The Monetary Board of the Central Bank on Wednesday (23) decided to maintain the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) of the Central Bank at their current levels of 11.00 per cent and 12.00 per cent, respectively.
It said in a statement: The Board arrived at this decision following a careful analysis of current and expected developments in the domestic as well as the global economy, while noting the significant easing of monetary conditions effected since June 2023.
The Monetary Board took note of the downward adjustment of market interest rates in response to monetary policy easing measures implemented thus far and the need to allow space for further adjustment of market interest rates swiftly. However, the Board observed that market interest rates of certain lending products remain excessive and are not in line with the current monetary policy stance.
Moreover, the Board anticipates a faster reduction in overall market lending interest rates in line with the recent monetary policy easing measures. Accordingly, the Board decided to adopt targeted administrative measures to reduce specific lending interest rates that it considered to be excessive and direct the licensed banks to reduce overall rupee lending interest rates by an appropriate margin in the period ahead.
Headline inflation, measured by the year-on-year change in the Colombo Consumer Price Index (CCPI, 2021=100), decelerated to 6.3 per cent in July 2023, reaching single digit levels for the first time since November 2021. Following a similar trend, headline inflation, based on the National Consumer Price Index (NCPI, 2021=100), also decelerated to 4.6 per cent in July 2023 (year-on-year).
The moderation in headline inflation was mainly driven by the softening of energy and food inflation, along with the favourable statistical base effect. Meanwhile, CCPI and NCPI based core inflation, which reflects underlying demand pressures in the economy, moderated to 6.1 per cent and 6.3 per cent, respectively, in July 2023 (year-on-year). Headline inflation is expected to moderate further over the next few months and stabilise around mid-single digit levels over the medium term.
Domestic economic activity is expected to recover in the second half of 2023 and gradually reach the potential level of economic growth over the medium term Economic activity is projected to recover gradually during the second half of 2023 and reach its potential level thereafter, supported by the normalisation of monetary conditions, improvements in business confidence, enhancements in supply conditions and the relaxation of import restrictions, and the impact of growth promoting structural reforms.
Leading indicators of economic activity point to a lower contraction in GDP in the second quarter of 2023, compared to the previous projections, while the second half of 2023 is expected to record a positive growth, compared to the same period in 2022. However, the impact of weather related disruptions and modest external demand conditions could weigh on expected growth in the near term. The external sector remains resilient, allowing a gradual relaxation of balance of payments restrictions.
The trade deficit decreased notablyduring the seven months ending July2023 with a significant decrease in mer-chandise imports, despite the decrease inmerchandise exports. Earnings fromtourism and workers’ remittances, whichimproved considerably from January toJuly 2023, in comparison to the corre-sponding period in the previous year, areexpected to improve further in the periodahead. Despite some recent outflows fromthe government securities market, netforeign investment inflows remained pos-itive during the seven months endingJuly 2023. In view of the improvementsin the balance of payments conditionsand the need to support the recovery ofactivity, the Government relaxed importrestrictions related to 638 HS codes,including those of commercial vehicles,since June 2023. Although a significantshare of import restrictions has alreadybeen relaxed, demand for imports contin-ued to remain subdued, reflecting thetight financial conditions
President Ranil Wickremesinghe’s address at the UNGA: ‘Sri Lanka’s journey to rebuild trust and global solidarity’
President Ranil Wickremesinghe addressed the UN General Assembly in New York on Thursday (21) on the theme “Rebuilding trust and reigniting solidarity” and its relevance to Sri Lanka’s recent challenges.
He mentioned how Sri Lanka faced significant social, economic and political challenges in the past year, including threats to democratic traditions but has managed to achieve a democratic transition.
He highlighted efforts made to stabilize the economy, including economic reforms and foreign assistance and said that his intention is to lead Sri Lanka towards sustainable recovery and growth, benefiting all segments of society and ensuring peace, prosperity and reconciliation.
The President also discusses the global geopolitical landscape, emphasizing the inter-connectedness of various challenges, such as climate change, debt and sustainable development. He stresses the need for international solidarity and climate finance, particularly for smaller, climate-vulnerable and debt-ridden countries.
President Wickremesinghe mentioned Sri Lanka’s commitment to climate action, including renewable energy goals, forest conservation and emissions reduction while expressing concern about the impact of climate change on food security, clean energy and livelihoods, emphasizing the urgency of mobilizing climate finance.
