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Ranil says UNP can garner IMF support for immediate economic take-off

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by Sanath Nanayakkare

A future UNP government could garner the support of the International Monetary Fund (IMF) to raise funds to honour the country’s debt repayment commitments, without causing any disruption to the economy, UNP leader Ranil Wickremesinghe said, at Mattegoda, last Saturday (01).

“The IMF has helped the UNP governments in the past to resolve balance of payment issues and effectively restore Sri Lanka’s economy during dire times, including the Easter Sunday bomb attacks. I am confident that the international lender will provide its much needed support to a UNP government, with loans on affordable terms because it knows that we do not compromise our sound economic policies and revenue-based fiscal consolidation programmes.”

The UNP leader said: “Our priority will be mitigating the negative impact of Covid-19 on diverse segments of the economy; from three-wheeler drivers to wage-earning workforce to self-employed people and small and medium entrepreneurs. The Covid-19 public health crisis has weighed heavily on economic activity, employment and inflation and poses considerable risks to the economic outlook in the near-to-medium term. The level of economic activity has drastically slowed down as consumers fear for their future. Due to the Covid-19 pandemic, about five million people have lost their jobs and a similar number of jobs are at risk. Thousands of people have experienced pay-cuts and reduction of their allowances. Employers are not hireing job seekers. Many people can’t pay their house rents, utility bills and payback their loans.

“Hence today everyone is thinking about their financial problems more than the parliamentary election because that’s very important to them. When I was Prime Minister I adopted a revenue-based fiscal consolidation strategy to increase government income at the risk of growing public displeasure. At that time, the government earned Rs 150,000 million as revenue. In July 2020, it declined to Rs. 50,000 million. Our public servants’ pensions alone require Rs. 90,000 million and the government had to borrow to meet pension payments among other things. How long can we go on like this?

“During the Yahapalana government, we struck a certain balance between our income and expenditure and obtained support from bilateral and multilateral lending agencies for economic development. In 2018/19 we were able to have a surplus in our primary account.

“Today, the country’s stressed external liquidity position remains a credit weakness. Sri Lanka has not been able to get IMF funds despite having made three requests to them. Pakistan and Bangladesh have received funds from the IMF, and there should be no reason why Sri Lanka can’t access their funds. The UNP has presented a new three-year economic framework to face the challenges in the future which would boost confidence of the international lending agencies in our macroeconomic prudence and post-pandemic recovery path going forward. International funding will help strengthen the rupee. More exports and foreign remittances will bring in more money into the country. Through that strategy we will put more money into consumers’ wallets and increase their spending power. If current liquidity issues continue, the exchange rate of the rupee will hover around Rs. 195-Rs. 200 by October. In such a context, there will be more severe import controls and smartphones, electric and electronic goods will not be available in the market. Commodity prices will go up and life will be more difficult six months from now. Our new economic programme is capable of addressing such fiscal and external challenges. I urge you to consider the looming threats of these issues as you go to cast your vote on August 5.”

 



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SJB: Excise, FM officials all out to pocket Rs 1 bn

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By Saman Indrajith

Matara District SJB MP Buddhika Pathirana yesterday told Parliament that the Finance Ministry and Excise Department officials had misled Prime Minister Mahinda Rajapaksa and State Minister Ajith Nivard Cabraal in order to obtain billion rupees, fraudulently.

The officials had got a contract for printing stickers or barcodes to be displayed on bottles of liquor awarded to an Indian company.

“The project would result in one-billion-rupee loss to the government coffers annually,” the MP said, adding that the money being taken from the public purse would end up in the pockets of corrupt officials.

Pathirana said that the Excise Department had commenced a project to paste stickers on bottles of liquor to differentiate them from the fake and counterfeit bottles in the market.

“As per this project’s requirements, 32 million stickers would be needed per month. The stickers are to be purchased from Madras Security Printers company of India. This method was proposed in 2016 but it failed and the officials thereafter decided to introduce a barcode system.

