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ECONOMYNEXT – Sri Lanka will supply fertilizer at 10,000 rupees per 50 kg bag for paddy cultivation, 25 percent of the original cost of 40,000 rupees as the crisis hit nation is trying to boost its rice production amid a looming food shortage after an ill-sighter fertilizer policy.

Sri Lanka’s rice production has dropped sharply since President Gotabaya Rajapaksa banned chemical fertilizers in April last year. Agriculture Minister Mahinda Amaraweera said the rice production has fallen up to 40 percent in the last ‘Maha’ cultivation season ended in February this year.

“Paddy farmers will be given fertilizer for 10,000 rupees and in the global market is selling it for 40,000 rupees,” Amaraweera, also a co-cabinet spokesman told a weekly cabinet media briefing on Tuesday (05).

He also said corn cultivators and other crop producers will be also receiving the fertilizer at the same price in the future.

Before the ban, the government had been providing a 50 kg fertilizer bag at 350 rupees. However, increased global prices and nearly 80% depreciation in the rupee currency against the US dollar have increased the import price of fertilizer.

The lack of fertilizer application has forced the government to import rice from India and Myanmar. The shortage and looming food crisis have increased the prices to more than doubled. Rice is the staple food in the island nation.

Rajapaksa stubbornly maintained the fertilizer ban policy despite many protests by farmers. He was forced to cancel the policy after the production of rice and vegetables started to fall in November. However, the government could not supply the required fertilizer to farmers due to dollar shortage.

Sri Lanka brought an organic fertilizer shipment from China, however it was not approved Sri Lankan authorities because the supply did not meet the required standards.

Later, the government imported nitrogen fertilizer from India, but farmers rejected it because of bad odour.

Amaraweera said Sri Lanka will receive a shipment of 40,000 MT of chemical fertilizer on July 9, from Oman under the Indian Credit Line, this will be distributed to farmers. Another 25,000 MT is expected to be reach the country in the near future.

The fertilizer will be used in the next Maha cultivation season starting in November this year, Amaraweera said adding that Sri Lanka will reach self-sufficiency and will no longer have to import rice.

“We want the next Maha season to be successful and for all this to be carried out we have taken the relevant measures,” the Agriculture Minister said.

He also said the paddy has been cultivated in 475,000 hectare land across the country in the on going Yala cultivation season, much higher than the expected 275,000 hectare. (Colombo/July 05/2022)

ECONOMYNEXT – Sri Lanka’s debt has shot up to 140 percent of gross domestic product Prime Minister Ranil Wickremesinghe said as the rupee fell in the worst currency crisis in the history of the island’s intermediate regime central bank.

Sri Lanka rupee has fallen to 360 to the US dollar from around 200 at the beginning of the years.

Wickremesinghe said Sri Lanka is making progress towards and 4 year Extended Fund Facility with the International Monetary Fund.

“With the IMF we hope to reduce it (debt) to 95 percent of GDP by 2032,” Wickremsinghe told parliament.

Sri Lanka’s government debt which was Rs17,580 billion by end 2021 and risen to 2022 March Rs21,969 billion, he said.

Sri Lanka defaulted on its foreign debt after three currency crisis from 2015.

Sri Lanka now had to repay the following debt, he sad.

June – Dec repayments of US$3489mn

2023 – US$5862mn

2024 – US$4916mn

2025 – US$6287mn

2026 – US$4030mn

2027 – US$4381mn

Sri Lanka’s economy is expected to shrink to 76 billion US dollars in 2022 from 94 billion in 2018.

It is expected to come back to the earlier level by 2026. (Colombo/July05/2022)

ECONOMYNEXT – India has become the top lender to Sri Lanka in early 2022, official data showed as the neigbhour stepped in with emergency financing as the island was gripped by the worst currency crisis in the history of its 72 year old intermediate regime central bank.

Up to April 2022, India had disbursed 376.9 million US dollars, mostly a credit line for petroleum imports up from 13 million US dollars last year.

