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Monday June 3rd, 2024

Sri Lanka inching forward on 76th independence as people backed difficult program: President

ECONOMYNEXT – Sri Lanka is inching forward from bankruptcy because people backed a program to stabilize the country amid great hardships, President Ranil Wickremesinghe said in his independence day message.

When Sri Lanka marked the 75th day of independence last year the country was labelled bankrupt.

“Undergoing various hardships, becuase the majority of the people supported a long term program to rebuild country we are now inching forward,” President Ranil Wickremesinghe said.

“If we go in this road, the difficulties will fade away. The cost of living will become lighter. Economy will become stronger. Mother Sri Lanka will flower.”

Sri Lanka defaulted in 2022 after the most aggressive growth by printing money (macro-economic policy) ever deployed macro-economists in the country in the history of the central bank which was set up in 1950.

The central bank in the course of mis-targeting rates for various reasons (re-financing rural credit, other private credit, sterilizing interventions) to suppress rates had depreciated the currency from 4.70 to 184 by 2020 by denying monetary stability to the nation.

The 2020 exercise of extreme macro-economic policy to close a ‘persistent output gap’ led to the collapse of the currency to 330 and the exercise to re-estabilish credibility in the rupee led to two years of contraction.

Trade and exchange controls swiftly as the central bank became more activist along with post Keynesianism took off in the West especially in the 1960s, eventually leading to the collapse of the Bretton Woods in 1971 and the ‘closed economy’.

Before the central bank was set up, Sri Lanka (then Ceylon) had a currency board, like Singapore, Hong Kong and somewhat similar to the Dubai, tying the hands of macro-economists and giving stability to the general public, especially less affluent classes.

Under the currency board Sri Lanka was considered only second to Japan in several indictors at the time of independence. The country’s foreign reserves equaled 11 month of imports. In 2022 the central bank’s reserves were negative after it borrowed dollars to print money.

“When Sri Lanka became an independent nation is 1948, the expectation of the international community was that Sri Lanka would become a developed nation in Asia,” Prime Minister Wickremesinghe said.

“We had all the background factors for that. But in the end we became a bankrupt nation.”

“We should not make the mistakes we have done in the past. That the current path is correct is correct has been proved before the entire world. We should be determined to go on this path and on this independent day.

I am asking all Sri Lankans in the country and outside to help the country to help to the extent they can to re-build Sri Lanka.

Sri Lanka’s rupee has been allowed to appreciate from 360 to 325 levels and to around 315 this week, with the help of deflationary monetary policy.

The 76th Independence Day celebrations are celebrated in the presence of Thai Prime Minister Srettha Thavisin.

Thailand had one of the least activist central banks even during the break up the of Bretton Woods and in the steep growth period had negative net assets and strong fiscal metrics as a result of monetary stability.

Thailand’s peg had only broken a few times in the first few years after the the IMF’s second amendment and the East Asian crisis in 1997, while Sri Lanka repeatedly goes to the IMF after mis-targeting rates. (Colombo/Feb04/2024)

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UNP gen secy defends call for postponing Sri Lanka poll, claims opposition silent

The UNP party headquarters in Pitakotte/EconomyNext

ECONOMYNEXT — United National Party (UNP) General Secretary Palitha Range Bandara has defended his call for postponing Sri Lanka’s presidential election by two years, claiming that his proposal was not undemocratic nor unconstitutional.

Speaking to reporters at the UNP headquarters Monday June 03 morning, Bandara also claimed that neither opposition leader Sajith Premadasa nor National People’s Power (NPP) leader Anura Kumara Dissanayake have spoken against his proposal.

“I have made no statement that’s undemocratic. My statement was in line with provisions of the constitution,” the former UNP parliamentarian said.

He quoted Section 86 of Chapter XIII of the constitution which says: “The President may, subject to the provisions of Article 85, submit to the People by Referendum any matter which in the opinion of the President is of national importance.”

Sections 87.1, 87.2 also elaborates on the matter and describes the parliament’s role, said Bandara.

“I spoke of a referendum and parliament’s duty. Neither of this is antidemocratic or unconstitutional. As per the constitution, priority should be given to ensuring people’s right to life,” he said.

“Some parties may be against what I proposed. They may criticse me. But what I ask them is to come to one position as political parties and make a statement on whether they’re ready to continue the ongoing economic programme,” he added.

Bandara claimed that, though thee has been much criticism of his proposal for a postponement of the presidential election, President Wickremesinghe’s rivals Premadasa and Dissanayake have yet to remark on the matter.

