ECONOMYNEXT – The 2022 annual average return on Sri Lanka’s largest contributory pension scheme, the Employees’ Provident Fund (EPF), has fallen to its lowest in nearly two decades, Central Bank data showed.

The annual average return in the last year fell to 9.52 percent from the previous year’s 11.40 percent, a central bank response to a Right to Information (RTI) request showed.

Returns on EPF has raised concerns among contributors after the government decided to include EPF investments in the government treasury bonds under the domestic debt optimization (DDO) process.

Last year’s lower return has been recorded despite market interest rates being more than 30 percent towards the end of the year. In contrast, the fund has given a double digit return in 2020 when the market interest rates hovered in single digits.

Analysts have predicted the returns to be further low with the central bank opting for the government’s DDO option.

A central bank analysis on DDO showed the return on EPF could fall to as low as 6.79 percent if the DDO option was not chosen within the next 12 years as against 8.02 percent if opted for DDO.

Trade unions and some politically motivated fractions opposed the government move to include the EPF investments under the DDO. However, parliament approved the move early this month.

According to the data made available from 2005, the central bank, which is the custodian of the EPF, has given the highest return of 16.03 percent in 2009.

The island nation’s largest pension fund has almost 21-million member accounts including 18.3 million non-contributing accounts due to some members having multiple number of accounts.

The 3.38 trillion-rupee ($10.6 billion) worth fund as of end 2022 is managed by the central bank, including its investment decisions.

As of end 2022, the central bank has invested 3.23 trillion rupees or 95.7 percent of the total EPF in government securities, while 84.1 billion rupees has been invested in listed companies in the Colombo Stock Exchange, the central bank said quoting the EPF audited financial statement. (Colombo/September 21/2023)

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Malaysia to support Sri Lanka’s bid to join RCEP

ECONOMYNEXT – Malaysia has agreed to support Sri Lanka’s application to become a member of the Regional Comprehensive Economic Partnership (RCEP), a major regional trade agreement.

The RCEP is a free trade agreement among the Asia-Pacific nations of Australia, Brunei, Cambodia, China, Indonesia, Japan, South Korea, Laos, Malaysia, Myanmar, New Zealand, the Philippines, Singapore, Thailand, and Vietnam.

President Ranil Wickremesinghe met the Malaysian Prime Minister Anwar Ibrahim during bilateral discussions on the sidelines of the United Nations General Assembly in New York yesterday (20).

During the meeting, the Malaysian Prime Minister expressed a strong desire to bolster economic ties between the two nations, according to a president’s media division statement.

He emphasized Malaysia’s eagerness to facilitate increased investments from Malaysian companies in Sri Lanka.

Ibrahim also expressed positivity towards Sri Lanka’s request to commence negotiations for a free trade agreement (FTA) between the two countries, which could potentially open up new avenues for trade and economic cooperation.

Wickremesinghe is in a drive to bolster international ties and integrate the country with the global economy.

So far this week he met with the leaders of Bangladesh, Nepal, Malaysia, Iran, South Korea, as well as representatives from global bodies such as the World Bank, International Monetary Fund, USAID, Meta, the Commonwealth, and attended other forums.

Sri Lanka aims to expand its economic reach first within South Asia and then extend further.
Data shows that Sri Lanka has been able to boost exports with FTAs.

Over the past two decades Sri Lanka’s exports have not grown as much as competitors.

Economists involved in trade have pointed out that Sri Lanka should make joining the RCEP a priority instead of trying to negotiate multiple smaller deals for which it does not have the bandwidth in government, or the technical resources to do multiple trade agreements. (Colombo/Sep21/2023)

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