Sri Lanka had signed up 1,550.4 million US dollars in new loans up to April 2022, with 1.5 billion coming from India, a Finance Ministry report said.

Sri Lanka is facing severe forex shortages after a the credibility of a peg was lost by liquidity injections and float attempted with a surrender rule in place failed and is unable to fund large import bills.

However rates have since been hiked and private credit is slowing giving more resources to fund a deficit and pay state workers, though the steep currency collapsing is destroying real savings.

Asian Development Bank disbursed 359.6 million US dollars up to April 2022 up from 113.6 million US dollars last year.

China disbursed 67.9 million US dollars up to April 2022, down from 514.9 million US dollars a year ago.

China last year gave a 500 million US dollar budget support loan.

Many Chinese projects are now winding down.

Sri Lanka had committed undisbursed loan balance of 8.05 billion US dollars, which relate to projects over the next 3 to 5 years.

India has the majority of the balance to be disbursed followed by, the Asian Development Bank, World Bank, China, and Japan.

Sri Lanka defaulted on its foreign debt in April 2022, after 7 years of flexible inflation targeting cum output gap targeting triggered three currency crises in a row and growth declined amidst the most severe monetary instability seen in history of the islands intermediate regime central bank. (Colombo/July05/2022)

ECONOMYNEXT – Sri Lanka’s state-run SriLankan Airlines has lost 248 billion rupees up to April 2022 with most of it coming from the collapse of the currency, official data showed, amid the worst currency crisis in the history of its intermediate regime central bank.

SriLankan Airlines had earned revenues of Rs71.82 billion in the first four months of 2022.

The airline had lost Rs248.44 billion in the first four months with 145 billion rupees coming from a foreign exchange loss.

Sri Lanka’s rupee collapsed from 200 to 341 to the US dollar by end April 2022 in an attempt to float the currency with a surrender rule.

SriLankan Airlines (SLA) has Rs 618,677.61 million in liabilities, including sovereign guaranteed US$ 175 million bond, Treasury guaranteed bank loans from state banks, aircraft leases, and debt with trade creditors, primarily Ceylon Petroleum Corporation, a Finance Ministry report said.

Sri Lankan has a dollar arrears to Ceylon Petroleum Corporation on fuel bought before 2019. But now it pays in US dollars in time.

“In this context, the government is no longer able to finance SLA’s losses and there is an urgent requirement to restructure SLA’s balance sheet and convert its operating model into a profitable structure,” the report said.

While aircraft leases relate to currently revenue earning assets, the 175 million bond and CPC arrears were taken to fund legacy losses.

Prime Minister Ranil Wickremesinghe has said the airline has to be privatized.

The rupee has collaped from 131 to around 370 to the US dollar after ‘flexible inflation targeting’ began where a notoriously unstable reserve collecting soft-peg was bombarded with open market operations, either to boost inflation (2015) or to boost growth (output gap targeting) from 2018.

State-run Ceylon Petroleum Corporation has been hit a 648 billion loss due to the soft-pegged exchange rate regime.

Sri Lanka has turned its back on classical economics and has rejected single anchor regimes like a clean float or a currency board and is operating an intermediate regime that has depreciated from 4.70 to 370 to the US dollar in belief that there is prosperity at the end of monetary instability and depreciation. (Colombo/June05/2022)

ECONOMYNEXT – Sri Lanka stocks fell over 1 percent on Monday (02), as uncertainties in the market continued with the economy was gradually coming into a halt due to an acute fuel shortage, brokers said.

The main All Share Price Index (ASPI) closed 1.31% or 97.93 points lower at 7,359.55.

Many public offices and all schools were closed on Monday due to a government decision to save fuel. Sri Lanka is facing its worst fuel crisis in its post-independent era.

“The uncertainty in the market is continuing to bring the sentiments down meanwhile the market is expecting the central bank to hike rates at July 07 policy review meeting,” a market analyst said.

“This sentiment will continue.”

