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COLOMBO (News 1st); The Parliament granted its approval for the  supplementary estimate of Rs. 695 billion which was presented by the Prime Minister Ranil Wickremesinghe in his capacity as the Minister of Finance. Moreover, approval was also granted at a meeting of the Parliamentary Finance Committee Chaired by Parliamentarian Anura Priyadarshana Yapa yesterday (7). The supplementary Supplementary estimate approved in Parliament

COLOMBO (News 1st); Prime Minister Ranil Wickremesinghe says that discussions are underway with India to purchase fuel and coal as the Line of Credit granted by the nation is coming to an end.  The Prime Minister, pointing out that Sri Lanka does not have fuel and coal to generate electricity, in addition to having a fertilizer, medicine I will not be responsible if a blackout is caused: Ranil

ECONOMYNEXT – A Sri Lankan body which has interest in transport and logistics has proposed a 20 step action plan to reduce the island nation’s fuel import bill and save up to 1 billion US dollars that can allocate for other essential imports easing the burden on the general public.

Sri Lanka is going through its worst economic crisis in the history and is facing long
term shortages of essential medicine, fuel and gas with a looming food shortage in the near future.

In 2022 from January to March, Sri Lanka has spent 1.4 billion US dollars in importing fuel to the country, which is 37 percent of the last year’s total fuel imports. The government expects the fuel bull for this year to be in the range of 6-7 billion US dollars.

Issuing a statement Sri Lanka Society of Transport and Logistics (SLSTL) said fuel for transport at current prices costs more than all other consumer imports including food, milk, medicine, household goods, LP gas and others.

In order to curtail the higher import cost of fuel, the state-run Ceylon Petroleum Corporation (CPC) has increased price of fuel three times to record high in the first four months of 2022.

“The government has not presented the country with a plan on how to deal with this crisis, where the reduction of fuel imports is necessary,” the SLSTL said in a statement.

It has proposed a short term action plan to reduce the current import cost to the Minister of Transport, Highways, and Media on June 4, 2022, at a workshop organised by the Ministry.

“The proposed plan would reduce oil imports for transport which cost us 4 billion US dollars a year or approximately two shiploads per week. The target is to reduce this figure by 500 million US dollars to 1 billion, which will depend solely on the government’s wiliness to implement the plan and the leadership they will provide in the implementation process,” the SLSTL said.

In its 20-point action plan, the SLSTL, emphasizes the importance of public transportation to reduce the fuel consumption by the private owned vehicles.

Since mid-February, motorists are forced to wait in long queues for hours due to fuel shortage with the government authorities citing panic buying and fuel hoarding as the reasons for the scarcity.

The SLSTL said, the government should prioritize importing diesel over petrol and improve the
distribution process to enhance the public transport and to adapt smart technology to avoid fuel
queues.

It also suggested that the government should impose a three-month restriction on the use of private cars on specific days of the week by the last digit of the registration number of cars, SUVs, pickups, and vans which consume 51 percent of the fuel used for passenger transport.

It also urged to impose restrictions on cars, vans, and SUVs carrying less than three passengers entering areas that experience regular traffic congestion. (Colombo/June 07/2022)

ECONOMYNEXT – Blaming poor foreign policy on the country’s international “marginalisation”, Sri Lanka Prime Minister Ranil Wickremesinghe on Monday (07) criticised the unilateral cancellation of projects funded by friendly nations like Japan and India.

“Japan is our long time friend; a nation that has helped our country greatly. But they are now unhappy with us due to the unfortunate events of the past. Our country had failed to formally notify Japan of the suspension of certain projects.

“Sometimes the reasons for these suspensions were not even stated. Some projects undertaken by Japan in our country were halted halfway through based on the reports of a single individual,” he said, speaking in parliament on Tuesday (07).

Wickremesinghe was ostensibly referring to Sri Lanka’s termination of a Japan International Cooperation Agency (JICA)-funded light railway transit (LRT) project, which analysts say soured relations between the two countries. The cancellation of a trilateral deal with India and Japan to develop the Eastern Container Terminal (ECT) of the Colombo Port did not help matters.

Wickremesinghe recently met Japanese Ambassador to Sri Lanka Mizukoshi Hideaki, one of the first envoys the newly sworn in PM called on in early May.

“Japan and India had agreed to supply us with two LNG power plants. The Ceylon Electricity Board (CEB) stopped those two projects without any justifiable reason,” Wickremesinghe told parliament.

