BY S VENKAT NARAYAN,
Our Special Correspondent
NEW DELHI, January 9: Wealthy Indians are flocking to Maldives for a holiday. Last year, they became that country’s top source market: 62,905 Indian tourists made it their holiday destination. They accounted for 11.3% of the total market share, according to the Indian High Commission in Male.
Maldives is one of the few countries open to international tourists during the Covid-19 pandemic. Five Indian cities have flights to Male with five airlines operating there under the air bubble formed between the two countries
Maldives had allowed international tourists from July 15, 2020 with free visa-on-arrival. The archipelago does not have mandatory quarantine or testing on arrival for foreign tourists.
“All tourists are required to submit an online health declaration form within 24 hours prior to departure… All tourists are required to hold a negative PCR test for Covid-19 conducted 96 hours prior the scheduled time of departure from the first port of embarkation en route to Maldives,” says the website of Maldives Marketing and Public Relations Corporation (MMPRC), the national tourism office of the Maldives.
Since the country opened up, a lot of hotels and resorts have hosted rich and famous Indians, including Bollywood celebrities like Tiger Shroff, Tapsee Pannu, Katrina Kaif, Varun Dhawan, Neha Dhupia, Disha Patani, Eli Avram and Mouni Roy. Some of their posts on social media have given their followers a glimpse of this island country where you can truly sit back, relax and forget the pandemic.
It has helped boost business. “We have had several top celebrities from India holidaying in the Maldives. This assured others of the stringent safety measures we have taken,” says Thoyyib Mohamed, MD, Maldives Marketing & Public Relations Corporation (MMPRC).
Even before the pandemic, Maldives had begun emerging as a favourite destination for Indians. “The Indian market has shown significant growth over recent years and by the end of 2019 the growth was 83.5% with a market share of 9.7 % and ranked second biggest source market in terms of arrivals,” adds Mohamed.
The honeymoon market is especially big in the Maldives. “Our natural beauty, rich marine life and excellent hospitality makes us a hot spot for honeymooners. India is the world’s second largest wedding market globally, and many Indian tourists visit Maldives for their honeymoon.
“Based on the arrival figures of 2019, India is ranked in the second position of the highest performing markets to the Maldives. It is one of the key focused markets after the reopening of borders on 15th July 2020,” the MMPRC website says.
“All tourists are granted a 30-day free visa upon arrival. Quarantine upon arrival is not required. However, if the passenger has a fever, cough or shortness of breath on board the flight or upon arrival, it should be informed to the local health protection agency. All tourists must undergo thermal screening at the arrival terminal (and) wear masks,” it adds.
People’s Bank celebrates world MSME Day with Biz fair 2022
Coinciding with World Micro – Small and Medium Scale Business Day, the small and medium scale business unit of People’s Bank, recently organized a trade fair called ‘Biz Fair 2022’ at the third floor of their Head Office, Colombo 02.
This fair was held with the participation of several entrepreneurs who benefitted from the ‘People’s Spark’ entrepreneurship development program along with other business clients. The exhibition consisted of stalls promoting clothes, confectionery items, dairy products, spices and related products, organic fertilizer, electrical items, ornamental jewelry and much more.
This Biz fair commenced with the patronage of the Chairman of People’s Bank – Sujeewa Rajapakse and Chief Executive Officer /General Manager – Ranjith Kodituwakku. Senior Deputy General Manager (Payment, Digital, Process Management & Quality Assurance) of People’s Bank – K. B. Rajapakse, Senior Deputy General Manager (Overseas Customer Services) – Rohan Pathirage, Deputy General Manager (Enterprise Banking) – Krishani Narangoda, Asistant General Manager (Small and Medium Enterprise) – Wickrama Narayana, other members of the corporate and executive management and other staff members also participated.