“I suggested that [Premadasa] make this proposal in parliament and for [Dissanayake] to second it. But I don’t see that either Premadasa nor Dissanayake is opposed to it. To date, I have not seen nor heard either of them utter a word against this. I believe they have no objection to my proposal which was made for the betterment of the country,” he said. (Colombo/Jun03/2024)

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300 of 100,000 trees in Colombo considered high risk: state minister

ECONOMYNEXT – Trees in Sri Lanka’s capital Colombo are being monitored by the municipal council, Army and Civil Defense Force as the severe weather conditions continue, State Minister for Defense Premitha Bandara Tennakoon said.

“Within the Colombo Municipal Council city limits, there are 100,000 trees. Of these, around 300 are considered high risk,” Tennakoon told reporters at a media conference to raise awareness about the current disaster management situation.

Not all trees required to be cut down he said. “We can trim some of the branches and retain them.”

The problem was that buildings in the vicinity of the tree had cut branches on one side, causing it to become unbalanced, the minister said.

New laws would be brought in so provincial/municipal institutions could strengthen enforcement of building codes.

“We don’t have a single institution that can issue a warning about a tree. Not one to tell us what trees can or cannot be planted near a road.

“Trees should be suitable for the area. Some trees have roots that spread and damage roads, buildings. When the roots can’t go deep, they tend to topple over.

“Now Environment Day is coming up, and anyone can go plant a tree by the road. We have to take a decision about this. We have to enforce laws strongly in future.” (Colombo/June3/2024)

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Support for AKD drops to SP’s level while RW makes gains, Sri Lanka poll shows

ECONOMYNEXT — Support for leftist candidate Anura Kumara Dissanayake dropped six percentage points to 39 percent in April, levelling with opposition leader Sajith Premadasa, while support for President Ranil Wickremesinghe increased three points to 13 percent in a presidential election voting intent poll.

The Sri Lanka Opinion Tracker Survey (SLOTS) conducted by the Institute for Health Policy showed that, according to its Multilevel Regression and Poststratification (MRP) provisional estimates of presidential election voting intent, National People’s Power (NPP) leader Dissanayake and main opposition Samagi Jana Balawegaya (SJB) lader Premadasa were now neck and neck while United National Party (UNP) leader Wickremesinghe had made some gains. A generic candidate for the ruling Sri Lanka Podujana Peramuna (SLPP) had the support of 9 percent of the people surveyed, up 1 percentage point from March.

These estimates use the January 2024 revision of the IHP’s SLOTS MRP model. The latest update is for all adults and uses data from 17,134 interviews conducted from October 2021 to 19 May 2024, including 444 interviews during April 2024. According to the institute, 100 bootstraps were run to capture model uncertainty. Margins of error are assessed as 1–4% for April.

SLOTS polling director and IHP director Ravi Rannan-Eliya was quoted as saying: “The SLOTS polling in April suffered from a lower response rate owing to the New Year holidays, and we think this may have skewed the sample in favour of SJB supporters. The early May interviews partly compensated for this, and it’s possible that our June interviews may result in further revisions
to our model estimates.

Rannan-Eliya also noted that a number of other internet polls may be overestimating support for the NPP or its main constituent party the Janatha Vimukthi Peramuna (JVP) by about 10 percent.

“We’ve been asked about some other recent internet polls that showed much higher levels of support for the NPP/JVP. We think these over-estimate NPP/JVP support. SLOTS routinely collects data from all respondents on whether they have internet access, and whether they are willing to participate in an internet survey. These data show that NPP/JVP supporters are far more likely to have internet access and even more likely to be willing to respond to internet surveys, and this difference remains even after controlling for past voting behaviour. Our data indicates internet polls may overestimate NPP/JVP support by about 10 percent, and for this kind of reason we have previously decided that the time is not right to do internet polling,” he said.

According to the IHP, its SLOTS MRP methodology first estimates the relationship between a wide variety of characteristics about respondents and their opinions – in this case, ‘If there was a Presidential Election today, who would you vote for?’– in a multilevel statistical model that also smooths month to month changes. It then uses a large data file that is calibrated to the national population to predict voting intent in each month since October 2021, according to what the multilevel model says about their probability of voting for various parties (‘post-stratification’) at each point in time. The multilevel model was estimated 100 times to reflect underlying uncertainties in the model and to obtain margins of error, the institute said. (Colombo/Jun03/2024)

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