Published on: October 22, 2024

Prepare a New Proposal to rationalize the Provincial Council System

Provincial Councils Should Act to Improve the Living Conditions of the People

– Says the President at the Governors Meeting

President Anura Kumara Dissanayake instructed the Governors to prepare and submit a new proposal aimed at rationalizing the Provincial Council mechanism.

The President also stated that, given the current government’s transitional period, the provincial councils must strive to deliver the best possible services to improve the living conditions of the people.

President Dissanayake made these remarks during a discussion held with the Governors this morning (22) at the Presidential Secretariat.

He urged the governors to engage in all possible economic and social initiatives to improve the living conditions of the public.

During the meeting, the President also highlighted the importance of establishing a new political culture and reiterated that the trust placed in him by the people should be fulfilled through effective action.

He reminded the Governors to avoid previous poor practices in the use of state assets and to remain committed to delivering quality public service.

Attention was drawn to existing vacancies in the health and education sectors under the Provincial Councils, with decisions made to find viable solutions.

The meeting included discussions on the lands in the Northern and Eastern provinces as well as finance.

Additionally, the President also made inquiries about the allocation of land to farmers in Kantale.

Participating Governors included Nagalingam Vedanayagam from the Northern Province, Champa Janaki Rajaratne from the Sabaragamuwa Province, Professor Jayantha Lal Ratnasekera from the Eastern Province, Kapila Jayasekera from the Uva Province, Bandula Harischandra from the Southern Province, Prof. Sarath Abeykoon from the Central Province, and Wasantha Kumara Wimalasiri from the North Central Province.

https://pmd.gov.lk/news/prepare-a-new-proposal-to-rationalize-the-provincial-council-system/

How important was India’s help to Sri Lanka in 2022?

The IMF program is to give Sri Lanka $ 3 billion over four years with conditions. India gave $ 4 billion in one year to Sri Lanka with no conditions. Also, the timing is important to note. The IMF program came in 2023 when Sri Lanka had stabilised to a large extent under President Ranil Wickremesinghe. Also, most of the toughest policies that were needed for Sri Lanka to achieve macroeconomic stability were already put in place by the former President Ranil Wickremesinghe when the IMF program was approved. But India came to Sri Lanka’s aid when Sri Lanka was staring at the abyss with a Government that was behaving very irrationally in January 2022 with the country facing macroeconomic instability. This point should not be forgotten by the Sri Lankan public

The Maldives is close to an economic crisis similar to which unfolded in Sri Lanka in 2022. The government of Muizzu came to power with an “India Out” campaign. But today, as was the case for Sri Lanka in 2022, when Maldives is in deep economic trouble and is close to defaulting, it is India that has come to its aid. India could have very well looked the other way but it didn’t. This should be a clear message for South Asian nations that they can have many best friends but India will remain the brother who will come to their help when things go bad.

The timing of India’s assistance in 2022

What most people in Sri Lanka do not realise is that India started rolling out its financial assistance totalling $ 4 billion (over the year) in January 2022 itself. Most of India’s $ 4 billion in 2022 came when President Gotabaya Rajapaksa was the President. In January 2022, the situation for Sri Lanka was dark. Sri Lanka needed to pay $ 6.9 billion by the end of 2022 and it only had $ 1.6 billion in reserves. Sri Lanka was shut out of international capital markets. It was staring at a default and the Government at that time was refusing to go to the IMF. Many other countries would have refrained from sending money to Sri Lanka in January 2022 as there was a strong possibility that that money would not be paid back any time soon. But still India went ahead and helped Sri Lanka.

IMF support vs. Indian support

The IMF program is to give Sri Lanka $ 3 billion over four years with conditions. India gave $ 4 billion in one year to Sri Lanka with no conditions. Also, the timing is important to note. The IMF program came in 2023 when Sri Lanka had stabilised to a large extent under President Ranil Wickremesinghe. Also, most of the toughest policies that were needed for Sri Lanka to achieve macroeconomic stability were already put in place by the former President Ranil Wickremesinghe when the IMF program was approved. But India came to Sri Lanka’s aid when Sri Lanka was staring at the abyss with a Government that was behaving very irrationally in January 2022 with the country facing macroeconomic instability. This point should not be forgotten by the Sri Lankan public.