CSE bounces back despite SL’s dismal Q1 growth stats
By Hiran H.Senewiratne
The CSE did not react yesterday to the survey done by the US Consumer Confidence Survey, when the US and all Asian stock markets were recorded as performing negatively, stock market analysts said.
The US survey revealed that United States’ consumer confidence edged lower in May as Americans’ view of their present and future prospects dimmed in the midst of persistent inflation.
The Conference Board said on Tuesday that its consumer confidence index dipped to 106.4 in May, still a strong reading from 108.6 in April.
Amid those developments the CSE bounced back following the previous days’ dip without a proper fundamental base. However, the economy in the first quarter had contracted by 1.6 per cent, the Department of Census and Statistics (DCS) revealed yesterday.
It was confirming that the country was in bad shape long before the current crisis emerged. The dismal performance in the first quarter is despite the 2021 fourth quarter registering a 1.8% growth, despite the COVID-19 pandemic and 3.3 per cent growth overall last year. In 2021 1Q the economy grew by 4%.
Agriculture and Industrial sectors suffered contractions of 6.8 per cent and 4.7 per cent respectively in 1Q of 2022, while the Service sector recorded a trivial expansion of 0.7per cent when compared to these values in the first quarter of year 2021. This would likely affect listed companies that engaged in the agriculture and industrial sectors, market analysts said.
Amid those developments both indices moved upwards. All Share Price Index went up by 53.2 points and S and P SL20 rose by 25.2 points. Turnover stood at Rs 778 million with three crossings. Those crossings were reported in Lanka IOC, which crossed 1.7 million shares to the tune of Rs 115.5 million and its shares traded at Rs 68, Print Care two million shares crossed to the tune of Rs 60 million; its shares traded at Rs 30 and Access Engineering 2.5 million shares crossed to the tune of Rs 25 million; its shares traded at Rs 10.
In the retail market, top seven companies that mainly contributed to the turnover were, Expolanka Holdings Rs 149.2 million (151,000 shares traded), Lanka IOC Rs 84.4 million (1.2 million shares traded), HNB Rs 61.4 million (786,000 shares traded), Browns Investments Rs 47.5 million (6.3 million shares traded), Vallibel One Rs 26.6 million (one million shares traded), LOLC Finance Rs 16.1 million (2.4 million shares traded) and Sampath Bank 14.8 million (494,000 shares traded). During the day 34.7 million share volumes changed hands in 8000 transactions.
Yesterday the Central Bank announced the US dollar rate. Its buying rate was Rs 355.81 and the selling rate Rs 367.07.
Constant ‘monetary financing’ had little backing from fiscal side, says Central Bank
by Sanath Nanayakkare
The majority of external obligations in the recent past were financed by sources like the Central Bank of Sri Lanka or through monetary financing, but fiscal consolidation through revenue enhancement as well as expenditure rationalization deemed necessary under such circumstances were hard to come by, R.A.A. Jayalath , Assistant Governor of the Central Bank of Sri Lanka said recently.
He said so while addressing a high level seminar held on the topic on “Confronting the Current Foreign Exchange Crisis in Sri Lanka: Lessons from Global Experience”.
“Thus, a significant amount of monetary financing by the Central bank has resulted in worsening inflation and exchange rate outcome”, he observed.
He went on to say: “In this environment, the tax cuts introduced in 2019-2020 with a reduction of VAT threshold was a grievous policy, in my view. Total impact of such a tax cut was over Rs. 600 billion and some put it at Rs. 800 billion. The resultant revenue drop was about 7.7% of GDP. The mainstream economic theory suggested such tax cuts would enhance money in circulation in the economy supporting growth in the medium to long term. The combination of pandemic-induced additional expenses and limited resource mobilization had widened the fiscal deficit. Tax cuts, low interest rates and high liquidity environment created higher demand for imports. In addition to that, the pandemic hit the brakes on tourism-related revenue which was the fifth largest inflow which had been normalizing after Easter Sunday attack in 2019. The pandemic related mobility restrictions around the world strengthened remittances via banking channels. However, this was short-lived as mobility increased after successful immunization programmes as a result of which the pattern of the flow of remittances changed. This was exacerbated by the fixation of exchange rate at Rs.200 levels”.