“Japan had agreed to provide about 3 billion dollars worth of projects to our country by 2019. All of these projects were put on hold for no reason.

“I urge the Parliamentary Committee on Public Finance to conduct an inquiry into the suspension of such valuable projects granted to us by our long-time allies for unstated reasons,” he said.

Despite alienating these friendly nations, the PM said, India has offered to help Sri Lanka in the face of the growing crisis.

“We express our respect and gratitude to them during this difficult time.  We are also working to re-establish old friendships with Japan.

“We call on the International Monetary Fund (IMF) to hold a summit to help unite our lending partners. Holding such a conference under the leadership of India, China and Japan will be a great strength to our country.  China and Japan have different credit approaches. It is our hope that some consensus on lending approaches can be reached through such a conference,” he said.

Commenting on a swap facility from China, Wickremesinghe said one of the conditions that came with the facility was that the funds could only be used if Sri Lanka had  enough foreign reserves for three months.

“We have not had foreign exchange reserves for three months since the loan was taken.  Our former officials took loans to deceive the country.  We will not be debt free under that condition. We have requested the Chinese government to consider removing that condition from the agreement that has been signed with them.

“We urge the Chinese government to look into the matter favourably,” he said. (Colombo/May07/2022)

COLOMBO (News 1st); A report by the Food and Agriculture Organization of the United Nations & the World Food Program has revealed that Sri Lanka will experience a further deterioration of food security over the next few months. “The domestic agricultural production and rising international prices, compounded by the ongoing economic crisis, are expected to Sri Lanka will experience further deterioration of food security – UN FAO Report

ECONOMYNEXT –  Sri Lanka is considering to grant tax relief and other benefits like housing loans for expatriate workers who sends their earnings through the official bank network Minister of Labour and Foreign Employment said.

Money is moving to unofficial channels such as Undiyal at higher premiums because the central bank is printing money creating forex shortages in the official banking system and exchange controls have been placed forcing them to go a free market at higher rates.

Sri Lanka’s official remittances have fell 52 percent in April to 249 million US dollars, compared to a year ago while they have fallen by 57 percent to 1 billion US dollars in the first four months of 2022, compared to the same period last year.

Manusha Nanayakkara, the newly appointed Minister of Labour and Foreign Employment has planned ambitious 500 million US dollar per month to boost foreign currency liquidity in the country.

“If we can increase it back up to 500 million US dollars, with these expatriate workers sending the money legally, we can solve some fundamental problems in the country,” Nanayakkara told a weekly cabinet briefing.

Nanayakkara said, the discussion is being held to give expatriate workers tax reliefs, duty relief, interest free housing loans to encourage them.

“And we will also start giving them discount cards to increase their trust and send money through legal procedures,”Nanayakkara said.

Sri Lanka is grappling with its worst economic crisis in the history. The dollar shortages have led to long queues for fuel and cooking gas. The dollar shortage has also deprived people of adequate medicines, cement, milk powders, and some foods which are imported.

“To solve the economic crisis we have at the moment, while getting the income of exports, one of the main ways to increase the foreign currency without taking loans is by increasing the foreign remittances,” Nanayakkara said.

“Due to various reasons, with these remittances not coming through legal channels. The remittances we had around 600 – 700 million US dollars has gone down to around 230 million US dollars by March, 2022.”

Until this month, a part of the unofficial remmittances were going for open account imports including for imports of oil. However buraucrats prefer money to come through the monopoly of the banking system.

Banking system also has a high transactions costs of about 10 to 15 rupees between buy and selling rates. (Colombo. June 07/2022)

ECONOMYNEXT – Sri Lanka must begin rebuilding its agriculture sector immediately to forestall looming food shortages and to retain the international market for export crops, Prime Minister Ranil Wickremesinghe said.

“We are losing the international market for our export crops.  Action must be taken to prevent this. [Inorganic] fertilizers are needed to boost local agriculture.  It costs 600 million US dollars a year to import fertilizer for paddy, vegetables, fruits, other major crops as well as our tea, rubber, coconut and export crops.

“Since manure has to be applied from time to time from the beginning to the end of a harvest, it is essential that fertilizer is exported without any shortages. We must ensure that no money or effort will be wasted,” Wickremesinghe said in a statement made to parliament on Monday (07).

Sri Lanka’s agriculture sector has taken a catastrophic hit from President Gotabaya Rajapaksa’s ill-conceived overnight shift to organic farming. Compounded by the country’s worsening forex crisis, Sri Lanka is now looking at a possible food shortage around October, as warned by several government officials including Agriculture Minister Mahinda Amaraweera.