Support given by India in getting IMF assistance

An IMF program is essential for Sri Lanka as the IMF is not about the $3 billion it gives but the verification it brings. The IMF is like an auditor which brings trust to the nation back. World Bank and ADB funding is linked to the IMF and so are debt restructuring with many creditors. India was instrumental in making it easier for Sri Lanka to enter the IMF program. As a former minister was saying that the IMF Managing Director Kristalina Georgieva had told him, that when the Indian Finance Minister Nirmala Sitharaman had met the IMF chief, the Indian Finance Minister had spent over 75% of her time speaking for Sri Lanka and only 25% of her time speaking about India. This shows the care and effort India placed in pushing the IMF to support Sri Lanka. India was also the first country to give financing assurance to the IMF for Sri Lanka and was one of the three key members of the Official creditor Committee along with France and Japan.

Indian Prime Minister’s help for Sri Lanka

A fact that is not mentioned much is the decision of Indian Prime Minister Narendra Modi in helping Sri Lanka. In January 2022, the Indian Prime Minister was two years away from reelection and in India there are many state elections in any given year in which his party, the BJP contests. Providing $ 4 billion to Sri Lanka is a large amount. PM Modi could have very well directed it towards domestic projects. For example, one of PM Modi’s flagship projects under his Production linked incentive scheme (PLI) was where the Indian government gave $ 2 billion worth of subsidies to Micron Technology to produce semiconductors in Gujarat which was to create 5,000 direct jobs and 15,000 indirect jobs.

PM Modi could have easily been tempted to initiate two more projects like Micron in India which could have increased his votes rather than help Sri Lanka with $ 4 billion (which is twice the amount the Indian government directed towards Micron). Putting the well being of Sri Lankans even above domestic interests by the Indian government should not be forgotten by Sri Lankans.

How significant is $ 4 billion for India?

Lastly, what many Sri Lankans need to realise is that $ 4 billion is much more significant for India than for the other bilateral creditors like Japan or even China. India is a lower middle income country and GDP per capita terms, Sri Lanka is still richer than India. In an imaginary situation, let’s say China (as it’s the largest bilateral creditor) and India both provided $ 4 billion in assistance for argument’s sake. China’s economy is almost five times larger than India’s so India’s assistance of $ 4 billion as a proportion of its economic size would be five times more valuable than $ 4 billion from China.

Conclusion

India’s help was significant at a crucial time as Sri Lanka was going through a nightmarish situation in 2022. It is a good time for Sri Lankans to reflect on this crucial bilateral relationship with our neighbour to the north. The way forward does not have to be based on gratitude alone but more on opportunity. India is the fastest growing large economy in the world and soon set to be the third largest economy in the world. India’s middle class alone is set to hit 500 million which is an opportunity for Sri Lankan businesses. Sri Lanka is a country that is known to not miss an opportunity to miss an opportunity. The next big opportunity for Sri Lanka is to our north and hope we do not miss this.

(The writer is an Economist and he is an economic policy consultant at the Asian Development Bank. He is a regular columnist for the International Monetary Fund. The opinions expressed in this article are strictly the author’s

personal views.)

https://www.ft.lk/opinion/How-important-was-India-s-help-to-Sri-Lanka-in-2022/14-768162

Petitioners seek SC intervention against Mannar Wind Power Project citing public interest

The Bishop of the Diocese of Mannar and three prominent environmentalists this week petitioned the Supreme Court in the public interest against the proposed 250 MW Mannar Wind Power Project by Adani Green Energy.

Rev. Dr. Fidelis Lionel Emmanuel Fernando along with Rohan Pethiyagoda, Prof. Nimal Gunatilleke and Prof. Sarath Kotagama have challenged the procurement process and proposed construction of the project by Adani Green Energy PTE Ltd and/or Adani Green Energy S L Limited.

The case names 67 respondents including the Cabinet of Ministers, the Sri Lanka Sustainable Energy Authority (SLSEA), the Central Environmental Authority (CEA), the Board of Investment, the Ceylon Electricity Board, the Public Utilities Commission Sri Lanka and the Attorney General, among others.

It raises concerns regarding the credibility of the project’s environmental impact assessment (EIA) and the role played by the SLSEA. It flags certain procedural issues in the awarding of the purported contract and questions the characterisation of the project as a government-to-government deal.

It questions the basis for the negotiated tariff to be fixed at USD 8.26 cents per kilowatt-hour for a period of 20 years when the EIA conducts its assessment based on a cost of USD 4.6 cents, potentially causing considerable financial loss to the country and a burden on consumers.

The petition also states that, notwithstanding the intensely public nature of the project, its vital importance to the general public and public resources, including the natural environment, as well as the paramountcy of transparency and openness in good governance, “there is a paucity of available data and information”.

