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Growing concerns about rapidly increasing government securities held by Central Bank

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by Sanath Nanayakkare

The Central Bank was again forced to pump massive amounts of liquidity into the government, as the state coffers were running dry as the authorities reimposed travel restrictions and state tax revenue took another beating, analysts say.

According data, the Central Bank holdings of government securities or the printed money stock had surged by Rs.34.51 billion since travel restrictions came into effect on May 21 through June 18, 2021, bringing the total outstanding printed money stock to Rs.896.24 billion, they say.

“Now there is serious concern about growing holdings of government securities by the Central Bank, which is also referred to as printed money in the system by certain quarters as excessive liquidity has the effects of destabilising economy by stoking inflation, balance of payment crises and asset bubbles. However, the proponents argue that the economy, which is significantly battered by the virus, can and should be supported through easy money, until it reaches its equilibrium as the economy still remains subdued. And the Central Bank has repeatedly said it was willing to take its foot off the gas if it saw significant excesses as a result of the current monetary policy.”

“As the government will continue to have to rely on the Central Bank liquidity amid depleted tax revenues, it could keep the domestic interest rates low to support the government financing as well as to support lending to the private sector.”

“On the other hand, the government, which has limited options to raise foreign currency funding to bridge its budget gap, could also resort to the banking sector for borrowings, potentially leaving less money for the private sector – a scenario known as ‘crowding out effect’, albeit the possibility remains less of that happening, they said.

Sri Lanka is bracing for back-to-back years of blow out budget deficits in 2021, potentially reaching double-digit levels as a percentage of its gross domestic product (GDP) as it crimped its revenues through lockdowns while confronting with unexpectedly high expenditure on virus containment measures. 

The fiscal deficit can also look higher than it actually appears when the output gets compressed as authorities have lost nearly a trillion rupees in GDP since April 23, 2021. they say.

 

 



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‘Adani Group has withdrawn from controversial wind power project’

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Gautam Adani

By Ifham Nizam

The Adani Group has officially withdrawn from the controversial wind power project in Mannar, citing unspecified reasons, Friends of Earth chairman Hemantha Withanage said.

It is believed that strong legal challenges, including a case filed by the Centre for Environmental Justice (CEJ) on behalf of local communities, have played a crucial role in the project’s cancellation. These cases have raised concerns over environmental and social impacts, the absence of a competitive bidding process, and the project’s high unit cost.

The decision comes in the wake of mounting public opposition and a recent resolution by the District Development Committee (DDC) of Mannar, which declared that no further destructive mining or wind power projects would be supported on Mannar Island. Local communities have been protesting against the environmental damage caused by existing development projects, including wind farm construction and road expansion, which have exacerbated flooding in the region.

For years, the Centre for Environmental Justice, in collaboration with the Mannar Citizen’s Committee, has been providing legal and scientific support to address these issues. Environmental activists argue that the government’s approval of such projects without proper scrutiny could lead to long-term ecological and social consequences.

With the Adani Group stepping away, the future of large-scale wind power projects in Mannar remains uncertain, as local resistance to potentially harmful developments continues to grow.

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Sharmini Pereira of the MMCA Sri Lanka speaks at the DBF-KMB lecture series

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Sharmini Pereira, Chief Curator at the Museum of Modern and Contemporary Art Sri Lanka (MMCA Sri Lanka), was a panellist at the ‘New Dialogues: Contemporary Art from South Asia’ lecture series, which took place in Bangladesh. The series was organised as part of the inaugural Durjoy Bangladesh Foundation/Kochi-Muziris Biennale Award (DBF-KMB Award), a new multi-year exhibition and lecture programme that brings together the Hayward Gallery, the Durjoy Bangladesh Foundation, and the Kochi Biennale Foundation.

The lecture series featured several eminent arts and culture professionals from South Asia such as artists Bani Abidi, Jeebesh Bagchi, Nikhil Chopra, Iftikhar Dadi, and Munem Wasif. Sharmini Pereira contributed to the panel titled ‘Exhibitions as Infrastructure’, where she explored the ways in which MMCA Sri Lanka is creating a museum of modern and contemporary art in the country, through not only exhibitions but also the training of museum professionals, who for Pereira are the most necessary component of any infrastructure project.

Speaking of how exhibitions contribute to the canon, knowledge production, and building a critical infrastructure, Pereira looked at the museum as infrastructure in the South Asian context. She identified how the MMCA Sri Lanka has been shaped by the process of making a museum from scratch, and took the audience through the MMCA Sri Lanka’s past exhibitions to explain the canonical approach to exhibition making. Pereira also emphasised that exhibitions do not exist without human capital, such as curators, exhibition designers, installers, editors, translators, conservators, etc., and that exhibition-making has helped the MMCA Sri Lanka to train and build up an infrastructure of expertise and knowledge.

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A bold step towards sustainable food production

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An initiative aimed to improve the energy landscape of Sri Lanka’s food and beverage sector, project titled, “New Solutions for Low-Emission Food Production in Sri Lanka,” was successfully completed. The project which is funded by the International Climate Initiative (IKI) Small Grants Programme which is jointly commissioned by three German Federal ministries was implemented with several partners in Sri Lanka. Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) Sri Lanka monitored the project on a local level on behalf of IKI programme. Ministry of Industries and the Sri Lanka Food Processors Association provided necessary guidance to National Cleaner Production Centre, Sri Lanka to implement and the complete project successfully.

The project dissemination event, graced by key figures from the Food Sector, government ministries, non-governmental organizations, relevant authorities and industry partners.

The project aimed at reducing energy losses in the food sector by implementing energy management systems, streamlining production processes, and obtaining international certifications, with a focus on achieving ISO 50001 Energy Management System certification. This strategic move was introduced not only for companies to cut energy costs but also to enhance their reputation on the global stage.

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