Analysts have said the market had a lot of gloomy sentiments as investors did not know what to do as the market was under selling pressure with no takers.

Sri Lanka is yet to finalise a deal with the IMF while potential lenders are waiting for an IMF deal, government officials say.

Last week’s T-bill auction saw yields rising between 180-312 basis points, which also raised concerns among stock market investors.

Government has also declared that it can only provide fuel for essential services including health until July 10 and all non-essential services to work online as the country has run out of fuel.

The turnover was 1.3 billion rupees, less than a half of this year’s daily average turnover of 3.38 billion rupees.

Market analysts have said investors were heavily feeling the pinch of economic crisis as the country’s fuel bunkers have dried out the island nation was frantically looking for dollars to purchase fuel.

The more liquid S&P SL20 index rose 1.48% or 35.18  points to 2,345.08.

The market in the month of June has lost 9.3% after gaining 6% in May. It lost 23% in April followed by a 14.5% fall in March.

The market has lost 39.8% so far this year after being one of the world’s best stock markets with an 80% return last year when large volumes of money were printed.

Sri Lanka’s sovereign debt default has already led the country to be rated with restricted/selective default rating by rating agencies, which has weighed on investor sentiment.

Investors are also concerned over the steep fall of the rupee from 203 to 370 levels so far in 2022.

The fall was led by Sampath Bank, which fell 4.2% to 29.70 rupees a share.

Browns Investment slipped 6.6% to 7.10 rupees a share, while Expolanka closed weaker 2.8% at 171.50 rupees a share. (Colombo/July 02/2022)

ECONOMYNEXT – Sri Lanka’s GCE Advanced Level (A/L) examination will likely be postponed by a month, Education Minister Susil Premajayantha said.

The minister told parliament on Monday July 04 that the exams, previously scheduled to be held from October 17 to November 12, will likely be delayed a month.

Sri Lanka is going through its worst fuel crisis on record, as a consequence of crippling dollar shortages, threatening to bring the country’s transport to a standstill. Education is one of many areas that have been affected by the crisis. (Colombo/Jul04/2022)

ECONOMYNEXT – Sri Lanka’s tax revenues grew 27 percent from a year ago to 543.6 billion rupees up to April 2022 partly helped by one-off retrospective tax, official data showed while inflation also started to gallop which tends to boost nominal turnover based taxes.

By April Sri Lanka’s 12-month inflation had hit 29.8 percent but many traded goods had risen higher.

The first installment of a retrospective tax had brought 59.6 billion rupees, a Finance Ministry report said. Income tax revenue was up 170 percent to 149.2 billion in the first four months.

Value Added Tax (VAT) on domestic activities increased by 36.6 percent to Rs 85.3 billion in the first four months of 2022 from Rs62.4 billion while revenue collected from excise duty on domestic activities increased 14.6 percent to Rs 94.7 billion.

VAT, CESS and PAL had marginally increased by 1.4 percent to Rs 203.6 billion in the first four months of 2022 from Rs 200.7 billion in the same period of 2021.

Customs Import Duties (CID) fell 44.7 percent to Rs. 17.5 billion and Special Commodity Levy (SCL) 22.9 percent to Rs. 15.8 billion, respectively due mainly to the import restrictions and downward revisions of SCL rates.

The realization of revenue from income tax as against the annual estimated revenue of Rs. 496.0 billion was 30.1 percent in the first four months of 2022.

Petroleum taxes had fallen 20 percent to Rs 16.4 billion with import volumes falling to 2.9 million metric tonnes from 3.4 million a year ago.

With non-tax revenues, total revenues were up 31 percent to 630.9 billion rupees boosted by central bank profits.

The central bank had transferred profits (as domestic liquidity) despite reserve losses and forex shortages.

Sri Lanka’s central bank had projected 20.7 trillion gross domestic product for 2022, sharply up from 16.8 trillion a year ago with a 22 percent inflation.

However it is not clear whether inflation would further increase nominal GDP, despite fall in real activity due to fuel shortages and lower spending power from a currency crisis expected to trigger a contraction in real GDP.