It requests Court to compel the release of the entire files and records including the call for bids for (if any) and responses to both the Mannar and proposed 234MW Pooneryn plants; records of deliberations and negotiations; Cabinet memoranda and decisions; unit price discussions including formulae related to the computation of the price per kilowatt hour; the criteria and benchmarks or any other basis for assessments of the project; and other relevant information.

The petition holds that the EIA commissioned by the SLSEA “appears to be a formality, conducted with a premeditated intention/decision to award the construction and operation of the project to predetermined contractors”.

Despite the CEA being the designated body, it appears from publicly disseminated information that the Power and Energy Minister was de facto acting in the capacity of the project approving authority, it states.

There is no transparency surrounding the purported leasing of 202 hectares acquired on Mannar Island for the project; and no information on compensation payable to affected landowners, the cost of which should be recovered from the investor.

The EIA has also not adequately evaluated alternative sites—Ambewela, the South East coast, Kalpitiya and Jaffna—or expressed “any acceptable rationale” for why Mannar Island was chosen.

“The promotion of Mannar when compared to other sites is made even more confounding given that it is the focal point of the Central Asian Flyway for over five million [5,000,000] migratory birds travelling to, and through, Mannar island on an annual basis, making it a crucial area for conservation and tourism which aspects are not as markedly evident in the other sites considered,” the petition states.

In seeking their relief, the petitioners pray that the Supreme Court declares a violation of their fundamental rights and that of the citizenry at large and the decisions made to award the project to Adani as wrongful; and calls for any consequential actions undertaken to be declared illegal.

The petition states that the case has been filed to further the national interest, to preserve and protect public property, including the environment, flora and fauna, public finances and to safeguard the rights and freedoms of the general public of Sri Lanka and its future generations.

https://www.sundaytimes.lk/240616/news/petitioners-seek-sc-intervention-against-mannar-wind-power-project-citing-public-interest-560422.html

Australian company’s multibillion sandmining project mired in Mannar protests

Protests hinder progress towards mining licence
Residents allege large-scale land robberies involving brokers working for company
Environmentalists fear existential threats such as soil losing fertility and contamination of water sources
Company representative downplays impacts of the project on people’s livelihood

By Mimi Alphonsus and S. Rubatheesan

For over a decade, an Australian company has tried to secure mining licences to extract heavy mineral sands from the ecologically rich region of Mannar Island—the fourth largest ilmenite deposit in the world—with little success.

Renewed attempts to push the project further were met with protests by locals over land usage and severe existential concerns about the environmental consequences.

Renewed attempts to push the project further were met with protests by locals. Pic by Joseph Nayan

The Australian company, Titanium Sands Limited (TSL), along with their local subsidiaries, have engaged in exploration activities covering vast swathes of Mannar Island. Its preliminary scientific studies found key minerals such as ilmenite, rutile, zircon and garnet. According to data from the Geological Survey and Mines Bureau (GSMB), Mannar Island has 53 million metric tonnes of mineral soil.

The company has secured land access agreements for mining on 296 acres, according to the company’s responses to the “Basic Information Questionnaire” (BIQ) submitted to the Central Environmental Authority (CEA). The Sunday Times obtained a copy through a Right to Information (RTI) request.

TSL is currently in discussions with GSMB to secure a mining licence with a pending environmental impact assessment (EIA), which is yet to be finalised due to protests by local communities.

Environmental concerns

The CEA’s Environmental Assessment and Management Division Deputy Director General, N.S. Gamage, told the Sunday Times that they were unable to conduct the required preliminary scoping study before beginning the EIA since residents vehemently opposed the project.

“The project proponent then approached the Presidential Secretariat, which requested a meeting to share information with the public at the Mannar District Secretariat,” said Mr. Gamage.

On May 13, a multi-stakeholder meeting was held at the Mannar District Secretariat to “brief” the local communities, fishermen unions, and civil society groups. There were heated exchanges between company representatives and local communities, who argued that if mining at a depth of 2 to 10 metres is allowed on low-lying land like Mannar Island, it would lead to saltwater contamination and flooding and ruin the fertile soil.

One concerned local among the audience was heard saying, “Don’t try to hoodwink our people with your lies. This is our land. We won’t accept any report you bring forward. If you pay enough, they will write any number of lies in it.”

Mannar District Secretary K. Kanakeshwaran also acknowledged receiving multiple complaints and petitions from local communities opposing the multibillion-dollar project.

During the meeting, the mining company representatives downplayed the short- and long-term impacts of the project.

