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Lanka’s growth to contract by 7.6% in 2022 – ADB

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The Asian Development Bank (ADB) says Sri Lanka’s growth is forecast to contract by 7.6% in 2022 and economic activity will remain subdued in 2023.In its latest Asian Development Outlook Supplement, the ADB said the island nation is beset with multifaceted and deepening challenges emanating from long-standing fiscal and current account deficits that have led to the sovereign debt and balance-of-payment crises.

According to the report, the scarcity of foreign exchange has triggered an acute energy crisis, affecting economic activity in all sectors of the economy, threatened food security, created shortages of other essentials, and hit consumer and investor confidence.The detrimental effects of a chemical fertilizer ban on agriculture compounded the effects of the balance-of-payments crisis and double-digit inflation is squeezing disposable income and discouraging investment, the ADB said further.

It added that the tight monetary policy to rein in inflation, revenue-based fiscal consolidation, and expenditure rationalization are also slowing the economy.

“Because of these factors, Sri Lanka’s growth is forecast to contract by 7.6% in 2022 and economic activity will remain subdued in 2023. Risks to the forecast are significant and stem from delays in securing external financing, rising commodity prices, a weaker global economy, and spillovers from the debt crisis on the banking industry.”

The ADB also mentioned that the economic conditions in Sri Lanka have deteriorated drastically since Asian Development Outlook 2022 (ADO 2022) published this April, on a sharp fall in usable reserves, causing the government to suspend external public debt servicing (excluding multilateral debt) on April 12 and default on its sovereign debt on May 18 – the country’s first sovereign debt default.

In Sri Lanka, inflationary pressures have been dramatic, the bank pointed out, adding that “CPI headline inflation averaged 28.6% in the first half of 2022 on multiple fuel price hikes, higher food prices because of poor harvests, supply chain disruptions, shortages caused by a foreign exchange squeeze, and a depreciating exchange rate. Core inflation increased from 9.9% in January to 39.9% in June, averaging 20.7% in the first half—an indication that underlying inflationary pressures are high. Because of this, the inflation forecast is revised up to 33.6% for 2022 and another year of double-digit inflation is expected in 2023.”

The ADB meanwhile lowered South Asia’s growth forecast from 7% to 6.5% for the year 2022, and from 7.4% to 7.1% for the year 2023 mainly due to the economic crisis in Sri Lanka and the high inflation and associated monetary tightening in India.The ADB said the economic fallout from Russia’s invasion of Ukraine on the most of developing Asia has increased, although the impact of Covid-19 has declined across the region.According to ADB’s report, war-induced supply disruptions and escalating sanctions imposed on the Russian Federation have led to global commodity prices spiking and remaining higher than 2021’s already elevated levels.

“As a result, inflationary pressures have increased in many regional economies. Headline inflation is at double-digit levels in most of the Caucasus and Central Asia, in Mongolia in East Asia, in Pakistan and Sri Lanka in South Asia, and in the Lao People’s Democratic Republic (Lao DPR) and Myanmar in Southeast Asia. Although inflation in India, at 7%, is above the 2% – 6% target range of the Reserve Bank of India (RBI), headline and core inflation in the rest of developing Asia’s large economies remain manageable. So, for the region as a whole, inflation remains moderate on average and much lower than elsewhere in the world.”



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Sri Lanka Navy joins commencement of AMAN-2025

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The multinational naval exercise AMAN-2025, hosted by the Pakistan Navy for the ninth time, commenced at Pakistan Navy Dockyard in Karachi on 07 Feb 25. The event was attended by Commanding Officer and crew of SLNS Vijayabahu, representing the Sri Lanka Navy.

AMAN-2025 will be held from 07 to 11 Feb in Karachi, and the multinational naval exercise will see the attendance of Navy Chiefs, stakeholders and think tank from maritime fraternity, from 60 nations.

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SME representatives accuse presidential aide of instigating protest against Central Bank

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Susantha Liyanaarachchi

A presidential advisor, identified as D. Gamage, had asked a delegation representing the SME sector to “surround the Central Bank” instead of troubling officers at the Presidential Secretariat, Susantha Liyanaarachchi, Chairman of the National Construction Association of Sri Lanka (NCASL) told the media yesterday near the Presidential Secretariat.

Liyanaarachchi said so following a meeting with Gamage, on Friday, during a protest staged by a group of small- and medium-scale entrepreneurs, affiliated with the MSME Joint Alliance, outside the Presidential Secretariat against parate executions.

Five representatives were permitted to enter the Secretariat, where they also submitted a 17-point proposal aimed at reviving the domestic coconut oil industry.

“Gamage said there was no point in coming to the Presidential Secretariat. He asked us to surround the Central Bank. What an awful officer. We came here to settle our issues amicably, and Gamage told us to surround the Central Bank,” Liyanaarachchi said.

Liyanaarachchi also stated that the Central Bank did not adhere to instructions given by President Anura Kumara Dissanayake, exacerbating the concerns voiced by the MSME entrepreneurs.

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Govt. to seek new indictments in Lasantha murder case

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Harini

By Saman Indrajith

The government would try to initiate fresh indictments in the Lasantha Wickrematunga murder case, Prime Minister Harini Amarasuriya said on Friday, pledging that those responsible for the murder of journalist Wickrematunga would be held accountable. She also stated that she intended to respond personally to a letter from Wickrematunga’s daughter, Ahimsa, who has called on Parliament to impeach Attorney General Parinda Ransinghe (Jr.) over the recent release of three suspects.

Ahimsa Wickrematunga’s request for impeachment followed the release of several individuals—among them a police officer—who had been arrested on accusations of destroying evidence, including a notebook belonging to her father and key police records. Speaking in Parliament, Prime Minister Amarasuriya said, “I plan to respond directly to Ms Wickrematunga, as I fully understand her concerns and the distress she must be experiencing. We are doing our utmost to observe due process and uphold the independence of the Attorney General’s office, but justice must prevail.”

She went on to say, “We intend to seek justice for Lasantha Wickrematunga’s murder. President [Dissanayake] has met with those involved to determine the best course of action. We are examining the possibility of refiling or initiating new inquiries if necessary, as there is plenty of evidence.”

Opposition legislator Rauff Hakeem noted that the suspects were released on a technicality related to an identification parade, and expressed concern that the Attorney General was selectively releasing certain suspects, despite there being many dedicated officers within the Department. He added, “Ultimately, the purpose of all our judicial institutions is to deliver justice. If procedures obstruct that aim, we must re-examine them.”

Prime Minister Amarasuriya reiterated that the Government is open to debating the matter in Parliament, saying, “We will look at refiling charges or bringing new indictments where appropriate. We fully appreciate the gravity of this situation and the need for transparency, and we will do everything in our power to ensure justice is served.”

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