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CB Governor sets the record straight on speculative theories of US dollar shortage



Central Bank Governor Prof. W.D Lakshman

Addressing speculations and concerns in various quarters including by the media about Sri Lanka’s international reserves, foreign currency liquidity in the domestic market and drains on such resources, Central Bank Governor Prof. W.D Lakshman yesterday provided a comprehensive account of the true situation and explained the measures taken by the authorities to ensure judicious management of foreign reserves, inflows, debt repayment, imports and the overall stability in the foreign exchange market.

Reproduced below is the full text
of the press statement issued
by the Governor.

Over the past few days, concerns have been raised by various individuals and media about an assumed shortage of foreign currency liquidity in the domestic market, preventing banks from facilitating imports. Reports published or circulated by some media channels indicate seriously negative viewpoints which can be very harmful to the country. I wish to make the following statement to explain the true position about this subject.

Due to heavy foreign currency borrowings in the past several years, there was adverse speculation, even by the time of the formation of the present Government in 2019/2020, about Sri Lanka’s ability to service its debt service obligations falling due in the near term. In spite of such speculation, and amidst added pressures owing to the COVID-19 pandemic on particularly our tourism cash flows, the Government of Sri Lanka reiterated its stance of ensuring that all its external debt service obligations would be met on time, thus maintaining Sri Lanka’s unblemished record of servicing all its maturing obligations.

To enable the country to perform this formidable task amidst reduced foreign currency inflows, Sri Lanka introduced measures to rationalise selected non-essential imports. Some of these restrictions have been gradually removed, although the Central Bank is of the view that there is further space to curtail non-essential and non-urgent imports, given the continued challenges emanating from multiple waves of COVID-19.

As a result of the measures taken by the Government and the Central Bank in the past 1 ½ years, the Government has been able to substantially reduce its foreign debt to GDP ratio to about 40 per cent and the face value of foreign debt from USD 34.1 billion at end 2019 to USD 32.2 billion by end March 2021, while successfully meeting its maturing debt service obligations. I believe that it is in Sri Lanka’s best interest to address the longstanding merchandise trade gap of USD 10 billion as it places Sri Lanka in a vulnerable position, through careful policy action. While doing this, we would continue to meet our debt service obligations and avoid further damage to the country’s reputation and to investor confidence on the Sri Lankan economy and the financial system.

We have also observed that some segments of the Sri Lankan community motivated by political reasons have continued to fuel adverse speculation about the future path of the exchange rate and the ability of the Government to service its obligations. Such self-serving speculations are unwarranted and are harmful to the general public as well as to the business community themselves. These speculative comments have naturally created some unnecessary short-term imbalance in the foreign exchange market between inflows and outflows. However, it must be noted that the Government and the Central Bank has ensured that trade is not unduly disrupted, and intermediate and capital goods imports are given priority in the process of imports. Total import values have remained considerably high at a monthly average of USD 1.7 billion during March, April and May 2021. High import values in these months show that importers, particularly of essential goods, have not been overly inconvenienced as the published media reports claim.

What the Central Bank is doing now with the participation of all commercial banks, is judicious management of imports and foreign reserves. As cash flows are poised to improve in the next few months, the Central Bank will be evaluating the national balance sheet and external macroeconomic conditions in deciding the future policy response.

As an interim solution in managing the mismatch in cash flows, the Central Bank has been working closely with the banking sector to ensure that stability in the foreign exchange market is maintained. Regular meetings with key officials of the banking community are held by the Central Bank, and the banking community has mutually agreed to manage their outflows within inflows, while giving priority to essential and urgent imports, and discouraging orders of speculative nature. It is such prudent action by banks that is being blown out of proportion by parties with vested interests.

Actions taken by the banking community have been supported by the Central Bank of Sri Lanka through measures taken in relation to mandatory conversions of export proceeds and regulatory measures to dampen speculative activity. The Central Bank has enabled commercial banks and corporates to borrow foreign funds so that the banking system could remain non-reliant on the Official Reserves to finance imports, thus supporting the national effort to continue the process of debt servicing without disturbance.

