ECONOMYNEXT – Sri Lanka Customs has seized two twenty-foot containers carrying 32,000 kilograms of scrap metal that were to be illegally exported to India, a Customs statement said.
The statement said on Thursday August 18 that 14,070 kg of scrap aluminum ingots, 7,480 kg of scrap copper, 4,500 kg of scrap aluminum and 6,780 kg of scrap steel were found in the two containers. The total market value of the scrap metal is estimated to be over 15 million Sri Lankan rupees.
A Customs declaration signed by the exporter had stated that the containers were carrying 40,000 kg of silicon coated electrical plates to be exported to India.
Investigations are ongoing, the statement said, adding that the goods will be confiscated and the suspects will be fined. (Colombo/Aug18/2022)
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ECONOMYNEXT – Staff at Sri Lanka’s Ayurveda Teaching Hospital in Borella held a demonstration to bring attention to several issues including medicine shortages faced by Ayurvedic practitioners around the island and to protest systemic corruption.
The protest, held on Friday August 19 was on behalf of several groups including the Sri Lanka Government Ayurveda Medical Officers’ Association, the All Ceylon Nurses’ Union and All Ceylon Ayurveda Health Service Union.
“There are no medicines in the Ayurveda hospitals. If we need 100, we only have 20. Doctors have to give close substitutes or sometimes turn patients away empty handed,” said protest organiser P D N S J Bandara.
Bandara said that despite having the capability to produce medicines locally, the government’s lack of planning meant that 90 percent of raw materials for Ayurvedic medicines had to be imported.
“We have around 5 Osu Uyan (medicinal herb gardens) in Sri Lanka, but the government has always come between development of those areas, preventing experimentation. All the medicines we need can be produced in the country, but because there are no proper policies, the gardens have been neglected and become forests,” he said.
The hospital had to campaign hard for funds to provide meals for patients who were admitted there, Bandara said.
“The people coming here are not rich people; but when they get admitted we can’t even feed them. There was a time when patients only had rice and gravy.”
Bandara alleged that funding was not getting through to hospitals.
“If we are allocated 600 million, we end up seeing only 100 million. This is the economic policy of this country.”
While Sri Lanka has a bloated public sector, Bandara said that Ayurvedic hospitals were critically understaffed to the point that it was almost impossible to function.
“This is because for 10 years no new recruitments have been made properly at the Ayurvedic hospitals. The International Monetary Fund (IMF) is saying there are too many state workers. Do they think we are getting paid in dollars? We are only getting a very poor salary, compared to the rest of the Asian region.”
Similar protests were being carried out in front of Ayurveda hospitals in Kurunegala, Pallekele, Ratnapura, Kegalla, Meegoda and the Chamal Rajapaksha Ayurveda Hospital in Hambantota, Bandara said. (Colombo/Aug19/2022)
ECONOMYNEXT- Sri Lanka’s average coconut prices grew 1.07 percent to 65,311.04 rupees for 1,000 nuts at the last auction held on Thursday August 18, official data showed.
The highest price was 71, 200 rupees up from 62,900 rupees in the last auction for 1,000 nuts, while the lowest was 58,000 also up from 57,000 rupees, at the auction conducted by Sri Lanka’s Coconut Development Authority.
Buyers offered 1,061,961 nuts at the auction and sold 589,239.
Exports of coconut-based products have risen by 12 percent in January to June to 434.48 million dollars from a year earlier, data show. (Colombo/Aug20/2022)
ECONOMYNEXT – An International Monetary Fund mission will visit Sri Lanka from August 24 to 31 for talks on “financial reforms and policies” which would bring the country closer to a staff level agreement, the Washington based lender said.
“The objective is to make progress towards reaching a staff-level agreement on a prospective IMF Extended Fund Facility (EFF) arrangement in the near term,” an IMF statement said.
“Because Sri Lanka’s public debt is assessed as unsustainable, approval by the IMF Executive Board of the EFF program would require adequate assurances by Sri Lanka’s creditors that debt sustainability will be restored.”
Sri Lanka defaulted on its debt after going on a borrowing spree from 2015 as flexible inflation targeting, with a reserve collecting peg, backed up by output gap targeting (printing money to boost growth) triggering frequent forex shortages and currency collapses.
As forex shortages hit the country in 2015, 2016, 2018, and 2020 debt was accumulated at central government level through sovereign bonds and term loans as the country lost the ability to repay maturing debt in rupees (except in 2017 and 2019) and also at state-run Ceylon Petroleum Corporation.
Later the central bank also borrowed as the central government and the CPC lost the ability borrow, a phenomenon critics called Nick Leeson loans. The Nick Leeson loans may also end up at the government eventually, some analysts say.
An attempt was made to on another borrowing spree in 2022 in the name of ‘bridging finance’ but it failed. However India is still loaning money to the central bank, which also borrowed and has negative foreign assets.
The central bank however has raised rates to smash private credit and reduce outflows in a bid to restore the credibility of the peg. The IMF usually does not disburse money until the BOP has been turned, through rate hikes and a float.
In the current crisis however Sri Lanka also has to re-structure its foreign debt. The rupee debt however has almost halved in dollar terms and the economy is inflating. However fears of rupee debt re-structuring has led to elevated rates.
IMF Staff Statement on Sri Lanka
Washington, DC: IMF staff plans to visit Colombo during August 24-31 to continue discussions with the Sri Lankan authorities on economic and financial reforms and policies. The objective is to make progress towards reaching a staff-level agreement on a prospective IMF Extended Fund Facility (EFF) arrangement in the near term. Because Sri Lanka’s public debt is assessed as unsustainable, approval by the IMF Executive Board of the EFF program would require adequate assurances by Sri Lanka’s creditors that debt sustainability will be restored. IMF staff would also continue the engagement with other stakeholders during the visit. The team will be led by Mr. Peter Breuer and Mr. Masahiro Nozaki.
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