Sivanesan Somanathar, an environmental consultant commissioned by TSL, said that an EIA would be necessary to assess all environmental risks and that many concerns could be mitigated.

In his presentation, he said there would be “no dewatering” and “no saltwater intrusion” and assured replanting of whichever vegetation the landowner preferred after the project’s completion.

The project BIQ submitted by the company to CEA indicated short-term impacts on soils and land use, surface and groundwater quality, and drainage and hydrology, as well as medium-term impacts on the landscape and visual environment.

GSMB’s Senior Director of Geology Starin Fernando dismissed claims that exploration drilling below the water table is harmful. “However, at the mining stage, if it goes below the water table, there will be saltwater intrusion,” he said. However, he said GSMB does not deal with this problem, and the National Water Supply and Drainage Board should provide tentative solutions.

Environmentalists and conservators raised serious concerns about the long-term impact of the project on a rich biodiverse region like Mannar Island, which is home to 874 hectares of mangrove plants and located in the global migratory path of some 400 bird species.

The 31,135-acre Mannar Island where the proposed project will be implemented is a highly populated area with 70,379 people residing there.

For Dr. Soosai Anandan, a retired Professor of Geography at the University of Jaffna, this project sounds the death knell for local habitats and communities who are still struggling to revive the rural economy after the end of the civil war in 2009.

“This project, if implemented, will not only change the landscape and terrain of the island as a whole but further accelerate the existing livelihood issues such as access to safe drinking water, farming and fishing,” Prof. Anandan said.

“The island is already below sea level. When they drill and mine in this sensitive region, the seawater will seep through the land, posing a threat to farming and drinking water,” he said.

Land Issues

Another point of contention has been land access for the project. “My family had 35 acres of palmyrah land for generations,” said a resident of Olaithoduvai who sells palmyrah toddy, fronds and firewood for a living.

“It is our ancestral wealth, but we don’t have title deeds for it. When they brought in these private land ownership laws decades ago, our people did not know how to get this land registered,” he explained. “Suddenly, big landlords from other villages started to fence it up in recent years, and, shortly after, big machinery appeared. I can’t access the palmyrah forest on that land and earn my income.”

Other residents are fearful that their livestock will lose access to grazing lands due to landscape changes. According to the BIQ, 60% of the lands proposed for mining are forested areas, and the project will require the removal of topsoil and vegetation.

The Sunday Times inspected government survey maps and spoke to the Land Title Settlement Department to understand the land problem. In several areas where TSL claims that land access agreements have been procured, ownership is tagged as “claimant not known.”

Mannar has hundreds of acres of land with unclear ownership or disputed cases, partly due to delays in drawing up a “village plan” by the Land Title Settlement Department but also owing to decades of wartime displacement. As a result, communities that have lived and worked there for generations are vulnerable to land grabbing.

Local officials who requested anonymity told the Sunday Times that TSL and other companies have been procuring land on Mannar Island by signing agreements with individuals who have made a “declaration deed,” a legal document claiming ownership.

“The government will only register a property if they are 100% sure of its ownership, but a company need not adhere to the same standard and can make agreements with whoever claims the land and is willing to give it to them,” explained the official. “Once they make a declaration deed, they transfer it a few times so it has a history and becomes normalised.”

Although not illegal, the official believes the process is being abused.

Villagers whose lands were utilised for exploration activities allege that middlemen, who collected land details and approached them individually with false promises to secure land access, later handed these properties over to the mining company.

“This way, they can pay a small sum to the aggrieved family and get them not to claim the land.” Another resident said she and her family agreed to hand over their lands to a big landowner as they had no deeds to challenge his claim. “They promised to pay us money in return, but I haven’t received a cent,” she alleged.

Saliya Galagoda, TSL’s local representative, acknowledged that large landowners were fencing off properties in sand mining areas, but he said they were doing so of their own volition and solely to increase the price when mining companies try to access the land.

Mistrust in the project also stems from years of secretive practices adopted by various companies to secure access to the land. Residents said that for years, local companies and brokers approached them for exploration by saying they were “checking the water,” “researching sand,” and part of a “government project.”

Speaking on condition of anonymity, a former broker who worked for one such company said that they would use “politically big people” to ensure villagers didn’t question the project too much. “Because people knew who I was in the community, they let me enter and explore their lands,” he said. “I don’t feel good about it.”

TSL’s Galagoda, who took over the project in 2021, said that since he started working, things have been done “correctly.” “We paid Rs. 12,500 for every single hole that was drilled,” he added.