“Tourism brought USD 4.4 billion – 5.6% of GDP in 2019 – and it was reduced to 0.8% in 2020. Then the government decided to ban the import of agro-chemicals in April 2021 for health reasons and to promote eco-friendly sustainable agriculture. Although the transition towards organic farming seemed like an environmentally friendly sustainable step, the sudden shift was like a time bomb waiting to explode. Whatever the rational, the sudden transmission was extremely problematic due to lack of organic farming infrastructure, dependence on imported agro chemicals and lack of access to modern agricultural techniques. …….This disrupted the economy’s self-sufficiency in rice production requiring rice imports using scarce foreign exchange reserves. The nation’s external economic performance deteriorated and the current account deficit increased from 1.14 billion in January 2022 from 0.13 in January 2021.”
“When you look at Sri Lanka’s current crisis, we can’t forget the legacy the country has been carrying. Since post-independence, Sri Lanka has been a twin-deficit country except for a few years. The number of times the country has sought assistance from the IMF in its post-independence history shows the frequency of BOP challenges it faced. Today we are seeking the global lending agency’s support for the 17th time.”
“The country’s trade account was continuously in deficit. Import expenditure was almost double the exports. In the current account, it showed some relief mainly because of migrant worker remittances. But that was insufficient to cover the twin deficit. The majority of the country’s foreign exchange inflows didn’t come via non-debt creating flows like FDIs, but through further borrowings. On top of this fiscal balance or the government budget was continuously in deficit. And it was increasing due to ever-increasing commitments of the government sector. Thus the country’s primary account balance – the government budget before deduction of debt servicing expenses – was in deficit except for a few years.”
“Government revenue as a percentage of GDP was constantly on the decline since 1980s except in 2015, and 2016. Tax revenue was declining until 2015, and showed some increase in 2017/2018. But the budget deficit was significant. In 2019, it was around 9.6% and increased to 11.1% in 2020 and 2021, so both fiscal and Balance of Payments ( BOP) issues were at the heart of Sri Lanka’s macroeconomic performance constantly. In addition, heavy and continuous borrowings by the government to bridge the fiscal deficit over the years, has led to monetary policy and exchange rate management having limited effectiveness in managing the fallout of funding the fiscal gap. Subsequent to the global financial crisis and the presence of low interest rates in the developed market, Sri Lanka shifted its strategy significantly towards foreign market borrowings, exposing the country towards global credit cycles. So although we witnessed rapid economic growth, majority of them were coming from borrowed funds and at the same time they were invested mostly in non-tradable sectors or slow-revenue generating sectors.”
“This was reflected in the trade balance which was not sound and was deteriorating. The other factor that led to the rapid shift in our debt composition was when we moved to commercial borrowings, particularly after we lost access to concessional borrowings. Since we graduated to middle-income country status in early 2000, most of our borrowings were commercial borrowings. We didn’t have access to low-cost borrowings from multilateral agencies. And as concessional loans declined, the economy increasingly moved towards commercial loans mostly by way of international sovereign bonds (ISBs) and other bank and overseas borrowings. While the domestic /public debt level remained mostly stable, foreign debt became primarily the force driving the Sri Lankan economy.”
“Foreign debt to GDP ratio increased from 30% in 2014 to above 50% in 2020. Although Sri Lanka’s foreign debt to GDP ratio has witnessed a significant reduction over the past two decades, the change in the composition of high level of external debt has made the economy more vulnerable to a currency crisis in the past few years. Consequently, in 2021, the economy had net repayments to foreign creditors; therefore, the entire budget deficit was financed by domestic financing. It was kind of domestication of external obligations,” the Assistant Governor said.
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