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Banks cannot provide US dollars even at Rs.345

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by Sanath Nanayakkare

All licensed commercial banks in the country are still facing a huge crunch in foreign exchange inflow, although inward remittances can be converted to Sri Lanka rupees at a much higher rate since the Central Bank of Sri Lanka floated the Sri Lanka rupee.

This was revealed in a report released by the Lanka IOC.

It says that exporters are not coming forward for conversion of foreign currency, even at the rates higher than official ones.

Lanka IOC, a subsidiary of Indian Oil Corporation that operates retail petrol/diesel stations in Sri Lanka, says that the local currency has depreciated further and while the Central Bank’s TT selling rate is Rs.330 as of now, the licensed commercial banks are not able to provide US dollars even at the rate of Rs.345.

“Since the Central Bank floated the rupee on 7 March 2022, the local currency has been constantly devaluing against the dollar and currently hovering around Rs. 330 per US$, having shot up from the level of Rs. 203. This has made fuel import much costlier,” Lanka IOC notes.

The company says that rupee devaluation by more than 60% during the last one-month since 7th March 2022, compelled them to again increase its retail selling prices of gasoline by Rs 35/ltr and gasoil price by Rs 75/ltr.

“Even though international prices are stable since last one week amid the surge in COVID cases in China and preparation of the International Energy Agency for releases of oil reserves, the local currency depreciation is significantly increasing the cost of fuel imports”, Lanka IOC says.

LIOC Managing Director Manoj Gupta says, “Unstable currency rates and steep rupee depreciation has directly impacted the landed cost of gasoil and gasoline making them expensive by an equivalent amount per litre. Our current losses are exorbitantly high considering at current exchange rate and international prices leaving no other option but to increase the prices of gasoil and gasoline. In view of uncertainty in the global market coupled with Sri Lanka country risk, most of the suppliers are not participating in the tenders or quoting high premium for supply of gasoil and gasoline. Despite this price increase, there would still be heavy losses being suffered by the company. Lanka IOC has always remained committed towards the economic and social upliftment of Sri Lanka. We are very much disturbed and find it painful to pass on the impact of currency devaluation to our customers, but absolutely left with no option to ensure our sustenance and maintain an uninterrupted fuel supply.”

“We will review the selling prices on a periodic basis and would be more than happy to give some relief to our customers by reducing the prices as and when the situation improves and the currency appreciates and stabilises,” Gupta says.



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More than 6 bn worth of substandard drugs dispensed to patients

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The Committee of Public Accounts (COPA) has disclosed that Rs. 6,259 million worth of drugs faced a quality failure from 2011 to 2020 due to improper storage. The COPA report has further revealed that 99% of such drugs had already been dispensed to patients when the condition was brought to attention. In that situation, it was not possible to recover the cost of substandard drugs from the suppliers, the Parliament said.

The Committee on Public Accounts has directed the Ministry of Health, Nutrition and Indigenous Medicine to expedite the process of facilitating better storage of drugs to ensure their safety.

It has also been observed that the temperature in the warehouses, owned by the Medical Supplies Division, is maintained properly and that the medical supplies are stored in the corridors of the central drug warehouses and hospitals.

Furthermore, the Secretary to the Ministry has pointed out that if there is a system to detect the failure of drugs as soon as they are received, the loss can be recovered from the suppliers and if the quality testing of 60 drugs can be done by the State Pharmaceutical Corporation, this situation can be avoided to some extent.

These concerns and observations were contained in the first report of the Second Session of the Ninth Parliament on COPA, which was tabled in Parliament recently (20) by Prof. Tissa Vitarana, the Chairman of the Committee on Public Accounts.

The report contains information about the investigations of seven state institutions summoned before the Committee on Public Accounts and one Special Audit Report during the period from 04.08.2021 to 19.11.2021.

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CBSL Chief: Economy could be stabilised in year or so if …

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By Hiran H. Senewiratne

The prevailing Balance of Payments (BoP) crisis could lead to a major social crisis as the available foreign reserves were only sufficient for a few weeks’ imports, Governor of the Central Bank Dr. Nandalal Weerasinghe warned on Monday.