While the application for a mining licence at the moment covers a relatively modest area, TSL currently has over 17,000 acres—more than half of Mannar Island—under retention. According to the GSMB licensing process, TSL has one to two years to apply for and receive a mining licence before retention expires permanently.

TSL complains of delays in obtaining approval

Despite nearly two years passing since Titanium Sands Ltd. (TSL) completed exploration activities, the company is awaiting approvals to begin the environmental studies. It says this is “something that has continually been delayed by the political situation in Sri Lanka.”

In a written response to the questionnaire sent by the Sunday Times, TSL Director Jason Ferris claimed the company has so far invested Rs. 2 billion from foreign sources on the project, and another Rs. 24 billion will be invested once the mining licence is approved.

“Exploration was only completed in 2022, and the final resource report was presented to GSMB in September 2022, which was accepted and signed off by GSMB. Since this time, the company has been waiting on the government process for each of the next stages; so the official mining licence process has been ongoing for approx. 18 months, not 10 years,” Mr. Ferris said.

Responding to the cancellations of exploration licences for TSL-owned companies in 2021 and their subsequent renewal, the company said “under legal opinion, the structure of TSL was proven correct and new licences were issued.”

TSL denied receiving any benefits through tax holidays but indicated that “BOI discussions are ongoing along with the EIA discussions, which are constantly delayed by government departments not doing their jobs.”

https://www.sundaytimes.lk/240616/news/australian-companys-multibillion-sandmining-project-mired-in-mannar-protests-560380.html

Sri Lanka ready to join BRI phase two, China FTA to be expedited

ECONOMYNEXT – Sri Lanka is among countries ready to join the second phase of China’s Belt & Road Initiative (BRI), with a free trade agreement (FTA) between the two countries to be also expedited, according to a discussion between President Ranil Wickremesinghe and a top Chinese official.

Wickremesinghe told visiting special envoy of the Chinese President, state councillor Shen Yiqin, that the BRI is expected to make a more substantial economic contribution, according to a statement from the president’s office said Monday November 20 afternoon.

China is also prioritising the extension of a China-Myanmar Economic Corridor to the island nation, according to Yiqin.

This was during a courtesy call paid by President Xi Jinping’s envoy to President Wickremesinghe Monday morning in Colombo. Both parties also agreed to expedite the implementation of the China-Sri Lanka Free Trade Agreement, the statement said.

The primary focus of the meeting was to enhance tourism and trade relations between the two countries, according to the statement.

“The President expressed gratitude for China’s support to Sri Lanka, notably acknowledging their assistance in the country’s debt restructuring programme. He extended sincere thanks to the Chinese President and the government for their invaluable support in this regard,” the statement said.

Wickremesinghe also expressed Sri Lanka’s desire to augment cooperation between the two countries in the fields of tourism, sports and agriculture . Both the Hambantota Port and Colombo Port City are currently prepared for investment opportunities, he said.

“The President also noted that countries such as Sri Lanka, participants in the Belt & Road initiative, are prepared to embark on the second phase of the initiative, which is expected to make a more substantial economic contribution.

“The President outlined the measures taken by Sri Lanka to access the Regional Comprehensive Economic Partnership (RCEP), and further affirmed Sri Lanka’s commitment to preserving the Indian Ocean as a free zone for navigation and ensuring it remains a peaceful region, free from global geopolitical rivalries.”

The visiting Chinese official has said her government is prioritising the extension of the China-Myanmar Economic Corridor to Sri Lanka.

Yikn reaffirmed China’s enduring support to Sri Lanka and emphasised her commitment to strengthening the relations between the two countries, the president’s office said. (Colombo/Nov20/2023)

Sri Lanka ready to join BRI phase two, China FTA to be expedited

Harsha exposes flaws in 2024 Budget in hard hitting critique

Alleges blatant violation of the Fiscal Management Responsibility Act in Budget 2024, with Budget deficit exceeding 5%
Says staggering increase in poverty affecting 3 to 7 million people, highlighting a critical issue overlooked in Budget
Critiques Govt.’s “Oxymoron” economic approach and absence of a comprehensive plan for making Sri Lanka an advanced economy by 2048
Says tax burden is excessively high, risking a decline in consumption, business failures, and an exodus of professionals
Reveals 18% VAT items list; calls it unfair; alleges COL allowance hike an eyewash
Expresses gratitude to petitioners who played pivotal role in recent Supreme Court verdict on economic crimes
Calls for a parliamentary discussion on civic rights of those found guilty of bankrupting Sri Lanka
Proposes robust measures to combat corruption, including the implementation of STAR program
Emphasises reservations regarding Macro-linked Bond (MLB) proposal, says it raises questions about potential benefits favouring external investors over provident fund workers during debt restructuring
Argues a 30% haircut is inadequate for ensuring debt sustainability, underscoring need for a more comprehensive and equitable approach
Says urgency for transparency, accountability, and a visionary approach for a new economic trajectory

Ina compelling address toParliament, main Opposition Samagi Jana Balawegaya (SJB) MP Dr. Harsha de Silva delivered a comprehensive critique of Budget 2024, shedding light on critical issues that demand urgent attention.