The statistics office had meanwhile also revised the GDP up based on a re-basing.

Inflation Hair Cut

When inflation go up, nominal government revenue go up and domestic debt holders, pensioners bear a key part of a real hair cut on debt as they lose the value of their savings, unlike foreign dollar debt holders and the cost of living and taxes go up.

Rupee wage earners including state workers also lose living standards and pay more taxes contributing to the fiscal correction as the rupee is depreciation. If they had rupee bank deposits or government debt, they pay the fall in the real value of savings as well.

Dollar debt holders are generally protected from depreciation and inflation unless a debt restructuring is done, though bond holders automatically suffer a hair cut and higher nominal tax payments as the currency depreciations.

Based on the central bank projection and last year’s GDP, tax revenues was 2.6 percent of GDP up from 2.5 percent a year ago as revenue grew 27 percent.

Current spending grew at a slower rate of 14 percent to Rs 1,016 billion rupees and was down to 4.9 percent of GDP from 5.3 percent based on the inflated GDP.

The revenue deficit was down to Rs 385.9 billion rupees (1.9 percent of GDP) from Rs 408.4 billion a year ago (2.4 percent of GDP).

Capital spending was Rs138.4 billion up 23 percent, giving an overall deficit of 524.3 billion rupees or 2.5 percent of GDP, compared to 3.1 percent last year.

The primary deficit was 97 billion rupees, down from 154 billion rupees last year.

Foreign borrowings were a net repayment of 127 billion rupees while domestic net borrowings were 651 billion rupees.

(Colombo/July04/2022)

ECONOMYNEXT – Sri Lanka is on the fast-track to the Korea path, with interventionists getting their wish using a US-built central bank with false monetary policy independence and extreme stimulus to target an output gap.

Sri Lanka has printed over 2.3 trillion rupees since the January 2020 rate cut and lost 9.3 billion US dollars in reserves including 4.0 billion in borrowed reserves up to March 2022.

The rupee has collapsed from 182 to 365 to the US dollar in the same period.

Now inflation is going up, monetary stability has not yet been restored and there signs that the central bank could lose control of reserve money.

In the 2012, 2016 and 2018 currency crises the central bank floated and got control of reserve money and there was typical deflationary style collapsed with a small spike in inflation.

However this time an inflationary blow off is the outcome with monetary stability yet to be restored.

Food prices are rising and people are finding it difficult to eat. Even if there are no actual shortages, the high prices will reduce the calorific intake of the poor, particularly children and put protein out of the reach of many.

The hardest hit would be children of poor families, for whom protein and dairy products will be a super luxury, which can harm their growth for years to come.

Sri Lanka’s central bank printed the money from 2020 saying the new administration was going to create a ‘developmental state’ similar to Korea.

Unlike countries like Hong Kong, Singapore, Malaysia, Thailand and Taiwan, Korea was one country which had severe monetary troubles, trade controls and near starvation due to its US-built central bank like Ceylon.

If monetary stability is not restored Sri Lanka will become more of a ‘Korea’.

Spam a Luxury Food

During lunar New Year in South Korea, Spam, a canned ham considered junk food in the US, is a valued gift found in premium gift hampers.

Hormel Foods, which invented the canned food in 1937 and became a component of military rations reportedly, has the biggest sales outside America of over 200 million dollars, in Korea.

When the Bank of Chosen (Joseon) and later the Bank of Korea was printing money in the immediate post-independent period from Japn, Spam was one of the foods available from post-exchange (PX) stores, which served US soldiers, and other American officials and their families.

As money printing triggered import controls, Spam and meat became luxury foods.

One of the foods that were invented during that time was Budae Jjigae or Amy base stew.

Army base stew was made from food trash thrown away from military eateries and officer’s messes. The saying goes that cigarette butts were removed, pieces of sausages and others were rescued, and mixed with spices and kimchi and vegetables it was boiled in to a tasty soup for the starving Koreans.

