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Decision to float rupee was not unilateral – Cabraal
The decision to allow the Sri Lankan rupee to be flexible from 07 March, 2022, onwards, had been taken by the Monetary Board of the Central Bank, based on a Monetary Board Paper of the same date submitted by all three Deputy Governors, Director – Economic Research Department and Director – International Operations Department, said then Governor Ajith Nivard Cabraal, issuing a press statement yesterday.The three Deputy Governors are Mahinda Siriwardana, Dammika Nanayakkara and Y. Fernando.
Cabraal said that the decision to allow the rupee to be flexible is sometimes described by certain persons as being a “unilateral” decision he took. Therefore, he issued this statement to provide the factual position so as to set the record straight, Cabraal said.Given below is the statement in full: “The decision to allow flexibility in the exchange rate was taken by the Monetary Board of the Central Bank of Sri Lanka, based on a Monetary Board Paper, dated 7th March, 2022, submitted by all three Deputy Governors (Mr Mahinda Siriwardene, Mr Dammika Nanayakkara & Mrs Yvette Fernando), Director – Economic Research Department and Director – International Operations Department. The Board Paper stressed the need for changing the exchange rate policy, immediately, in order that the exchange rate acts as a “shock absorber” in the face of adverse developments in the global front on Sri Lanka’s already fragile Balance of Payments, including the increase of the crude oil price to nearly USD 140 per barrel and the worsening Russia-Ukraine war.
“Based on that Board Paper and the discussion at the meeting, the Monetary Board decided to “allow the market to have a greater flexibility in the exchange rate with immediate effect and communicate that the Central Bank is of the view that forex transactions would take place at levels which are not more than Rs. 230 per US dollar”. From the above it will be clear that, while the Monetary Board had expressed its “view” as to the level at which forex transactions would take place as a market guidance, a clear decision had been taken to allow for the flexibility of the LKR in the forex market. On the same day, a statement was issued to the media in line with the above decision.
Refer: https://www.cbsl.gov.lk/sites/default/files/cbslweb_documents/press/pr/press_20220307_policy_package_
to_support_greater_macroeconomic_stability_e.pdf
“Further, within about a week of floating the LKR, the President made a formal announcement that the government had initiated discussions with the International Monetary Fund (IMF) for a programme.
“Subsequently, Governor Cabraal resigned on 4th April 2022, on which day, the LKR was trading at Rs. 289.73/299.99 per USD in accordance with the new “flexible” exchange rate policy as announced by the Monetary Board. After Governor Cabraal’s exit, the Monetary Board, chaired by the new Governor Dr. Weerasinghe, continued with the “flexible” exchange rate policy, whist the Government and CBSL also took a series of far reaching decisions which included the decisions to: sharply increase policy interest rates by 700 bps from 8th April 2022 onwards, and to discontinue repayments of forex loans and interest from 12th April 2022 onwards. In the meantime, the LKR continued to depreciate to a range of Rs. 364.23/377.50 against the USD by 12th May 2022, at which point, the Monetary Board had apparently once again decided to “fix” the exchange rate at a new range between Rs.355.00/Rs.365.00 per USD. Such move to “fix” the exchange rate seems quite similar to the policy adopted by the Monetary Board chaired by Governor Professor W D Lakshman which “fixed” the LKR exchange rate at a range of Rs.199.00/203.00 per USD from 6th September 2021 onwards.
“It must of course be understood that there will always be conflicting opinions among stakeholders as to the value, timing and methodology to be followed in “fixing”, or “floating” or “pegging” a country’s currency. It is also quite possible that after decisions are taken to “float” or “fix” or “peg” the currency, others could, claim that the decision was right or wrong or implemented differently. However, it must be appreciated that the decision-making authority has to take its decision based on the prevailing circumstances, expert advice, practical ground conditions, judgement of future expectations and outcomes, etc. when viewed holistically. That is obviously why the Monetary Law Act provides the authority to the Monetary Board to change financial and monetary sector policies (including the exchange rate policy, interest rates, statutory reserve ratios, etc) when it deems appropriate to do so, from time to time.