The President called on developed countries to fulfill their commitments, provide assistance and assume their share of responsibility, while underscoring the importance of restructuring the international financial system to address climate change and sustainable development.
Additionally, the President emphasized the need for reform in multilateral institutions like the UN, particularly the expansion of the Security Council’s composition and the importance of disarmament and the impact of global military expenditures.
Overall, the President’s speech highlighted the challenges faced both by Sri Lanka and the world, and emphasized the importance of solidarity, climate action, disarmament and multilateral cooperation in addressing these issues.
Following is the full speech delivered by President Ranil Wickremesinghe at the 78th session of the United Nations General Assembly;
“Rebuilding trust and reigniting solidarity“ is an appropriate point of departure not only for reflecting on the challenges before the multilateral today, but also for reviewing developments in my own country, Sri Lanka, over the past year.
At this time last year, amidst multiple global crises, Sri Lanka was experiencing its most challenging period in recent times socially, economically and politically, which had a devastating impact on people’s lives.
Even our Democratic traditions were threatened by attempts to occupy our Parliament and bring it to a halt. Nevertheless, we succeeded in bringing about a democratic political transition, due to our deeply entrenched and resilient democratic traditions.
Resorting to the re-graduation of Sri Lanka’s economy, coupled with the gift of fertilizer from the United States’ Government which led to a bumper harvest, has assisted us in ensuring stability during that period.
The reforms I have since initiated in the economic, financial, institutional and reconciliation fronts have been directed on the one hand towards rebuilding trust and confidence between the people and the government; and on the other, towards laying the foundation for economic stabilization and recovery. Sri Lankans are already witnessing the positive outcomes of these measures in their daily lives and the revival of confidence internally and externally in the progress of the country.
It is my intention to lead the country towards sustainable and stable recovery and growth which will benefit all segments of Sri Lankan society in all parts of the country, ensuring a future of peace, prosperity and reconciliation for the present and future generations of women and men. In reaching this goal, we will be accompanied by the support, trust, and solidarity of our own people and of the international community.
As we turn the corner towards the 80th anniversary of the UN and prepare for the Summit of the Future in 2024, we see the fragmented geopolitical landscape of a multi-polar world where new centers of global power have emerged.
Accompanying this systemic change, are, on one hand, great expectations of development and human progress with millions of people rising out of poverty to prosperity.
On the other hand, we see a world where former big power rivalries and geopolitical tensions have reignited in open war, overlapping with new theaters of conflict and tension on land and in the oceans. Security Alliances have expanded and recent arrangements have been formed to deal with strategic threat perceptions in old and new theaters of conflict. North-South divisions are widening with the digital divide, the financial and debt crisis and the energy transition. Contrary to the promise of 2030, today we are seeing levels of poverty and hunger not witnessed since decades.
Neutral, nonaligned countries of the global South such as Sri Lanka are once again constrained in-between new global power configurations facing those who not respect the sovereignty of our nations.
In numerous recent Declarations in the UN and beyond including at the G20 in Delhi, the BRICS in Praetoria and G7 in Hiroshima, we have agreed that our challenges are interconnected, across borders and all other divides. We must grasp the opportunity to unite in order to build an inclusive future.
It is an appropriate reflection of this current global predicament, that the theme of this year’s general debate is “Rebuilding trust and reigniting global solidarity”.
This year, in parallel with the UNGA, we have participated in three interrelated summits dealing with accelerating the SDGs, Financing for Development and Climate Ambition where we agreed that international solidarity and collective action is needed to address these simultaneously.
Cross-border financial impacts of crises such as climate change and the pandemic are impeding the ability of smaller indebted countries such as mine, to make progress on SDG’s and climate adaptation and mitigation. Conflicts and tensions among big powers are complicating the policy environment for the rest by adding uncertainty to economic and macro-financial stability, disrupting supply chains and causing inflation as well as food and energy insecurity.
Long before the SDGs, Sri Lanka had achieved high human and social development indicators which ranked us in a category well above other middle-income countries. Neither has Sri Lanka shirked its responsibility to the planet. Last year at COP27 we outlined our Climate Ambition Plan. We said that by 2030 we will have 70% renewable energy in electricity generation, increase forest cover by 32% and reduce greenhouse emissions by 14.5%. We will phase out coal by 2040, and reach net zero by 2050.