Another food that was reportedly invented at the time Dwaeji Gukbap which is a culture food in Busan. It was invented in the early 1950s by refugees and poor families and made with discarded pork bone from US military kitchens.

Gamja-tang, a traditional dish was made with discarded pork bone from military kitchens.

When central banks buy Treasury bill to pay state workers or to keep rates down and the currency collapses, it is not only banks that collapse but the nutrition of people.

In Sri Lanka in the 1970s beggars died on streets.

There are those who remember how they used to scavenge discarded food from offices in Colombo after lunch hour, collect the leftover rice, wash them boil then on the roadside in pot with some vegetables again and eat them.

A central banker will never admit to their mistakes, not only in Sri Lanka but anywhere in the world, but will use big words to confuse bamboozle the helpless public, using the same rhetoric used by Western Mercantilists and escape accountability.

The Korean Central Bank’s wish for Japan reform

The Bank of Chosen was originally private bank. It was forced to print money in the latter stages of World War II under Japanese occupation by purchasing Japanese government bonds.

The officials inside the Bank of Chosen however did not want to print money, since they had a long history before American academic central banking. They wanted to change the law.

They pointed out that the Bank of Japan act was changed in 1948 by Joseph Dodge, a US banker who had worked with Ordoliberals of Germany and was involved in killing inflation and setting up the new Deutsche Mark.

One of the first things Joseph Dodge, who was helicopter dropped into Japan did was to close the Reconstruction Development Bank which (Fukkin Bank) was financed with bonds sold to Bank of Japan which was firing 700 percent inflation and triggering multiple parallel exchange rates.

The Fukkin bank among other Keynesian interventions was the product of the Keynesian-New Dealer Economic Co-operation Agency of the US. Japan was a victim of the agency which was rescued by Dodge who fixed the Yen at 360 and banned deficit finance.

Chalmers Johnson who wrote about Japan in a misleading way, was a Naval officer working out of Japan during the Korean war and was protected from the consequences in Korea. In any case they had the Us officers had the benefit PX stores.

The Yen held till the break-up of the Bretton Woods and appreciated, while Sri Lanka printed and closed the entire economy.

Dodge ended up in Japan on the intervention of US President Harry Truman and the US military, which saw the stability and monetary reform in Germany and was able to undo the damage caused by the ECA.

Fed experts in 1948 had failed to arrest the monetary problems in Japan, people were starving and the military feared a revolt when the military administration took matters in hand and brought in Dodge.

According to the official history of the Bank of Korea, “the Korean government and Bank of Chosen reached a consensus that it was necessary to invite international financial experts to examine the government’s central bank bill.”

“At the proposal of the ECA, the minister of finance requested in June 1949 that the Board of Governors of the Federal Reserve send experts to Korea.

“In response the Federal Reserve dispatched Arthur I Bloomfield, (chief economist of the balance of payments division), a prominent authority in financial theory and John P Jensen (assistant chief of the auditing division) from the Federal Reserve Bank of New York.

Korea gets Argentina Cookie Cutter

The Federal Reserve Board had been sending staff to countries including Paraguay, Guatemala, the Dominican Republic, the Philippines and Sri Lanka since 1943 to support their monetary and banking reforms.

The dispatch of two experts to Korea was in line with this trend.”

PICTURE TO USE BELOW

The Bank of Chosen officials who wanted to arrest inflation of course had no idea that US academic economists has been completely corrupted by Keynesianism and the Fed was exporting a cookie-cutter Argentina style central banks and Dodge followed classical discipline.

Arthur Bloomfield, a Fed official, later set up a bank in the style of one’s set up in Latin America in a previous decade and in Ceylon by fellow Federal Reserve official John Exter.

The South Korean won (the first version) had depreciated from 15 to the US dollar in 1945 to 6000 by 1953.

The new bank printed a brand new currency called the Hwan. The new currency was born at 100 old Won per Hwan.

Predictably the new central bank was unable to halt inflation.

