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Sri Lanka economy managed in ‘alternative’ way: CB Governor

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ECONOMYNEXT – Sri Lanka’s economy is managed through new policies in an ‘alternative way’ but critics are using the downturn seen in the second quarter of 2020 to make, doom and gloom predictions for 2021, Central Bank Governor W D Lakshman said on Friday.

The alternative policy now being deployed seemed to be criticized based on a political or ideological basis in his view, he said.

It was important to have a positive view he said. A pick-up in business confidence has been seen in the purchasing managers’ index.

 

Alternative Policy

“It is important to note the government’s determination to move away from the, so far, heavy dependence on imports for foodstuffs,” he said. “That is indeed a really significant long term policy approach despite in the short run there is an adverse impact in the prices.”

Sri Lanka was already growing enough turmeric he said. Sri Lanka banned the import of turmeric and as prices shot up to 200 rupees for 50 grams (about 4,000 rupees a kilogram) smuggling commenced.

But now nobody is talking about turmeric, he said.

The Navy was deployed to stop smuggling. Sri Lanka had seen similar smuggling in the 1970s.

Most negative analysis and critiques were based on the performance of the economy in the second quarter of 2020, but conditions for 2021 were different, he said.

The country was now using limited closures of areas instead of national lockdowns and business activity was picking up with people starting to move around.

Tourism, which was the most badly hit was also now starting to unlike in 2020, he said.

The government was moving towards a mass vaccination campaign which would also help.

The International Monetary Fund has forecast global economic growth to pick up to around 5.5 percent in 2021.

 

Pick Up

Gross domestic growth of 5.5 to 6.0 percent in 2021 was expected, recovering from a 3.9 percent contraction in 2019. The low base will also help the recovery number, Governor Lakshman said.

Per capita GDP is expected to be 4,000 dollars.

Inflation of 4-6 percent is targeted in 2020. Private credit is expected to grow by 850 billion rupees.

There were challenges in the fiscal side and external sector. But we will repay debt and maintain our unblemished record of debt repayment.

Year end gross official reserves were targeted at 5.5 billion US dollars. Negotiations were underway with multilateral lenders, and foreign central banks as well as commercial banks for credit and swaps, details of which would be announced as they are finalized, he said.

It was not correct to simply add debt repayments and compare against foreign reserves. The foreign share of central government debt was expected to fall to 35 percent in 2021 according to Central Bank projections. In 2020, foreign loans were repaid partly by using foreign reserves and selling Treasury bills to the Central Bank. Despite stronger private credit a 500 million dollar surplus in the current account is also forecast.

 

Inflows in 2021

Exports are targeted tat 13 billion US dollars, with apparel at 6.0 billion USD, tea 1.5 billion dollars, gem and jewelry 1 billion dollars. Imports are expected to be 17 billion USD. Among services, IT/BPO is expected to be 1.75 billion USD and tourist earnings 1.75 billion USD.

Worker remittances would be around 7.5 billion US dollars and foreign direct investments would be about 2.0 billion US dollars. Port City lease sales would bring in an additional billion US dollars.

Sri Lanka had recorded a surplus in the current account for part of 2020 for the first time in decades.

In 2020 up to October the government had repaid foreign debt on a net basis. Up to August 2020, private credit was negative, and the second quarter GDP was negative, which will also help create a current account surplus, analysts say.



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Geneva HR vote:

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UK, Canada seek to influence member states against Lanka

The Sri Lanka Core group members, Canada and the UK, are campaigning hard to muster support for their resolution against Sri Lanka at the Geneva-based United Nations Human Rights Council. Sri Lanka Core group consists of Canada, Germany, the UK, North Macedonia, Montenegro and Malawi.

Canada High Commissioner David McKinnon met the Bangladesh High Commissioner Tareq Ariful Islam, at the Canada House, Colombo 07.

Sources said that meetings between diplomats of those countries were rare. Bangladesh is a member o the f UNHRC. The meeting at the Canada House took place close on the heels of the UK HC Sarah Hulton meeting South Korean Ambassador Woonjin Jeong. South Korea is also a member of the UNHRC.