“The economy can be stabilised in the next 12 month if the IMF negotiations and debt restructuring are finalised within the next seven to eight months. Until then we have to support the poor people,” Dr. Weerasinghe said, addressing a seminar on the “State of the Economy and Talks with the IMF”. It was organised by the Press Club, together with the Press Institute, at Colombo Hilton.

The CB Governor said the current BoP crisis would worsen and, therefore the economic pain could only be minimised if essential policies and measures were implemented in an expeditious manner. But “IMF technical level virtual meetings are likely to conclude this week, and thereafter further discussion will take place to finalise everything,” Dr. Weerasinghe said.

Dr. Weerasinghe suggested that the monetary and fiscal authorities tighten the monetary policy by higher margins and fiscal policy by restoring tax rates to pre-2020 levels.

The Governor said, “We have three categories of creditors namely International Sovereign Bonds, which raise short term funds from global markets, which account for 35 percent of the government debt, while other two creditors are Paris Club and non-Paris Club (India and China).

Dr. Weerasinghe said that the country’s debt needed to be brought to a sustainable level. “For that purpose a debt sustainability analysis needs to be drafted with a fiscal policy for the IMF bailout”, he said.

Speaking about the country’s worsening economic fundamentals, Dr. Weerasinghe said: “The nation is currently experiencing a historically low economic growth and falling trend of per capita GDP since 2017 with rising levels of poverty. It is also running the highest fiscal deficits since 1988 with the lowest ever government revenue as a percent of GDP.

“Amid those developments Sri Lanka’ poverty level will increase, unemployment level soar and local industries will have to shut down due to restriction of importation of raw material. Therefore, we have to seek humanitarian assistance from the World Bank, Asian Development Bank and other bilateral and multilateral agencies”, the Governor said.

“We are seeking short-term bridging facilities from official creditors until an agreement is reached with creditors on restructuring,” he said.

In his presentation, Dr. Weerasinghe analysed the links between banking and the currency crises. He pointed out that the problems in the banking sector typically precede a currency crisis with the currency crisis deepening the banking crisis, thus activating a vicious spiral.

Sri Lanka also had the highest-ever government debt which was unsustainable at the moment. Debt dynamics might be worsening in the next few years unless the debt was restructured, he said.

Sri Lanka also recorded the highest rate of inflation in 12 years which was increasing sharply and was experiencing the highest-ever levels of money printing by the CBSL, he added

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Dragonfly thought to be extinct found again

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By Ifham Nizam

Scientists have rediscovered Sri Lankan Clubtail (Anisogomphus ceylonicus), one of the rarest species of dragonflies in the country. The team that made the discovery comprised Amila Sumanapala of the Department of Zoology and Environment Sciences, University of Colombo, T. Ranasinghe of the Butterfly Conservation Society of Sri Lanka, and D. Sumanapala of the Faculty of Graduate Studies, University of Sri Jayewardenepura. According to lead scientist Amila Sumanapala Sri Lankan Clubtail is one of the rarest species of dragonflies.

First collected in 1859, it was only known from the original collection and another collection record made a century after in 1962. This species had not been found anywhere in Sri Lanka for close to 60 years until the team encountered a larva during a survey conducted in 2021.

Anisogomphus ceylonicus is one of the few Odonates of Sri Lanka with no photographic records of a living specimen available hitherto.

The present observation provides the first photographs of a live A. ceylonicus larva and the most recent documentation of the species. These observations, coupled with previous work (Lieftinck 1971, Bedjanič & van der Poorten 2013), provide an improved understanding of the species, which might enable further targeted surveys to be made

It was first discovered from Ramboda over 140 years ago based on a female specimen, which was originally described as Gomphus ceylonicus and later assigned to the genus Heliogomphus by F.C. Fraser (Bedjanič & van der Poorten 2013). Almost a century later, Lieftinck (1971) collected an immature male and its exuvia of a clubtail dragonfly from Rambukpath Oya, 10 miles northwest of Hatton in 1962 and described it as Anisogomphus solitaris. However, Bedjanič & van der Poorten (2013) recognized that H. ceylonicus is conspecific with A. solitaris, and thus reassigned it to the genus Anisogomphus. Since the discovery of the species, only these two records have ever been documented (Bedjanič et al. 2014), despite odonatological surveys and numerous biodiversity explorations conducted countrywide.

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