Political Upheaval

Sygman Rhee, who had opposed Japanese occupation and was considered an independence leader, returned to the country and won Presidential elections and headed what, was called the First Republic.

However the country continued to experience inflation and by 1960 the Hwan had fallen to around 1250 to the dollar.

The first Republic collapsed and Rhee was disgraced as usually happens when currencies collapse as can be seen in Sri Lanka now. Following what was known as the April Revolution he resigned.

The Second Republic lasted only one year. General Park Chung-hee came to office through a coup, promising to end corruption and tackle big business.

After central bank reform a second Won (which is now found in Korea) was set up with 1 won for 10 Hwan (about 135 to the US dollar).

The new was much better and held for long periods though the country experienced BOP troubles and high interest rate and inflation from time to time.

The currency troubles led to import controls – SPAM smuggling became a popular sport – and was criminalized by the military administration and authoritarian rule prevailed.

The Korea central bank law was reformed about a dozen times. The won collapsed in the early 1980s as Paul Volcker tightened (and Latin America went into default). However the last reform reduced monetary and exchange policy conflicts and stability started to come around the mid 1980s

As the currency was stabilizing after the final collapse, people came to the streets in Great Workers Struggle, the dictatorship also collapsed in a massive strike.

A liberal government came to power (officials of the Bank of Korea Busan branch went on strike demanding further tightening of the law) which was allowed by the liberals.

The currency stabilized and appreciated, interest rates (and inflation) collapsed as a consequence and the Korea became an OECD country within a decade.

All kinds of new economic activities came which interventionists could imagine. Korean music which developed partly as opposition to authoritarian rule took Japan and the rest of Asia by storm.

K-drama and other culture products followed, with the film industry being liberalized and facing competition.

In 2020 Hallyu exports were estimated to have topped 10 billion dollars, about the same as total exports of Sri Lanka.

The government got interest in Hally when it realized one year that culture exports topped the revenues exceeded many of the biggest industrial groups, and it started funding drama schools.

The democratization reforms of the 1980s also created private TV channels, which led to an explosion of the industry. A strong currency preserved peoples, incomes allowing them to spend on culture, and restaurants. Girls and boys who would have worked in factory floors became idols.

Today there is a service sector (global production chains) style activity in Hallyu. K-pop bands have stars from Japan, Thailand and China. Music is developed by in collaboration with sound studios in the US and Europe. Korean stars study at Juliard and top music school.

By and by foreign Mercantilists will write about then and say it is happened as a result of some state intervention.

However Sri Lanka can expect no such prospects in the current situation. Almost all the economists in the country are interventionist soft-peggers who want to manipulate interest rates with no thought of the consequences with the notable exception of W A Wijewardena.

Classical monetary theory is unknown in Sri Lanka.

A deadly flexible exchange rate awaits

A deadly central bank reform that institutionalizes monetary and exchange rate conflicts (flexible exchange rate with flexible inflation targeting) and gives ‘independence’ to soft-peggers is waiting in the wings.

It will probably be enacted under the IMF reforms.

There is little prospect of a clean floating regime starting under any IMF program.

While the IMF is good at smashing economies and stabilizing currencies, it cannot prevent the next one.

That is because the seeds of the next crisis is contained in the discretionary and anchor conflicting ‘flexible’ and sterilizing central bank laws it supports.

IMF is replete with Arthur Bloomfields and Robert Triffins, David Groves, and the like who set up sterilizing supposedly counter-cyclical soft-pegs.

They prescribe to the third world what was discarded by the Fed and the Bank of England in the Reagan/Thatcher era after their own currencies collapsed.

The bigger problem is Washington in now against strong pegs, unlike during the Bretton Woods era.

The Treasury believes (falsely) that strong East Asian stable currencies are ‘undervalued’ and they become export power houses at the expense of the US trade deficit.

Monetary instability will continue and the economists/mercantilists will continue to blame imports, the current account deficit and external shocks instead of their own flexible, discretionary and independent policies backed by central bank credit.