De Silva, who is also the Committee on Public Finance (COPF) Chairman, meticulously outlined the shortcomings and concerns surrounding the economic policies proposed in the budget, providing a stark contrast to the optimistic claims made by the Government.

Dr. de Silva commenced by pointing out a blatant violation of the Fiscal Management Responsibility Act (FMRA) within Budget 2024, citing an alarming budget deficit exceeding 5%.

He substantiated his concerns by referencing reports from LirneAsia, the World Bank, and UNDP, revealing a staggering increase in poverty affecting 3 to 7 million people. The multi-dimensional vulnerabilities highlighted by UNDP underscored the severity of the crisis, with over 50% of those affected categorised as multidimensionally poor.

De Silva expressed gratitude to petitioners who played a pivotal role in the recent Supreme Court verdict on economic crimes. He emphasised that the court›s rigorous discussion identified key figures, including Mahinda Rajapaksa, Gotabaya Rajapaksa, Basil Rajapaksa, Ajith Nivard Cabraal, and Dr. P.B. Jayasundara et al, as responsible for the economic downturn, pushing over 4 million people into poverty. He called for a parliamentary discussion on the civic rights of those found guilty of bankrupting Sri Lanka.

Contrary to the President›s claims of stabilised inflation and economic equilibrium, de Silva cited CBSL former Deputy Governor W.A. Wijewardene›s statistics. The cost of living for a family of four, he revealed, had surged from Rs. 91,880 in January 2021 to Rs. 175,490, illustrating a 91% increase in the last two years.

Labelling the current Government as an «Oxymoron,» SJB MP drew a parallel to Shakespeare›s Romeo & Juliet. In this case, ‘being together is such a sweet sorrow’. He raised questions about the legitimacy of the Government›s economic vision. MP Harsha presented a scientific analysis of the growth targets set by the Government. To achieve advanced economic status by 2048, he highlighted the necessity of a growth rate of 6.4% from 2027 to 2048. He challenged alternative claims, stating that even growing at 3% would delay reaching advanced economy status until 2068.

De Silva dissected Budget 2024, emphasising three critical pillars for Sri Lanka›s recovery: eradicating corruption, creating economic opportunities, and ensuring social equity. The seasoned politician delved into each point, offering a pragmatic assessment and proposing viable alternatives.

Need to combat corruption

He underscored the need for robust measures to combat corruption across various sectors. He criticised the absence of tangible anti-corruption initiatives, citing examples like the cricket scandal, sugar tax scam, and fraudulent activities in the liquor industry. The SJB parliamentarian questioned the Government’s inaction and proposed the implementation of the Stolen Assets Recovery (STAR) program and the establishment of an independent prosecutor’s office, as outlined in the SJB blueprint.

Moving to the second point, de Silva highlighted the importance of creating economic opportunities for youth in rural areas, empowering entrepreneurs, supporting small and medium businesses, and ensuring fair prices for farmers. He argued that eradicating corruption alone is insufficient and advocated for a broader economic vision.

In his exploration of the third key aspect, the SJB MP shed light on the complexities of fiscal consolidation and expenditure reduction, emphasising the profound implications for social equity. Despite the President’s focal point on revenue-based fiscal consolidation, concerns surfaced regarding the comparatively meagre attention given to reducing overall expenditure.

He acknowledged challenges in curtailing expenditure, particularly in vital sectors like Health and Education, allocated a modest 1.7% of GDP. However, he expressed reservations about funding directed to loss-making SOEs, exemplified by SriLankan Airlines, which sought Rs. 110 billion to settle liabilities to Ceylon Petroleum Corporation (CPC) recently. This raises concerns about fairness in comparison to the total expected revenue from PAYE of Rs. 100 billion annually or essential needs like children’s uniforms, a significant 27 times less.

