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South Asia not ready for common currency

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Governor of the Central Bank of Sri Lanka, Dr P Nadalal Weerasinghe participating in a panel discussion at the 14th South Asian Economic Summit on Saturday

(Daily Star/ANN) South Asia is not yet ready for a common currency, said economists from countries in the region at the opening of a two-day 14th South Asia Economic Summit in Sheraton Dhaka on Saturday.

However, integration in trade and investment, increased mobility and people-to-people connectivity will provide the incentive for monetary cooperation in the region, they told a session on macroeconomic cooperation and the possibility of a common currency.

South Asia accounts for nearly one fourth of the global population and it has the market and ability to grow together, said the economists at the event being hosted by the Centre for Policy Dialogue.

Yet it is the least integrated in terms of trade, said Zahid Hussain, former lead economist at The World Bank, Bangladesh.Intra-regional trade accounts for 5 percent of South Asia’s total trade whereas the share of intra-regional trade in the Association of Southeast Asian Nations (Asean) region is 25 percent, he said.

South Asia is diverse in land area, gross domestic product or economic output, and population but the region’s countries have similar levels of human and economic development which calls for increased integration, he said.However, there is a lot of barriers to mobility, he said, citing non-tariff barriers, complicated visa policies and rigid bureaucracies.

“There is high sensitivity to national sovereignty. National currencies evoke strong attachment and emotion,” said Hussain at the event.

Political will to give up fiscal and monetary autonomy is also necessarily to go for a common currency, he said.

Complementarity in trade and free flow of labour and capital among the members can make cooperation over a currency more likely, he said.

Several countries have taken steps to reduce dependence on the US dollar and Bangladesh also took bilateral initiatives to settle trade in Chinese yuan and Indian rupee in 2022 and 2023, said Hussain.

However, the response with regard to trade in rupee is muted while exporters in China prefer receiving payments in dollars, euro and pound sterling, he said.There is persistent and growing trade deficit among Bangladesh, China and India, which makes trade in rupee and yuan limited here, he said.

Bangladesh’s average monthly trade deficit is $1.13 billion with China and $644 million with India.Comparability of economies is needed for a common currency, said Md Habibur Rahman, chief economist at Bangladesh Bank. “We are not right there…We can search for an appropriate time and opportunity for this,” he said.

A mechanism enabling independence is needed to avoid sanctions, said Abid Qaiyum Suleri, executive director at Sustainable Development Policy Institute, Pakistan.

Pakistan is relying on barter trade with countries such as Afghanistan, China and Russia, he said.

“Instead of losing hope on a common currency, we can explore so that we reduce dollar dependence,” said Suleri.

Posh Raj Pandey, senior economic advisor of the finance ministry of Nepal, proposed for establishing a regional financial market in this regard.

Use of the US dollar for international transaction settlement is declining, said Professor Sachin Chaturvedi, director general of the Research and Information System for Developing Countries, India.

International transactions other than that of the US dollar accounted for 9 percent of total global trade in July 2022 and it rose to 14 percent in December the same year, he added.

“This is an indication of rising arrangement of settlement in non-dollar,” he said, adding that 38 countries have shown interest to trade with India in rupee.

However, to make trade in the rupee popular between Bangladesh and India, a large line of credit in rupee is needed, said Ahsan H Mansur, executive director of the Policy Research Institute of Bangladesh.

“Otherwise, the performance we have seen is dismal…We also should think of currency swap to protect against external shock,” he said.

Countries should start with trade facilitation for economic integration and go for common documentation for customs, encourage firms to invest regionally and foster people to people connectivity, said Mansur.

Visa issuance and border control is quite pervasive and old fashioned, he said.

The economist also suggested harmonisation of tax and trade policies among members of the South Asian Association for Regional Cooperation.

“We also need monetary policy harmonisation. We need to think about bringing inflation close to each other and currency stability. Cooperation at the institutional level is critical,” he said.



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PM departs Sri Lanka to participate in the 56th World Economic Forum Annual Meeting in Davos-Klosters, Switzerland.

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Prime Minister Dr. Harini Amarasuriya departed Sri Lanka on this morning  (19 January) to participate in the 56th Annual Meeting of the World Economic Forum (WEF), to be held in Davos-Klosters, Switzerland, from 19 to 23 January 2026.

The World Economic Forum 2026 will be convened under the theme “A Spirit of Dialogue” and will bring together over 3,000 global leaders, including heads of state, government leaders, chief executive officers of leading multinational corporations, policymakers, and technology innovators.

During the visit, the Prime Minister is scheduled to hold a series of high-level bilateral meetings with key international leaders, heads of global institutions, and other distinguished dignitaries.

(Prime Minister’s Media Division)

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Coal scandal: Govt. urged to release lab report

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Pubudu Jagoda

The government is under mounting pressure to release a foreign laboratory report on the controversial coal consignment imported for the Lakvijaya Power Plant, with the Frontline Socialist Party (FSP) accusing the authorities of political interference and tender manipulation.