Our low carbon development trajectory gave us one of the lowest per capita carbon emission rates for a lower MIC country.
This year as a result of exogenous shocks and debt, the incremental progress we were proud to have reached has been reversed. Food inflation reached putting significant pressure on food security amongst vulnerable communities. At the same time children’s education and nutrition have suffered due to the pandemic and the economic crisis.
In parallel, last month in Sri Lanka we were grappling with the driest weather spell seen in recent years followed by torrential rainfalls.
Adverse climate outcomes spilling over onto our tight fiscal space just as we begin to stabilize from last year’s economic crisis. As a climate vulnerable developing country in debt crisis, the urgency to mobilize climate finance is greater today than it was ever before. However, despite promises made to which we were all witness, rich countries are not delivering to expectation.
Developed countries must do their part and fulfill what they agreed – assume their share of the common but differentiated responsibility, provide assistance for mitigation and adaptation and compensation for loss and damage.
National efforts alone will not suffice to ensure the success of the SDGs and reverse climate change. The need for global solidarity to restructure the international financial architecture is paramount. This is articulated loud and clear in multiple global fora including in G20, and the BRICS. The Secretary General’s SDG stimulus highlights the interconnections between the achievements of the SDGs, combatting climate change and the concrete interventions required by creditors sovereign and private, as well as by IFIs including to mitigate the debt crisis.
It is estimate that the 2008 financial crisis has cost the U.S. economy $4 trillion. Recent studies in the U.S. have stated that the impact of the pandemic on the U.S. economy from 2020 to 2024 would reach $14 trillion. These numbers would more than double if the rest of the global economy is added. We have not faced an economic crisis of this magnitude any time before in our modern history. The cost of World War 2 in today’s USD would amount to $4 trillion, and the Marshall Plan would be $ 150 billion.
This is the magnitude of the challenge before us. Therefore if we are unable to restructure the global fiscal order, then certainly we will fail in the struggle to reverse climate change and achieve the SDG goals.
There is still time for course correction as the crisis has not reached its peak. At the same time, the Paris Summit for a New Global Financing Pact will come up with the funding requirements.
Therefore, the Summit of the Future should not be crafting new programs, but re-structuring the present financial architecture to suit the needs of climate change and sustainable development.
This must be the priority of this General Assembly; we cannot afford to allow divisions to drive focus away from this crisis.
While key issues such as the Bridgetown Initiative and the necessity to address the debt of low-income countries are being discussed in this assembly, it is not commanding the attention it deserves. Unfortunately, the Security Council has failed to give priority to these connected issues of climate change, debt relief and sustainable development. This impacts the future of mankind. The survival of the planet must be our priority, we cannot afford to go into this war with a divided high command. The future of all species on the globe is dependent on our ability to put aside our rivalries until this crisis is solved.
Multilateral machinery which reflects the world of the past century needs to be reformed to meet the challenges of the present and the future, a machinery which has failed to find a solution to the longstanding Palestine question. The composition of the Security Council must be expanded to be representative of current global diversity and decision-making. In parallel, the role of the UNGA must be strengthened.
We are asking that the permanent members engage in a credible dialogue which will lead to a unified approach to combat these threats ahead of the next sessions.
While we seek solidarity and financing to alleviate poverty and climate challenges, global military expenditures have risen today to record levels reaching $2.24 trillion. This reflects the strategic trust deficit among the powerful, key arms control frameworks which were instrumental in maintaining system stability in the past have collapsed and nuclear conflict is once again under open discussion, potentially and apocalyptically triggered by autonomous control. We urge restraint in the increase of military expenditure which leads to escalation of conflict.
Developing countries have been the voice of sanity and reason in this regard for decades. In keeping with Sri Lanka’s longstanding position supportive of disarmament of WMD and nuclear weapons, this year Sri Lanka ratified the Comprehensive Test Ban Treaty. Yesterday, we acceded to the Treaty on the Prohibition of Nuclear Weapons.
The war in Ukraine has far-reaching and severe financial and humanitarian repercussions on food, hunger and debt in all parts of the world including Sri Lanka. It is recalled that the UN Charter vests on powerful states in the Security Council the responsibility to maintain international peace and security and to deescalate rather than ignite conflict.