Criticism was directed toward the extension of tax breaks, citing the Strategic Development Projects (SDP) Act and recent Supreme Court rulings on preferential tax treatment for associates, resulting in substantial losses to the Treasury.

He said a historical lens revealed a stark decline in Government revenue from 20-21% of GDP in 1994 to a current low of 8%, framing a narrative of economic transformation. The disparity between IMF revenue targets (15% of GDP by 2026) and the anticipated 10.2% for 2023 was underscored, calling for a substantial 2.5% increase, equivalent to Rs. 1229 billion.

Fairness and transparency for tax changes

However, concerns were articulated regarding proposed tax changes, especially their disproportionate impact on citizens through heightened consumption taxes. For example, the VAT hike from 15 to 18% and the removal of VAT exemptions for items like petrol, diesel, gas, and fertiliser could drive inflation up and consumption down. He called for fairness and transparency advocating for the disclosure of tax changes to Parliament, ensuring public awareness amid talks of Government giveaways.

De Silva proposed the Government implement his revised PAYE tax structure, significantly reducing the burden on professionals while still achieving the expected income. The MP lamented the lack of response from the Ministry of Finance to their proposal, contrasting it with the President’s call for cooperation.

Rallying cry for comprehensive reforms

In a dramatic climax, de Silva concluded that the proposed tax burden is excessively high, risking a decline in consumption, business failures, and an exodus of professionals from Sri Lanka.

His impassioned critique serves as a rallying cry for comprehensive reforms, emphasising the urgency of addressing corruption, fostering economic growth, and ensuring social justice to pave the way for Sri Lanka’s resurgence.

Acknowledging the Government’s efforts to broaden the tax net, de Silva highlighted initiatives such as the requirement for a Tax Identification Number (TIN) to open a bank account, obtain building permits, register vehicles, or renew revenue licence.

These measures, while commendable, de Silva said set the stage for a broader conversation about Sri Lanka’s economic trajectory, moving beyond stability to growth.

He stressed the imperative of transcending mere economic stability and transitioning towards sustainable growth. He referenced the International Monetary Fund’s (IMF) expectation for Sri Lanka to achieve debt sustainability by 2027, emphasising the challenges posed by a projected debt-to-GDP ratio of 104%, significantly exceeding the internationally accepted norm of 60%.

Expressing concern over the staggering debt-to-GDP ratio, de Silva underscored the potential ramifications, particularly the substantial interest payments. With interest payments for 2024 reaching a staggering Rs. 2,651 billion against revenue of Rs. 4,127 billion, he pointed out that Sri Lanka could become the world’s top contributor to interest payments relative to Government revenue.

Raising pertinent questions, the SJB MP inquired about the status of discussions with the Exim Bank of China and the agreement of the Paris Club, questioning the transparency of the process. He delved into the controversial Macro-linked Bond (MLB) proposal, expressing reservations about its potential benefits favouring external investors over the workers in provident funds who bore the majority of the burden during debt restructuring.

He passionately urged authorities not to bind future administrations to what he perceived as an unjust deal with International Sovereign Bond (ISB) holders. Furthermore, he reiterated that a 30% haircut is insufficient for debt sustainability. He questioned the beneficiaries of specific bonds, including the $500 million bond, and sought clarity on the ownership of Hamilton Reserve bonds amounting to $250 million. The recent Supreme Court decision added further complexity, prompting Harsha to call for transparency in navigating the fiscal challenges.

Expressing concerns about the stability of the banking system, de Silva questioned the lack of information on the promised asset quality review by the President. He delved into the Budget’s allocation of Rs. 450 billion for bank recapitalisation in 2025, emphasising the President’s acknowledgment that this amount may be insufficient.

The proposed 20% privatisation of the Bank of Ceylon (BOC) and People’s Bank was commended as a move towards stability and accountability, free from political influence.

De Silva painted a challenging picture for Sri Lanka’s future debt issuance, projecting a debt of $ 68 billion by 2027. He raised critical questions about sourcing the required funds through taxes and the conversion of tax revenue into dollars. Addressing this, he emphasised the necessity of increasing forex reserves and advocated for a growth-oriented production economy.

Need for mindset shift to achieve higher growth rates

In a sharp critique of the current Government’s approach, the SJB MP highlighted the need for a mindset shift to achieve higher growth rates. He underlined the importance of breaking down barriers and reducing red tape to connect with global production networks. Referencing opposition to the Sri Lanka/Singapore Free Trade Agreement (FTA) by certain political entities, he advocated for an open-minded approach to foster economic growth.

