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Monday June 3rd, 2024

Sri Lanka private credit negative in May, CB credit sharply down

ECONOMYEXT – Sri Lanka’s credit to private borrowers contracted 2.5 billion rupees in May to 5,541.8 billion rupees, after a 43.4 billion rupee contraction in April, which coincided with a settlement of a payment arrears to contractors by the state.

Credit to government increased 10.3 billion rupees to 2,594.5 billion rupees in May, whole state enterprise credit was almost unchanged at 726.4 billion rupees.

Central bank credit to the government (the outstanding stock of printed money) fell 118.9 billion rupees in May as excess liquidity was mopped up as extra cash issued to meet April festival needs came back into the banking system.

Reserve money fell from 924.2 billion rupees in April fo 849.4 billion rupees.

In Sri Lanka the excess cash injections tends to pressure the rupee peg with the US dollar when credit demand is strong, unless that cash is withdrawn quickly.

In 2018, analysts pointed that the central triggered a run on the rupee by injecting large volumes of excess liquidity in to the banking system in April in excess of a real demand for money in the festival period.

However monetary policy was more cautious this year. Despite weak credit data showed that the central bank had to sell 40 million US dollars in April to maintain the rupee peg, though 45 million dollars was also bought.

So far in 2018 central bank credit to government had fallen 155 billion rupees despite a foreign reserve appropriation in January, as term reverse repo injections which helped triggered monetary instability was terminated.

Private credit in the first five months of 2019 had contracted 29 billion rupees, a reversal from a growth 251 billion rupees in 2018.

Sri Lanka’s central bank printed money in 2018 as the credit system to recovered to target inflation and close an econometric output gap, making the rupee fall from 153 to the 182 to the US dollar and generating monetary instability to kill the recovery, analysts have pointed out. (Colombo/July15/2019)

There have been calls to the central bank to stop targeting two anchors (external by defending a peg to collect forex reserves) and printing money to push inflation up in the style of a non-existent floating rate, which are contradictory and generates a collapse of the peg. (Colombo/July14/20190

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Water levels rising in Sri Lanka Kalu, Nilwala river basins: Irrigation Department

Sri Lanka Navy assisting in rescue operations (Pic courtesy SL Navy)

ECONOMYNEXT – Sri Lanka’s Irrigation Department has issued warnings that water levels in the Kalu and Nilwala river basins are rising and major flooding is possible due to the continuous rain. People living in close proximity are advised to take precautions.

“There is a high possibility of slowly increasing prevailing flood lowline areas of Kiriella, Millaniya, Ingiriya, Horana, Dodangoda, Bulathsinhala, Palinda Nuwara and Madurawala D/S divisions of Ratnapura and Kalutara Districts, up to next 48 hours,” it said issuing a warning.

“In addition, flood situation prevailing at upstream lowline areas of Ratnapura district will further be prevailing with a slight decrease.

“The residents and vehicle drivers running through those area are requested to pay high attention in this regard.

“Disaster Management Authorities are requested to take adequate precautions in this regard.”

The island is in the midst of south western monsoon.

DMC reported that 11,864 people belonging to 3,727 families have been affected due to the weather in Rathnapura, Kegalle, Kilinochchi, Jaffna, Mullaitivu, Kalutara, Gampaha, Colombo, Galle, Matara, Hambantota, Puttalam, Kurunegala, Kandy, Nuwara Eliya, Anuradhapura, Polonnaruwa, Badulla, Moneragala, and Trincomalee districts.

Meanwhile, the Meteorology Department stated that showers are expected on most parts of the island today.(Colombo/June3/2024)

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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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