We need to halt the momentum where this and other big power tensions are spilling over into established areas of international rules-based cooperation forged over decades of multilateral negotiation, ranging from international trade to ocean governance.
This international system is today undergoing vast changes. At the same time, it is being confronted with unprecedented challenges. We come to the United Nations to demonstrate solidarity in arriving at common solutions. What is at stake is not the future of the United Nations, but of our planet as a whole. Member States will need to find new ways of working together despite the increasing mistrust that has permeated international relations.
We who have not been able to find a solution to the Palestinian question must now be able at least to find a solution to the questions which threaten the existence of the present global community.
This can be achieved through the willingness of the permanent members to work together in solidarity with the developing world. They must show the way”
President Wickremesinghe also extended his sincere condolences to the victims and families of the natural disasters that hit Morocco and Libya in recent days and pledged solidarity with Moroccan and Libyan friends during this difficult time.
In terms of RTI Act House releases names of MPs who voted for new law
Abolition of time-tested Exchange Control Act
Only 18 opposed it and 113 skipped vote
By Shamindra Ferdinando
Amidst allegations that the abolition of the time-tested Exchange Control Act of 1953 contributed to the country’s bankruptcy and foreign exchange crisis, The Island, in terms of the Right to Information Act No 12 of 2016 requested from the Office of Secretary General of Parliament, the names of the MPs who had voted for the new law (Foreign Exchange Act No 12 of 2017) and those who opposed it.
According to parliamentary records, 94 voted for the Bill and 18 voted against it while 113 skipped the vote. The TNA voted with the UNP and the SLFP-led UPFA for the new law. The then Prime Minister Ranil Wickremesinghe, who moved the second reading motion in his capacity as the Minister of National Policies and Economic Affairs was among those who skipped the vote on July 25, 2017.
Justice Minister Wijeyedasa Rajapakse voted for the new law, which, he says, has helped unscrupulous exporters park export proceedings overseas to the tune of USD 100 bn. Two of the strongest critics of current economic policies namely Dr. Harsha de Silva and Eran Wickremaratne voted for the new law enacted in 2017.
Former Governor of the Central Bank Dr. Indrajith Coomaraswamy has publicly alleged that the new exchange law was not formulated in consultation with the Central Bank. The Governor led Central Bank team which appeared before the Parliamentary Select Committee (PSC) probing the 2019 Easter Sunday carnage declared that the new law hindered its regulatory powers.
The following MPs voted for the new law: S.B. Dissanayake, Nimal Siripala de Silva, Gamini Jayawickrama, John Amaratunga, Lakshman Kiriella, Gayantha Karunatilleka, Rajitha Senaratne, Ravi Karunanayake, Kabeer Hashim, Sajith Premadasa, Mano Ganesan, Thilanga Sumathipala, Anura Priyadarshana. Yapa, Tilak Marapana, Vajira Abeywardena, S.B. Nawinna, Sarath Fonseka, Navin Dissanayake, Wijeyadasa Rajapakse,(Mrs.) Chandrani Bandara, (Mrs.) Thalatha Atukorale, D. M. Swaminadan, Abdul Haleem, Sagala Ratnayake, Daya Gamage, Faizer Musthapha, A. H. M. Fowzie, Dilan Perera, Lakshman Seneviratne, Ravindra Samaraweera, Niroshan Perera, Ruwan Wijewardene, Mohan Lal Grero, A.D. Premadasa Champika, Sujeewa Senasinghe, Wasantha Senanayake, Wasantha Aluvihare, Dr. Mrs. Sudarshini Fernandopulle, Eran Wickramaratne, Mrs. Sumedha G. Jayasena, Ameer Ali Shihabdeen, Lasantha Alagiyawanna, Faizal Cassim, Dr. Harsha De Silva, Ashok Abeysinghe, Karunarathna Paranawithana, Manusha Nanayakkara, Lucky Jayawardana, Vadivel Suresh, Edward Gunasekara M.S. Thowfeek, J.M. Ananda Kumarasiri, J.C. Alawathuwala, Seyed Ali Zahir Moulana, Ranjith Aluvihare, Abdullah Mahrooff, Srinal de Mel, Anura Sidney Jayarathne, K.K. Piyadasa, A.A. Wijetunge, Ajith Mannapperuma, Nalin Bandara Jayamaha, Hector Appuhamy, Sisira Kumara Abeysekara, Thushara Indunil Amarasena, A.Aravindh Kumar, Ananda Aluthgamage, K. Thurairetnasingam, Mavai S.Senathirajah, A. Adaikkalanathan, Sivagnanam Shritharan, E. Sarawanapawan, M.A. Sumanthiran, Charles Nirmalanathan, Gnanamuthu Srineshan, Ashoka Priyantha, Chandima Gamage, Mylvaganam Thilakarajah, Mohamed Navavi, Sujith Sanjaya Perera, Bandulal Bandarigoda, Imaran Maharoof, Ashu Marasinghe, Ishak Rahuman, Malith Jayathilake, Mujibur Rahuman, Harshana Rajakaruna, Jayampathy Wickramaratne, Thusita Wijemanne, Mrs. Rohini Kumari Wijeratne, Hesha Withanage, Sandith Samarasinghe, Chathura Senaratne and Wijepala Hettiarachchi.