It must also be appreciated that the implementation of policy measures is carried out by the professional and technical staff, of the Central Bank and they would naturally ensure that the policy measures being implemented are based on legal and binding decisions of the Monetary Board, which is the decision making authority, and not based on “unilateral” decisions of a single person.”
News
The guidance of Religious Leaders is essential to strengthen coexistence among communities. — Prime Minister
Prime Minister Dr. Harini Amarasuriya stated that the guidance or religious leaders is essential to further strengthen harmony and solidarity among communities in multicultural areas such as Anamaduwa, where Sinhala, Tamil, and Muslim communities live together.
The Prime Minister made these remarks while addressing the official ceremony of presenting the Sannas Patra to confer the title of Chief Sanghanayaka of the Rajavanni and Kumaravanni two provinces upon Venerable Dharmakeerthi Sri Pangnananda Nayaka Thero of Anamaduwa. The ceremony was held on Wednesday (13) at Sudampaya, Anamaduwa.
The event was held under the patronage of the Anunayaka Thero of the Malwathu Chapter, Most Venerable Niyangoda Vijithasiri Thero. During the ceremony, Prime Minister Dr. Harini Amarasuriya formally presented the official declaration appointing Venerable Dharmakeerthi Sri Pangnananda Nayaka Thero as the Chief Sanghanayaka of the Rajavanni and Kumaravanni provinces. The ceremonial Vijinipatha was presented by Opposition Leader Sajith Premadasa.
Addressing the gathering, the Prime Minister stated:
“Venerable Dharmakeerthi Sri Pangnananda Nayaka Thero of Anamaduwa is a distinguished member of the Maha Sangha who has rendered invaluable service to both the Buddha Sasana and the education sector through the country nearly 50 years of monastic life and 35 years of service as an educator.
His service is not confined merely to religious observances. He has sheltered the children and people of the area in times of both hardship and happiness. In particular, it is important to remember the humanitarian leadership he demonstrated in providing relief to the people of the Puttalam District affected by cyclone Ditwah, which became a source of strength for the entire region.
His dedication towards restoring and preserving historic religious sites, including the Paramakanda Rajamaha Viharaya, for future generations is commendable.
As the government strives to lead the country towards ’a new era of renaissance’ built upon compassion and solidarity, the guidance and blessings of religious leaders such as him are of immense value to the government”.
The occasion was graced by the presence of members of the Maha Sangha representing the three Nikayas, clergy of other religions, and attended by the Governor of the North Western Province, Minister of Public Administration, Provincial Councils and Local Government Chandana Abayarathna, Diyawadana Nilame Nilanga Dela Bandara, Members of Parliament, government officials, and a large number of devotees.
[Prime Minister’s Media Division]
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Special Coordination Committee meeting for Badulla District chaired by the President
A Special Coordination Committee meeting for the Badulla District was held on Wednesday (13) afternoon at the Badulla District Secretariat under the patronage of President Anura Kumara Dissanayake to review the progress of measures taken to restore normalcy to the lives of people affected by the cyclone “Ditwah” and to develop infrastructure in the district.
As a result of the disaster situation, 90,667 individuals belonging to 26,517 families in the Badulla District were affected. A total of 77 estate houses and 507 rural houses suffered complete damage. In addition, 1,376 estate houses and 1,474 rural houses have been identified as high-risk dwellings. Accordingly, the total number of families that need to be resettled in the Badulla District is 3,434. During the meeting, the President inquired separately at divisional secretariat level about the resettlement process and the issues that had arisen.
Special attention was also given to the speedy release of state lands currently occupied by private companies, which have been proposed for resettlement purposes. The President instructed officials to commence housing construction work immediately after reaching agreement among the relevant institutions regarding the release of these lands.
The President further emphasized the need to expedite the resettlement process and stated that authorities should move beyond reports and plans and ensure that people who lost their homes gain confidence and hope in owning a new house.
The President also instructed that people who are hesitant about relocating to different lands should be given time until June 15 to make a decision.
