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SL’s inflation will fall faster than expected due to rupee appreciation against dollar –CBSL Governor

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By Hiran H.Senewiratne

The country’s inflation will fall faster than expected due to the recent appreciation of the local currency against the US dollar, after a surrender rule was done away with, releasing more dollars to the banking system amid private de-leveraging, Central Bank Governor Dr. P. Nandalal Weerasinghe said.

“This is a recent development. Obviously, the selling rate of the US dollar at commercial banks appreciated to around Rs 348 from around Rs 370 to the US dollar a week earlier, Dr. Weerasinghe said. “The exchange rate pass-through and transmission will take some time, he said. He was addressing the media following the monthly CBSL Monetary Board review meeting on March 3.

Dr. Weerasinghe said: ‘The CBSL Monetary Board has decided to raise the monetary policy stance. There will be an immediate impact though petroleum. When there is a cost- reflective pricing formula, the benefit that can come through exchange rate appreciation should definitely be passed through to the consumer.

‘The Monetary Board at its meeting held on Friday has decided to raise the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) of the Central Bank by 100 basis points to 15.50 percent and 16.50 percent, respectively.

‘The new rates will be effective from the close of business on March 3, 2023.’

Earlier, the Central Bank which had been engaging continuously with the IMF in negotiations on the monetary policy stance said the Bank and the global lender had reached a consensus to raise policy interest rates to finalize the IMF debt relief arrangement.

Dr. Weerasinghe added: ‘Given the necessity of fulfilling all the “prior actions” to move forward with the finalization of the IMF’s Extended Fund Facility (EFF) arrangement, the Monetary Board and the IMF staff reached consensus to raise the policy interest rates, in a smaller magnitude, compared to the adjustment which was envisaged during the initial stage of negotiations.

‘The decision to raise policy rates demonstrates Sri Lanka’s commitment to the IMF-EFF arrangement, which has been pursued by the government to ensure stability in the economy on multiple fronts.‘The IMF-EFF arrangement is expected to benefit all stakeholders and bolster confidence, which would help restore stability in the economy on a sustained basis.

‘The Monetary Board believes that today’s decision would pave the way for a faster-than-expected deceleration of inflation and expects a lowering of the spread between policy interest rates and high market interest rates.’



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UNDP study shows need for wider public engagement of tax officials with taxpayers in Sri Lanka

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Shehan Semasinghe, State Minister of Finance and Azusa Kubota, Resident Representative, UNDP Sri Lanka at the launch of the research findings from the first ‘Taxpayer Perception Study’ in Sri Lanka

By Sanath Nanayakkare

The United Nations Development Programme (UNDP) in Sri Lanka, in collaboration with the Ministry of Finance, Inland Revenue Department, University of Moratuwa, and the National Innovation Agency of Sri Lanka co-convened the first-ever National Tax Dialogue to address contemporary issues surrounding taxation and fiscal policies in the island. The opening was attended by Shehan Semasinghe, State Minister of Finance and Ms. Azusa Kubota, Resident Representative, UNDP in Sri Lanka.

In light of the ongoing economic reforms and the need to bring in citizens’ perspectives, the National Dialogue drew attention to tax morale, social/fiscal contract, fairness in taxation, transparency and accountability of revenue institutions and digitalisation of public service delivery. The Dialogue launched research findings from the first ‘Taxpayer Perception Study’ in Sri Lanka, collaboratively conducted by the Ceylon Chamber of Commerce and UNDP in Sri Lanka. The nationally representative study revealed public perceptions on issues surrounding tax burden, evasion, trust in institutions, and experiences with revenue institutions which are particularly pertinent in the context of institutional reform.

By bringing together over 100 stakeholders representing diverse interests and perspectives including policymakers, legislators, bureaucrats, academia, professional bodies, private sector as well as civil society, the dialogue served as a platform for the exchange of opinions and sharing of insights across various awareness levels. The discussions led to a shared understanding of the importance of taxation for the achievement of SDGs and national development, and the need to enhance transparency and accountability in the use of tax revenue. The knowledge and insights generated through this dialogue will serve as a cornerstone for national policy-making institutions, providing valuable input for informed decision-making processes.

The event featured plenaries of global experts renowned for their exceptional expertise in the realm of taxation. Among them are Alex Cobham, Chief Executive of the Tax Justice Network; Lauren Kahn, Director of Strategy and Research, Public Digital UK; and Sudarshan Kasturirangan, Regional Programme Specialist for Asia Pacific for UNDP Tax for SDGs whose contributions enriched the discussions and provided invaluable perspectives on navigating the complexities of tax policies on a global scale.

Shehan Semasinghe, State Minister of Finance stated, “Taxation equips states with resources to progressively achieve SDGs. These revenues represent public resources that need to be deployed with a view to optimizing social returns. Considering this relationship, a national dialogue on taxation is a necessity and serves a constructive contribution to Sri Lanka’s democratic process.”