The 47-member UNHRC is divided into five groups on regional basis. The Asia-Pacific Group consists of Bahrain, Bangladesh, China, Fiji, India, Indonesia, Japan, Marshall Islands, Nepal, Pakistan, the Philippines, South Korea and Uzbekistan; Western Europe and Other States consists of Austria, Denmark, France, Germany, Italy, the Netherlands and UK; Eastern European States consists of Armenia, Bulgaria, Czechoslovakia, Poland, Russia and Ukraine; Latin American and Caribbean States group consists of Argentina, Bahamas, Bolivia, Brazil, Cuba, Mexico, Uruguay and Venezuela and African States group consists of Burkina Faso, Cameroon, Côte d’Ivoire, Eritrea, Gabon, Libya, Malawi, Mauritania, Namibia, Senegal, Somalia, Sudan and Togo. (SF)

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CEB Chairman: Country would have been facing daily power cuts if not for MR’s initiative

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by Ifham Nizam

The country would have been facing a daily power cut of eight hours if not for the initiative taken by Prime Minister Mahinda Rajapaksa, when he was the President, to commence the first coal fired power plant complex at Norochcholai, said Ceylon Electricity Board (CEB) Chairman Engineer Vijitha Herath at yesterday’s inauguration of the first Liquefied Natural Gas (LNG) power plant in Sri Lanka.

PM Rajapaksa was the Chief Guest at the event. The CEB head stressed that if not for the Norochchoali plant the country would have lost more than Rs. 100 billion annually.

Power Minister Dullas Alahaperuma said that since the construction of the Norochcholai power plant in 2013, no large scale power plant had been built.

“Today, we are paying for this. Only small hydro power plants and solar power plants have been added to the national grid,” Alahaperuma said.

The power minister said that the LNG plant was coming up at an important time and would bring great relief to the economy which was heavily dependent on fossil fuels.

“Let there be a power sector that is not dependent on fossil fuels. The new power plant has been constructed at Kerawalapitiya, Wattala. This has been designed in accordance with international standards with minimal environmental damage. This power plant will have the highest efficiency F class gas turbine installed. The Kerawalapitiya Power Plant is a dual cycle power plant and will be completed in two phases. The installation of the first phase, or gas turbine, will generate 220 MW, which will be completed within 21 months and added to the national grid.”

Alhaperuma said that the second phase would add another 130 megawatts to the national grid via a steam turbine, which was expected to be completed in 12 months. With a total capacity of 300 MW over the next three years, the plant was expected to meet the country’s growing electricity demand, he said.

Speaking at the event Prime Minister Mahinda Rajapaksa stressed that the government wanted to provide electricity at affordable prices using the most advanced technology. There had been many delays in building power plants under the Yahapalana regime; but the current government would fast-track power projects, he added.

Minister Alahapperuma also said: “The LNG power plant will be a great relief to the economy. Renewable energy is the future. It was clearly mentioned in the President’s vision of prosperity as well as in the Mahinda Chinthana. Our goal is an economy fully armed with renewable energy.”

State Ministers Duminda Dissanayake, Susil Premajayantha, Nimal Lansa, Secretary to the Ministry of Power and Energy Wasantha Perera, LTL CEO of Lakdanavi Affiliates U.D. Jayawardena, and a large number of people’s representatives and government officials were present.

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US Secretary of State names Lankan for International Women of Courage (IWOC) award

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Lankan Human Rights Activist and Attorney-At-Law Ranitha Gnanarajah is among the recipients of this year’s International Women of Courage (IWOC) award presented by the United States Secretary of State.

Secretary of State Antony J. Blinken will host the annual International Women of Courage (IWOC) Awards virtual ceremony to honour a group of extraordinary women from around the world on Monday, March 8, at 10:00 am, the U.S. State Department announced.

The First Lady of the United States, Dr. Jill Biden will deliver remarks to recognize the courageous accomplishments of these women.

Now in its 15th year, the Secretary of State’s IWOC Award recognizes women from around the globe who have demonstrated exceptional courage and leadership in advocating for peace, justice, human rights, gender equality, and women’s empowerment – often at great personal risk and sacrifice, the US State Department says.

According to the biographies of the finalists for the 2012 IWOC Awards, Sri Lanka’s Ranitha Gnanarajah, a lawyer, and Head of the Legal Department of the Center for Human Rights and Development (CHRD) Sri Lanka continues to fight for and defend the rights of the marginalized and vulnerable communities in the country, despite threats and challenges by the state.

“Ranitha has dedicated her career to accountability and justice for victims of enforced disappearances and prisoners detained often for years without charge under Sri Lanka’s Prevention of Terrorism Act by providing free legal aid and related services. As an individual personally affected by the conflict and based on her extensive experience working with victims and their families, Ranitha has demonstrated tremendous passion and dedication to justice and accountability, especially for Sri Lanka’s most vulnerable populations.”

From the inception of this award in March 2007, the Department of State has recognized more than 155 awardees from over 75 countries.

U.S. diplomatic missions overseas nominate one woman of courage from their respective host countries, and finalists are selected and approved by senior Department officials.

Following the virtual IWOC ceremony, the awardees will participate in an International Visitor Leadership Programme (IVLP) virtual exchange and connect with their American counterparts.

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