“Our harvest has declined in the past several months. We have to face this situation at and we have to work hard from this point onwards to ensure the next harvest is a success. That harvest, however, will be available by the end of February 2023,” said Wickremesinghe.

“In terms of rice, our country’s annual rice requirement is 2.5 million metric tons.  But we have only 1.6 million metric tons of rice in stock.  This is not limited to paddy but applies to many other crops. In a few months we will have to face serious difficulties and shortages in terms of our diets. We need to import food items to meet our daily requirements. It costs about 150 million dollars a month,” he said.

Meanwhile, the cabinet of ministers on Monday (06) approved a proposal to provide 150,000 MT of urea, 45,000 MT of MOP and 36,000 MT of TSP fertilizer for farmers for the next Maha cultivation season through the Ceylon Fertilizer Company and the Colombo Commercial Fertilizer company.

Related:

Sri Lanka state firms to buy 230,000MT fertilizer for next cropping season: Minister

(Colombo/May07/2022)

COLOMBO (News 1st); Sri Lankan Prime Minister Ranil Wickremesinghe said that the beginning of the decline of the country’s economy was when the government lost Rs. 6.6 billion in revenue with the abolition of the tax system implemented in 2019. “We must immediately return to the 2019 tax system. We must begin our resurrection from ‘Economy started to decline when 2019 Tax system was abolished’ – PMs Full Speech

ECONOMYNEXT – Sri Lanka will present an interim budget cutting capital spending and directing money for essential public services and relief for the poorer sections of society, Prime Minister Ranil Wickremesinghe said.

“Some projects will have be delayed or halted,” Wickremesinghe, who is also Finance Minister told parliament.

“We have to have a safety net for the weak.”

He said about 700 million US dollars in spent on transfers including pensions. It will be increased to 850 million US dollars wand if possible about 900 million US dollars.

About 100 billion rupees has been spent on Samurdhi relief but it has to be increased by around 150 billion to around 350 billion rupees, he said.

After Sri Lanka’s soft-peg with the US dollar collapses people are facing high food prices.

“By 2022 we have to stabilize the economy,” Wickremesinghe said. “In 2024 we can give some stimulus for growth. By 2025 we want to have a primary surplus in the budget.”

“All future government’s must keep to the plan.”

Sri Lanka is currently facing the worst currency crisis in the history of the country’s 72-year old intermediate regime central bank after stimulus triggered three currency crises in 7 years.

Each stimulus is followed by an economic shock.

After two years of stimulus, economy is set to contract in 2023.

“The central bank estimates the economy to contract 4 to 5 percnet,” Wickremesinghe said. “The IMF thinks in will be worse around 6.9 percent.

For 2023 about a trillion rupee may have to be printed, he said.

Agricultural loans to farmers who have land below two hectares will be written off he said.

Promises of loans write-off usually triggers a wave of defaults in Sri Lanka endangering banks and discouraging farming loans in the future, critics have said.

State urban housing units where occupants are now on rent will be given to them to own on a concessionary terms.

He said many were built by the father of the current opposition leader Sajith Premadasa. (Colombo/June07/2022)

ECONOMYNEXT – Sri Lanka Cricket (SLC) has decided to donate the entire revenue from ticket sale of the upcoming Australia tour of Sri Lankan games to the welfare of the people suffering from the ongoing economic crisis, a SLC spokesman said.

Eight games between the two countries will be played as day and night games, which are expected to play under flood lights and consume more power than only day light games. Two one-day games will be played in Kandy, Pallekele ground, while other six matches in the shorter version of the game will be played in Colombo.

The SLC’s executive committee has taken the decision to donate the money following a request made by the Sports Minister Roshan Ranasinghe.

“The entire ticket money from the five one-day games, three T20 games, and the two tests will be donated for the people to have their essential items,” the he said.

The first Twenty20 (T20) starts on June 7 at 1900 hours. The tour goes until end July.

SLC has already made nearly 2 million US dollars of donation for two hospitals in Colombo to buy medicines.

Sri Lanka is facing its worst economic crisis in its history with people are facing shortage of essential goods including fuel, cooking gas, milk powder, medicines, and foods.

Many people are forced to wait in queues for hours or days to get their essentials amid President Gotabaya Rajapaksa’s government has exhausted the country’s dollar reserves. Tens of thousands of people have lost their jobs or earning less because of lower demand and closure of businesses. (Colombo/June 06/2022)