UNDP in Sri Lanka, Resident Representative, Ms. Azusa Kubota pointed out that “Sri Lanka’s economic crisis offers a historic opportunity to optimise the use of resources for SDG attainment. This entails concerted efforts to strengthen the linkages among planning, budgeting, monitoring and oversight and citizens’ engagement. Therefore, the National Tax Dialogue is timely to foster a whole-of-society understanding and commitment to improving tax morale for effective SDG attainment. The Dialogue assumes global significance, especially as the UN Secretary-General in February 2023 called for an ‘SDG Push’, a surge in investment of $500 billion annually in affordable long-term finance for developing countries.”

“One of the key recommendations stemming from the Tax Perception Survey is the need for wider public engagement of the tax officials with the taxpayers. UNDP is already supporting the Inland department (IRD) with such efforts in operationalizing solutions which are instrumental towards open and proactive communication and outreach,” she said.

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National economy grew by 5.3 per cent in Q1 2024: CBSL report

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Industry activities such as steel manufacturing grew by 11.8 per cent in Q1 2024

The national economy grew by 5.3 per cent in Q1 2024, contributed by all three major economic activities, states the weekly Economic Indicators report of the Central Bank of Sri Lanka (CBSL). Accordingly, Agriculture, Industry and Services activities grew by 1.1 per cent, 11.8 per cent and 2.6 per cent, respectively.

During January – April 2024, tea production registered a year-on-year decrease driven by unfavourable weather conditions, particularly in March and early April 2024. Although rubber production remained low in January – April 2024 compared to the corresponding period of the previous year, production has gained pace since the latter part of 2023. Coconut production recorded a marginal year-on-year decline in January – April 2024 due to the lingering impact of adverse weather conditions that prevailed in the first half of 2023.

Index of Industrial Production (IIP) in April 2024 increased by 10.3 per cent to 88.3 compared to April 2023, mainly contributed by the increases reported in the manufacture of Food products (10.2 per cent), Rubber and Plastic Products (39.0 per cent), and Wearing Apparels (9.1 per cent).

Meanwhile, on the monetary sector, the weekly Average Weighted Prime Lending Rate (AWPR) for the week ending 14th June 2024 decreased by 13 bps to 9.15 per cent compared to the previous week, according to the CBSL report.

In the first quarter of 2024, the country’s year-on-year GDP growth rate was estimated at a positive 5.3%, a significant improvement from the negative growth rate of 10% recorded in the same quarter of 2023. This growth is reflected in the increase in GDP from Rs. 3,161,963 million in the first quarter of 2023 to Rs. 3,329,583 million in the first quarter of 2024. This reflects a significant turnaround in the economic performance after the contraction experienced in the previous year and has positively influenced the perception of the economy, boosting confidence in the country’s economic stability and growth prospects.

In relation to this State Minister Shehan Semasinghe said on X,” In the first quarter of 2024, the country’s year-on-year GDP growth rate was estimated at a positive 5.3%, a significant improvement from the negative growth rate of 10% recorded in the same quarter of 2023. This growth is reflected in the increase in GDP from Rs. 3,161,963 million in the first quarter of 2023 to Rs. 3,329,583 million in the first quarter of 2024. This reflects a significant turnaround in the economic performance after the contraction experienced in the previous year and has positively influenced the perception of the economy, boosting confidence in the country’s economic stability and growth prospects.”

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Sri Lanka Insurance City Office branch relocated

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Chairman of Sri Lanka Insurance, Ronald C. Perera PC and Group Chief Executive Officer Chandana L. Aluthgama at the event

Sri Lanka Insurance Life (SLICLL) and Sri Lanka Insurance General (SLICGL) relocated its City Office Branch on the 12th of June 2024 to, 1st Floor, No 50, Hyde Park Corner, Colombo 02, to offer more convenient and efficient services to their customers.

The event was led by Chairman of Sri Lanka Insurance, Ronald C. Perera PC, Group Chief Executive Officer Chandana L. Aluthgama along with the senior management of SLICLL and SLICGL.

Representing Sri Lanka Insurance Life, Chief Business Officer Namalee A. Silva, Chief Officer – Life Dayarathna Perera, Acting Chief Financial Officer Sriyani Kulasinghe Weerasinghege, Deputy General Manager – Human Resource and Administration Rohitha Amarapala, Head of National Sales Jagath Welgama, Assistant General Manager – Life Chaminda Athauda, Assistant General Manager- Engineering Services Jeevantha Welihinda and Regional Manager – Western I – Upul Gamage. Also, Chief Financial Officer Malaka Bandara, Deputy General Manager- Support Services Chaminda Gunasinghe, Deputy General Manager/Head of Distribution – General Lalith De Silva, Acting Deputy General Manager – Underwriting – General Ms. Nadeera Gunawardene and Regional Manager Western I – Samantha Peiris were present representing Sri Lanka Insurance General.

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