The following MPs voted against D. V. Chanaka, Piyal Nishanta de Silva, Prasanna Ranaweera, Kanchana Wijesekara, Indika Anurudda Herath, Mrs. Sriyani Wijewickrama, Thenuka Vidanagamage, Shehan Semasinghe, Vijitha Herath, Bandula Gunawardane, C. B. Ratnayake, Nihal Galappathi, Gamini Lokuge, Rohitha Abeygunawardana, Wimalaweera Dissanayake, Udaya Shantha Gunasekara, Ranjith de Soysa and Roshan Ranasinghe. The then Speaker Karu Jayasuriya was in chair at the time the vote was taken.
Before the vote was taken the then UPFA MP Vasudeva Nanayakkara said the new law would lead to disaster. Quoting Washington-based Global Financial Integrity, MP Nanayakkara said that USD 1.99 bn had been moved out of the country through illegal means annually.
Easter Sunday carnage: Alles admits PCoI named SDIG
By Saman Indrajith
Public Security Minister Tiran Alles admitted in Parliament yesterday (21) that the Presidential Commission of Inquiry on 2019 Easter Sunday carnage had referred to Senior DIG Nilantha Jayawardena, the then head of State Intelligence Service (SIS) as one those against whom the PCoI recomemnded the Attorney General to inquire into.
Making a special statement, Minister Alles said that he had errored in Parliament the previous day when he declared PCoI didn’t mention the SDIG’s name. The Minister said:”In response to MP Hector Appuhamy, I said SDIG’s Nilantha Jayawardena’s name was not there in the Presidential Commission report. That was a mistake. Jayawardena’s name isthere in the report, but that reference was not a charge. The commission recommended to the AGl to consider whether action should be taken against him.”
MP Appuhamy raised a point of order, but the Speaker said that there was no need of further debating the matter which had been put to rest by the minister with his apology.
However, MP Appuhamy shouted that the Speaker wanted to hide facts by not giving time for opposition MPs. “The Minister is better than the Speaker and admitted that he made a mistake. The Speaker does not allow us to speak the truth. This sends wrong messages to society and that is why people attack us on the roads. I need to rectify the statement of the minister. The report does not tell the Attorney General to consider action. It recommends court proceedings against Jayawardena under a suitable provision of the Penal Code. That is the truth. How long are you going to keep hiding the truth,” the MP queried.
Showers in Western, Sabaragamuwa and North-western provinces and in Galle and Matara districts
France rout Namibia 96-0 in Rugby World Cup match
Bangladesh discover Mustafizur’s success with the new ball in rainy Dhaka
‘Dates have the highest sugar content to fight Coronavirus’
Sunday Island 27 December – Headlines
#Sundayisland Sunday Island- 31 January- Headlines
News6 days ago
National Security House Committee head asks why Diaspora doesn’t want India and TNA investigated
Latest News6 days ago
President Ranil Wickremesinghe addresses G77 & China Summit in Cuba
News4 days ago
G-77 summit: President RW calls for earmarking 1% of GDP for R&D over a decade
Latest News5 days ago
More questions to answer for India, Sri Lanka in Asia Cup final
Latest News5 days ago
Siraj’s spell for the ages gives India eighth Asia Cup title
Features5 days ago
Channel 4 resurrects Easter Sunday, rips open can of squirming worms
Opinion5 days ago
Dr. Mary Srikanthi Handy, philanthropist extraordinaire
Sports5 days ago
The Asia Cup jinx