Speaking to the media after a party meeting in Homagama yesterday, FSP Education Secretary Pubudu Jagoda demanded an immediate explanation for the delay in disclosing the report from a Dutch laboratory, Cotecna, which was commissioned to test samples of the coal stocks in question after doubts were raised about an earlier local laboratory assessment. Jagoda said Cabinet media spokesperson Dr. Nalinda Jayatissa had announced that the report would be submitted by 16 January, but it had yet to be made public.

“The Sri Lankan lab confirmed the coal was substandard and could damage both the environment and power plant machinery. The foreign lab has independently verified the same results, we are told. Yet, political pressure appears to be delaying the release of the report.” He warned that any attempt to issue a false report would eventually be exposed and urged the government and the laboratory to maintain transparency.

SLPP MP D.V. Chanaka told Parliament last week that while 107 metric tonnes of coal were normally required per hour to generate 300 megawatts, but as many as 120 tonnes of newly imported coal were needed to produce the same amount of power due to its lower calorific value. Tests showed the first two shipments had calorific values of 5,600–5,800 kcal/kg, below the required minimum of 5,900 kcal/kg, said.

Jagoda accused the government of tailoring procurement rules to benefit an Indian supplier, citing a drastic reduction in reserve requirements—from one million metric tonnes in 2021 to just 100,000 tonnes in 2025—and alleged previous irregularities by the company, including a 2016 Auditor General finding regarding a rice supply contract and the 2019 suspension of a key agent of the company by the International Cricket Council over match-fixing.

He further criticised systemic manipulation of the coal tender process, including delays in issuing the tender from the usual February-March window to July, and progressively shortening the submission period from six weeks to three, giving an advantage to suppliers with stock on hand.

The Ministry of Energy recently issued an amended tender for 4.5 million metric tonnes of coal for the 2025/26 and 2026/27 periods, following the cancellation of an earlier tender. Jagoda warned that procurement delays and irregularities could trigger coal shortages, higher spot-market purchases, increased electricity costs, and potential power cuts if hydropower falls short.

Jagoda called for urgent investigations into the procurement process, insisting that any mismanagement or corruption should not be passed on to the public.Denying any wrongdoing, the government has said it is waiting for the lab report.

by Saman Indrajith ✍️

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Greenland dispute has compelled Europe to acknowledge US terrorising world with tariffs – CPSL

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Dr Weerasinghe

The Communist Party of Sri Lanka yesterday (18) alleged that the US was terrorising countries with unfair tariffs to compel them to align with its bigot policies.

CPSL General Secretary Dr. G. Weerasinghe said so responding to The Island query regarding European countries being threatened with fresh tariffs over their opposition to proposed US take-over of autonomous Danish territory Greenland.

US President Donald Trump has declared a 10% tariff on goods from Denmark, Norway, Sweden, France, Germany, the UK, the Netherlands and Finland with effect from 1 February but could later rise to 25% – and would last until a deal was reached. Targeted countries have condemned the US move.

Dr. Weerasinghe pointed out that none of the above-mentioned countries found fault with the US imposing taxes on countries doing trade with Russia and Iran. Now that they, too, had been targeted with similar US tactics, the CP official said, underscoring the pivotal importance of the world taking a stand against Trump’s behaviour.

Referring to the coverage of the Greenland developments, Dr. Weerasinghe said that news agencies quoted UK Prime Minister Keir Starmer as having said that the move was “completely wrong”, while French President Emmanuel Macron called it “unacceptable.

Dr. Weerasinghe said that Sri Lanka, still struggling to cope up with the post-Aragalaya economic crisis was also the target of discriminating US tariff policy. The top CPSL spokesman said that the recent US declaration of an immediate 25% increase in tariff on imports from countries doing business with Iran revealed the prejudiced nature of the US strategy. “Iran is one of our trading partners as well as the US. Threat of US tariffs on smaller countries is nothing but terrorism,” Dr. Weerasinghe said, stressing the urgent need for the issue at hand to be taken up at the UN.

Responding to another query, Dr. Weerasinghe cited the US targeting India over the latter’s trade with Russia as a case in point. He was commenting on the recent reports on India’s Reliance Industries and state-owned refiners sharply cutting crude oil imports from Russia. The CPSL official said that the EU wouldn’t have even bothered to examine the legitimacy of US tariff action if they hadn’t been targeted by the same action.

Perhaps, those who now complain of US threats over the dispute regarding Greenland’s future owed the world an explanation, Dr. Weerasinghe said. The reportage of the abduction of Venezuela’s President and the first lady underscored that the US intervened because it couldn’t bear the Maduro administration doing trade with China and other countries considered hostile to them, Dr. Weerasinghe said.

The CPSL official said that the NPP couldn’t turn a blind eye to what was happening. Just praising the US wouldn’t do Sri Lanka any good, he said, adding that the Greenland development underscored that the US under Trump was not concerned about the well-being of any other country but pursued an utterly one-sided strategy.

The US dealings with the NPP government, particularly the defence MoU should be examined taking into consideration US tariffs imposed on Sri Lanka at the onset of the second Trump administration and ongoing talks with the US, Dr. Weerasinghe.

By Shamindra Ferdinando ✍️

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