At present, our focus is managing Sri Lanka’s debt service obligations. In this regard our Gross Official Reserves remain at USD 4 billion, without considering the standby SWAP agreement of approximately USD 1.5 billion with the People’s Bank of China. While there may be short term fluctuations in this level of foreign reserves in the period ahead due to debt servicing of the Government, adequate financing strategies have been lined up to maintain reserves at sufficient levels, through inflows to the country. These include non-debt inflows expected within a short period of time to the Government particularly through its new investment arm, and other inflows to the Government from multilateral and bilateral sources. Inflows expected to the Central Bank include the SWAP facility of USD 250 million from the Bangladesh Bank expected in July 2021, the SAARCFinance SWAP facility from the Reserve Bank of India of USD 400 million expected in August 2021, and the special SWAP facility of USD 1,000 million being negotiated with the Indian counterpart. These are in addition to the receipt of around US dollars 800 million under the IMF SDR allocation expected in August 2021, and the Central Bank purchases of export proceeds and worker remittances from the market, which would help the Central Bank to build Official Reserves through non-debt inflows of around USD 700 million annually in the period ahead. Measures are also being put in place to entice the resident holders of maturing Sri Lanka International Sovereign Bonds (ISB) to repatriate maturity proceeds. It may be noted that 30 per cent of upcoming ISB maturities are held by residents. Moreover, the banking sector and the corporate sector have also seen increased amounts of financial flows at concessionary rates to support real sector activity. Private sector entities are expected to raise funds from overseas counterparts making use of the recent easing of related foreign exchange regulations. Some of these inflows in the period ahead are expected to add to the Official Reserve as well. The recent enactment of the legislation on the Colombo Port City Commission will also enable increased non-debt foreign exchange inflows to the economy.

Overall, I wish to assure the media, the general public, the business community and the investor community that the conditions of foreign currency liquidity observed in the domestic market at present are temporary and are driven by excessive speculative activity. We request these operators in the market to remain calm and not fuel undue speculation, which is not in the national interest, as the careful management of the situation without undue disruption, will result in a beneficial outcome to the country as a whole.




ADB partners academia to leverage Environmental Finance for Sri Lanka



‘Bio-diversity prospecting is a very risky area, and therefore, it has to be done right’

‘Many good consultations needed before Sri Lanka can go for climate bonds’

Forum aims at combining profitability with ecosystem conservation and regeneration

by Sanath Nanayakkare

Bringing together a collection of global good practices in investing in natural capital, the Asian Development Bank (ADB) recently held its Serendipity Knowledge Program (SKOP) at the University of Peradeniya on a hybrid platform.

Several high-profile officials and academics from around the world and panelists and participants at the physical forum with specialized knowledge in Bio-Diversity and the Natural Capital Asset Class shared their insights on the topic in a no-holds-barred full-day session on May 31, at the picturesque garden university.

The forum held a lot of relevance to the local audience as Sri Lanka is facing a significant challenge in managing its natural assets not only because of the growing demand for natural resources and the environment’s ability to restore these resources, but also the country’s limited public funds to invest in its natural capital for a sustainable future.

Andreas Thermann, Environmental Finance and Partnerships Specialist at ADB addressing the forum said,” We decided to contribute our expertise and experience by designing natural capital investment strategies for institutional investors, aiming at combining profitability and ecosystem conservation and regeneration. There is increasing interest for blue bonds from investors and potential issuers. However, the lack of universal standards creates risks and slows blue economy growth. In this context, a Global Blue Bond Guidance is to be published in June 2023. This new collaboration is building on: ICMA Green, Social, and Sustainability-Linked Bond Principles, UNEP FI Sustainable Blue Economy Finance Principles and Guidance, ADB Green and Blue Bond Framework, UN Global Compact Sustainable Ocean Principles/Practical Guidance, Blue Bond Reference Papers and International Finance Corporation (IFC) Guidelines for Blue Finance.”