Instability will continue until a currency board is brought to tame the Mercantilists or the country goes into spontaneous dollarization. Prospects of a clean float are almost zero under an IMF program which requires pegging to repay its loans.

Sri Lanka earns about a billion dollars in exports, about 500 to 600 million in remittances (part of it diverted to food until recently through informal markets), more as IT and BPO exports, while food imports are around 100 to 200 million dollars a month.

It is a relatively simple thing to keep the nation fed as long as people have some income.

Even there are no price controls and no shortages, food prices will be high. Like in Korea food will be will be out of reach of the poor.

In particularly proteins will become expensive as in Korea. Malnutrition will go up, young children will be stunted.

Sri Lanka’s interventionists and academic economists have got their Korea wish. But there is there is no SPAM, no pork bones, or PX stores to bring relief.

ECONOMYNEXT – Sri Lanka’s state-run Ceylon Petroleum Corporation will issue fuel on a guaranteed quota to companies that can pay in US dollars, Power and Energy Minister Kanchana Wijesekera said as the country grapples with the worst currency crisis in the history of its soft-pegged central bank.

Sri Lanka is facing severe fuel shortages (cannot convert rupees to dollars) with after the central bank printed money, imposed a surrender requirement and smashed the credibility of a pegged exchange rate regime now called a flexible exchange rate.

“Any company/industry that can pay in US dollars can open a consumer account at CPC to obtain a weekly guaranteed quota,” Energy Minister Kanchana Wijesekera said in a twitter.com message.

“The need to pay a month in advance; fuel will be issued on a daily or weekly basis from the 12th.”

Forex shortages are a problem associated with soft-pegged central bank which artificially manipulates interest rates with liquidity injections and are not found in clean floating regimes or currency boards (credible pegs).

When the credibility of the peg is broken wealth cannot be transferred from the credit system linked to the rupee monetary base to dollar system linked to the US Fed.

However by not converting the US dollar in the first place and keeping wealth in US dollars and settling transactions in the foreign currency (dollarization), the ability to transfer wealth can be maintained.

Analysts had warned that the central bank, which was set up in 1950 by abolishing a credible peg can allow economic activities to continue by allowing parallel dollarization.

However legislators in the country have given the agency extensive powers to control the people through exchange controls and legal tender laws, which can be used block US dollar transactions, preventing normal economic activity from resuming. (Colombo/July04/2022)

ECONOMYNEXT – Sri Lanka will be receiving 9 shipments of fuel in the next two months, Power and Energy Minister Kanchana Wijesekara said.

The shipments include the three Indian Oil Corporation (IOC) consigments that are to arrive between 13 July and 15 August.

Wijesekara said that the IOC ships would be partially paid using the 20 million US dollars left from the Indian credit line.

Related: Three shipments of fuel to arrive in Sri Lanka by mid, end July, August: Lanka IOC

Four shipments of fuel were awaiting confirmation, the minister stated.

Meanwhile, a 40,000 metric tonne diesel shipment worth 66.5 million US dollars from the UAE-based Coral Company is due between 8 and 9 July.

A 35,000 metric tonne furnace oil consignment worth 34 million dollars is due to arrive between 10 and 11 July.

Another 40,000 metric tonne diesel shipment from the Singapore-based Vitol Company is due to arrive between 11 and 14 July. The shipment is worth 77 million USD, Wijesekara said.

The Coral Company had also confirmed a 135,000 MT shipment of crude oil to arrive on 15 July, and another shipment for August.

Another shipment of Petrol is due between 22 and 23 July.

Wijesekara stated that the Sri Lankan Government had requested Malaysian aid for petrol and kerosene, but it was getting difficult to find ships for delivery.

Sri Lanka’s economy has come to a grinding halt due to the fuel crisis, with many private buses and taxis not running. Fuel hoarding is also contributing to the scarcity and queues, and the country’s government recently started to issue fuel tokens in a bid to shorten queues and prevent excessive filling.

However, all those measures have proven to be in vain.
(Colombo/03Jul/2022)