“The cost of a sticker at 25 cents and the new barcode system will cost of two rupees a piece. This is a dubious deal. It seems that the Finance Ministry officials and the Excise Department heads have ganged up to give the contract to the Indian company and get commissions. There are many unanswered questions. First, the contract of printing the barcode too has been given to the MSP company, which could not secure the first contract. I want to know whether the proper procurement process has been followed. The second question is whether the barcodes would be up to the standards listed in the tender. Third question is who had selected the MSP company which is black-listed in India after being found guilty of frauds with Indian liquor companies in providing stickers to them. MSP has been blacklisted in many other countries. The company has been banned in Sudan and Liberia for supplying the stickers to private companies. The last question is whether this fraud is being committed with the knowledge of ministers of this government.”

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Reserves fall to lowest since 2009, rupee strengthening to be short-lived: report

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by Sanath Nanayakkare

Sri Lanka’s Foreign reserves had dropped to USD 4.1bn in March 2021, the lowest since August 2009, on the back of over US$ 4bn outstanding debt payment during April-December 2021 period, a report issued by First Capital Research yesterday said.

According to the report, rupee appreciation is likely to be short-lived considering Sri Lanka’s depleting foreign reserve position, high foreign currency debt repayment requirement and limited funding sources available in the market are expected to further increase depreciation pressure on the currency during 2Q and 3Q.

“We maintain our exchange rate target for 1H2021 at Rs. 196-202 with 2021 year-end target at Rs. 205-215 as mentioned in our ‘Investment Strategy 2021 – January 2021,” the report recalls.

“Sri Lankan rupee appreciated 5% against the US dollar over the last 2 market days reversing the continuous accelerated depreciation witnessed in January-April 2021. On 12th April, Sri Lankan rupee recorded a historical low of Rs. 201:1 US$. Ministry of Finance (MoF) reported on the same day that the government of Sri Lanka entered into a loan agreement with the China Development Bank (CDB) for US$ 500mn and MoF expected the funds to be disbursed during the same week. Following the announcement, the market registered a steep appreciation with mid-rate recording at Rs. 190.9 on April 19,” it says.

The total foreign debt repayment (capital and interest) for 2021 is US$ 6 bn, according to the report.

Meanwhile FC Research believes that the temporary appreciation in USD-LKR, may adversely impact earnings of export companies such as Hayleys, Haycarb, Dipped Products, MGT Knitting Mills, Teejay Lanka, Expolanka Holdings etc. in the short term.

“However, considering the potential future currency pressure, we expect an overall depreciation of approximately 12% for the rupee providing a significant gain for companies with foreign currency revenue”, FC research predicts.

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Govt. asks Opposition not to propagate lies

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By Saman Indrajith

Chief Government Whip and Highways Minister Johnston Fernando yesterday accused the Opposition MPs of abusing parliamentary privileges to mislead the public by propagating lies about the Easter Sunday terror attacks. 

Addressing Parliament, Minister Fernando said: “The Opposition MPs level wild allegations in the House knowing that they have the cover of parliamentary privilege. If they have anything substantial or any knowledge of the perpetrators of the Easter attacks still not in custody they can go to the CID and lodge complaints so that such complaints could be investigated.”  

Fernando said so after SJB Galle District MP Manusha Nanayakkara had told the House that he possessed evidence of those who carried out the Easter Sunday terror attacks.

Nanayakkara also said that the facts that he had were not in the report of the Presidential Commission of Inquiry into the Easter Sunday carnage.

“You are making various statements regarding the Easter Sunday terror attacks in the Chamber without any proof because you know that you have Parliamentary privilege. You even quoted some statements which are not included in the PCoI report. How did you obtain such information? Why didn’t you complain about this to the CID in the first place? Your action is aimed at misleading the public,” the Minister said. 

Minister Fernando said that the Opposition should stop insulting Archbishop of Colombo Malcolm Cardinal Ranjith by misinterpreting the latter’s statements. 

“When you are in the Government you never said that this is a Buddhist country. Now you are insulting the Cardinal too. You should not do that,” the Minister said. 

“The former Government should be responsible for the terror attack. Now we are trying to punish those who are responsible for it. We will take action against everyone who is responsible. You should support us, not try to obstruct the on-going investigations,” Minister Fernando said.

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