Andreas made a presentation of ADB Action Plan for Healthy Oceans and Sustainable Blue Economy covering pollution control, sustainable coastal and marine development, ecosystem and natural resource management and ocean and climate finance.

He explained ADB’s frameworks for supporting governments to issue blue bonds and supporting the corporate sector to do same, providing them with training, outreach events, technical services and financial services.

Sanath Ranawana, Water Resources Specialist, South Asia Department ADB said,” There are opportunities for investment in Sri Lanka’s environmental resources. These investments may come from the public sector as well as the private sector. In order for these investments to really take place, there is a need for more in-depth assessments. There needs to be monitoring of our basic benchmarks; what Natural Capital do we have at the moment, what is their current status etc. Along with advocacy we need additional monitoring and assessments. As we are all aware, it is very relevant to this topic how the private sector can invest in Natural Capital. There is a general belief that bio-diversity prospecting for commercial purpose is a very risky area, and therefore, it has to be done right. There is a responsibility for the government side in this respect because together we have to undertake bio-prospecting in an organized, controlled and a regulated way. There is a lack of perception about the role the private sector can play in bio-prospecting. So, it is important to make sure that bio-prospecting is done right- that means that it is sustainable, ethical, and results in benefits for the country and the local people. It emerged during our discussion that in terms of environmental financing, there would have to be certain legal provisions that allow the government to make eco-system services payable or not. Such valid concerns may present policy barriers that require policy action. So, engaging relevant stakeholders, in-depth assessments, establishing bond frameworks, arranging independent external reviews etc., will lead to the final desirable objective of climate investment action.”

In addition to ADB, the following global institutes pledged support to provide global guidance to Sri Lanka’s journey in assessing and monitoring its natural capital with the objective of raising long-term environmental financing: The Research Centre for Eco- Environmental Sciences – Chinese Academy of Sciences, People’s Republic of China, Stanford University USA, Sovereign Debt Department Office of the Ministry of Economy and Finance Uruguay and the Government of Belize.

ADB established this new knowledge program in 2021 in line with its vision as a knowledge solutions bank.

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Unlocking New Possibilities: The impact of deep fake technology on brand storytelling



Kavi Rajapaksha

By Kavi Rajapaksha

By now, marketers know that they need to work hand in hand with artificial intelligence (AI) to be successful in this era driven by technological advancements. According to the most recent data, more than 650 million unique branded content pieces are posted every day but 87% of them fail in achieving any significant engagement. So brands continually search for innovative ways to engage audiences and captivate their attention.

One such technological marvel that has emerged in recent years is deep fake technology. This cutting-edge AI-driven technique, with its ability to manipulate and recreate images and videos, is revolutionizing brand storytelling. As we explore the potential of deep fake technology, we uncover a new dimension of creativity and narrative possibilities for brands to produce more emotionally captivating and relevant content.

Breaking the boundaries of imagination

Deep fake technology has the power to blur the lines between fiction and reality, allowing brands to push the boundaries of imagination. By seamlessly blending the real and the surreal, brands can transport audiences into immersive storytelling experiences that captivate and leave a lasting impact. Whether it’s bringing historical figures back to life, resurrecting beloved characters, or merging multiple personalities, deep fake technology unlocks a world of limitless possibilities.

With the introduction of ChatGPT, Canva and various other AI platforms that has transformed how the creative industry does things, many have started to question if AI can indeed replace marketers and creatives. AI can automate basic and repetitive tasks and work efficiently to find the best, published information available. However, whether or not Ai can be programmed to emulate human emotions and think like a human is an answer only the future holds. But, the one thing that holds true is that all brands must adapt right now to stay ahead of the curve.

Also, deep fake technology disrupts conventional notions of authenticity and challenges the way we perceive truth in storytelling. With the power to recreate personalities, brands are now faced with the responsibility of navigating the ethical landscape surrounding this technology. Transparency and clear communication are crucial to ensure audiences understand the creative intent and the boundaries between reality and fiction. As brands venture into this realm, it becomes essential to strike a delicate balance between the captivating allure of deep fake technology and the need for honesty and integrity in brand storytelling.