The President separately reviewed the progress of compensation payments to affected people in the Badulla District, including compensation for loss of livelihoods, compensation for small and medium-scale business establishments, housing rental assistance and compensation for loss of life.
Attention was also drawn to the process of removing sand and rocks deposited on paddy fields and agricultural lands due to the disaster. It was decided to provide an allowance of Rs. 25,000 per acre for this purpose and to implement the programme with the support of farmer organizations.
Special focus was also given to the development of roads in the Badulla District damaged by the disaster. The President instructed that work on all 21 affected roads under the Road Development Authority be completed within this year.
The President also inquired about the programme being carried out for provincial road development and the required allocations and instructed officials to prepare and submit estimates for the necessary funding for all those roads.
The President further instructed officials not to consider financial constraints as an obstacle in restoring normal life for those affected by the disaster. President Dissanayake stated that the district should recover from the destruction caused by the cyclone within this year and be prepared to restart the Badulla District development programme from next year onward.
Also attending the meeting were Badulla District Coordination Committee Chairman and Minister of Plantation and Community Infrastructure, Samantha Vidyarathna; Co-Chairman and Uva Province Governor, Attorney-at-Law Kapila Jayasekara; Deputy Minister of Tourism, Ruwan Ranasinghe; Deputy Minister of Youth Affairs, Dinidu Saman Hennayake; Members of Parliament Kitnan Selvaraj and Ravindra Bandara; the Mayors of Badulla and Bandarawela Municipal Councils; Chairpersons of Local Councils; public representatives; the Chief Secretary of the Uva Province; the District Secretary; government officials of the Badulla District; Heads of relevant Departments; and representatives of the security forces.
(PMD)
News
SJB flays PUCSL for shifting coal scandal losses to electricity consumers
Alleging that the Public Utilities Commission of Sri Lanka (PUCSL) has shifted the massive losses, caused by the coal scam, to the hapless public, Opposition and SJB Leader, Sajith Premadasa, has questioned the conduct of the regulator, noting that it is mandated to protect the interests of both the service provider and the consumers.
Premadasa alleged that the PUCSL ignored the representations made by the SJB on behalf of local industries.
Premadasa said that the PUCSL had authorised the latest 18% increase, in response to the request made by the recently established National System Operator (Pvt) Ltd (NSO), on behalf of the NPP government.
The PUCSL was established in terms of the Public Utilities Commission of Sri Lanka Act, No. 35 of 2002. Although the PUCSL was supposed to function as a multi-sector regulator for electricity, water services and petroleum industries, successive governments refrained from bringing water services and petroleum industries under its purview.
The Opposition leader alleged that the PUCSL did the bidding of the government.
Since January this year, PUCSL has increased electricity tariffs on three occasions. The latest came into operation on 11 May.
The PUCSL consists of Prof. K. P. L. Chandralal (Chairman), Engineer Piyal Henanayake (Deputy Chairman), Dr. M.C.S. Fernando, and Lilantha Samaranayake, PhD.
Premadasa said that instead of taking tangible measures to recover the unbearable losses caused by the coal scam, the government burdened the entire country through the PUCSL.
“Don’t forget that the government is shielding its henchmen responsible for the coal scam at the expense of the country,” MP Premadasa said, pointing out that there couldn’t have been any dispute over their culpability, after the National Audit Office (NAO) found fault with the Energy Ministry for granting the tender for the supply of coal for the 2025/2026 season to a company not qualified even to participate in the tender process.
The SJB leader declared that the resignation of Energy Minister, Kumara Jayakody, and its Secretary, Prof. Udayanga Hemapala, in the immediate aftermath of Parliament defeating a no-faith motion against the Minister was meant to protect the ruling party.
The PUCSL has stated that the NSO received Rs 15 bn from the government to grant relief to 95% of the consumers. “How could the PUCSL justify unbearable electricity tariff increases for the remaining 5% of the consumers, knowing very well that it will destabilise key sectors in the economy?” a power sector expert said.
By Shamindra Ferdinando
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