Empowering creativity and collaboration

The most common jokes in the industry are revolved around how small the client budgets are versus the very inspiring briefs that are received. Often, marketers and creative teams come up with great ideas that require a lot in terms of the budgets which prevents them from executing them. In a way, its fair to say that the strength of the ideas is parallel and even better than some of those in the world right now, but not many organizations can afford to spend the required amount to make those a reality. But now with AI, many of those boundaries can be easily crossed and a lot of video and static content can be created within seconds.

Now is the time to leave hygiene content to AI and focus on really breaking the clutter with unimaginable things that collaborations between human intelligence and creativity can achieve in partnership with AI.

In conclusion

Deep fake technology is transforming brand storytelling by unlocking new realms of creativity and narrative possibilities. It empowers brands to establish emotional connections, challenge the status quo, and collaborate with technology experts to create captivating campaigns. However, as brands explore this innovative technology, they must prioritize transparency, ethics, and authenticity to maintain the trust of their audiences. Ai is unlocking the possibility of pursuing larger than life campaigns that previously was not a possibility due to budgetary restrictions and now more than ever, marketers need to really adapt and work hand in hand with Ai and all forms of technology to stay relevant.

(The writer is the Senior Vice President/Chief Marketing Officer at Softlogic Life Insurance PLC)

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IronOne Technologies appoints former Sri Lankan ambassador Manori Unambuwe as vice president to drive global expansion



Left to right: Manori Unambuwe - Vice President of Strategy and International Markets at IronOne Technologies, Lakmini Wijesundera - Founder and Executive Director at IronOne Technologies and BoardPAC, Buddhika Abeygooneratne - Head of Operations at BoardPAC.

IronOne Technologies is pleased to announce the appointment of Manori as Vice President of Strategy and International Markets. In this role, Manori will lead IronOne’s global strategy, overseeing the company’s expansion into new markets and driving growth in existing ones. She will also be responsible for IronOne’s business development efforts, identifying new opportunities to bring innovative IT solutions to clients worldwide.

Manori brings to IronOne over 20 years of experience in Information Technology, having held senior leadership positions in three global technology giants. Prior to her appointment as Ambassador, she served as the Sri Lankan Ambassador Extraordinary and Plenipotentiary to the Federal Republic of Germany with concurrent accreditation to Switzerland, Croatia, North Macedonia, and Montenegro. She has also served on the Boards of the Information and Communication Technology Agency of Sri Lanka (ICTA) and the Sri Lanka Computer Emergency Readiness Team (SLCERT).

“We are delighted to welcome Manori to the IronOne team,” said Lakmini Wijesundera, Co-founder and Executive Director of IronOne Technologies. “Her extensive experience in information technology and her track record of success in business development and market expansion will be invaluable as we continue to grow and expand our global reach.”

The appointment plays a crucial role in IronOne’s strategic vision to position the company as the foremost IT solution provider in the field of artificial intelligence across Asia and expand its global business presence.

Manori said, “I am excited to join IronOne Technologies and to work with the talented team to drive the company’s growth and success. I look forward to contributing to the company’s vision of bringing innovative IT solutions to clients worldwide.”

IronOne Technologies is an IT solutions provider to many clients worldwide, including some listed in the Fortune 500. Its AI labs division, consisting of a highly skilled team of AI engineers with experience in Data Science and Machine Learning, can deliver state-of-the-art solutions to various industries. Atrad, a multi-disciplinary financial trading platform with over 80% of the market share in Sri Lanka, and the Mobile web solutions, with unique apps provided to renowned global brands, are the other business solutions the company provides.

Manori currently serves as an Ambassador for AsiaBerlin Forum, an initiative by the Berlin Senate to support Asian tech startups to access the German market. Her experience and knowledge will be instrumental in guiding IronOne Technologies’ strategic decisions and expanding its global footprint.

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