Drawing inspiration from former President J.R. Jayewardene’s initiatives in the 1970s, de Silva emphasised the role of investments in building capital, especially in a country with low savings. He urged the creation of an environment conducive to entrepreneurs, promoting foreign direct investments as a means to fuel economic growth.

He proposed creative solutions such as building wind farms in Mannar and connecting Sri Lanka to India’s grid to earn valuable forex by exporting power to South India. He challenged conventional thinking, advocating for an open mindset in generating forex through innovative and collaborative projects.

De Silva ‘s comprehensive address underscores the intricate challenges facing Sri Lanka’s economic landscape and proposes strategic reforms to navigate the country towards equitable growth. His impassioned plea for transparency, accountability, and a visionary approach serves as a rallying cry for a new economic trajectory.

Ex-Tourism Chief recommends preserving historic Nuwara Eliya Post Office

Former Sri Lanka Tourism Chairperson Kimarli Fernando suggested yesterday to consider switching the President’s Nuwara Eliya residence into a hotel as an option if demand arises for additional accommodation.

She voiced her concerns over the Government’s decision to convert the historic Nuwara Eliya Post Office into a hotel, acknowledging the ‘excess’ room capacity in upcountry city.

“Nuwara Eliya currently has excess room capacity. Should there be a need for more rooms, converting the President’s Nuwara Eliya house, to a hotel, could be considered in the future, if needed,” she said via her Facebook account.

On Monday the Cabinet of Ministers approved a proposal presented by President Ranil Wickremesinghe in his capacity as the Investment Promotion Minister to convert Nuwara Eliya Post Office into a hotel.

“Taj Group has proposed converting the Nuwara Eliya Colonial-era Post Office into a hotel. The proposal came to the Presidential Secretariat and the specifics will be made available by the Secretariat once the project gets off the ground,” Cabinet Co-Spokesman and Minister Bandula Gunawardana confirmed at the post-Cabinet meeting media briefing on Tuesday.

Fernando said the Post Office in Nuwara Eliya, the Tudor-style two-storey red-brick building with a clock spire, was constructed in 1894 by the British. Sri Lanka Post has been in existence for more than 209 years, with a proud history and heritage.

“It should remain as a working Post Office. If management needs to be shared to uplift, where income is shared, a unique memorabilia museum, store or tea boutique could be considered, to generate income,” she noted.

China renews support for Sri Lanka

President Wickremesinghe finally meets Chinese counterpart Xi Jinping in Beijing
Xi assures China will continue to provide assistance to Sri Lanka without any political strings attached
Says China and Sri Lanka should strengthen collaboration on international and regional affairs, oppose politicisation of the human rights issue and bloc confrontation, and safeguard the common interests of developing countries
Expresses China’s willingness to import more quality and specialty products from Sri Lanka and encourage Chinese enterprises to invest and do business in Sri Lanka
Says China glad to see Sri Lanka becoming a commercial centre in the Indian Ocean
China stands ready to work with Sri Lanka to jointly promote high-quality Belt and Road cooperation and push for new progress
Commends Wickremesinghe’s speech at UN General Assembly for reflecting strategic independence, neutral stance; Sri Lanka’s support for “Belt and Road” initiative
Assures friendly, practical and timely support for Sri Lanka’s debt optimisation program
SL expresses appreciation for China’s longstanding support
Wickremesinghe shares vision to set up maritime economic corridor linking China, Myanmar, Sri Lanka and South Africa; Xi points to challenges; encourages Sri Lanka to take the lead

In a significant diplomatic encounter, President Xi Jinping yesterday extended China’s unwavering commitment to aiding Sri Lanka in achieving economic stability and progress, devoid of any political agenda.

This gesture was made during a meeting at the Great Hall of the People Beijing with President Ranil Wickremesinghe who was on a four-day official visit to China attending the third Belt and Road Forum for International Cooperation. It was also the first Presidential-level meeting since Wickremesinghe assumed office 14 months ago. China is the largest lender for Sri Lanka apart from being the biggest investor and the second biggest source for imports.

“China will continue to provide assistance to Sri Lanka without any political strings attached and help the country cope with difficulties concerning its society and people’s livelihood,” Xi was quoted as saying by Xinhua.

Xi also said China and Sri Lanka should “strengthen collaboration on international and regional affairs, oppose politicisation of the human rights issue and block confrontation, and safeguard the common interests of the two countries and developing countries,” Xi said.

Xinhua also said Xi had expressed China’s willingness “to import more quality and specialty products from Sri Lanka’, and encourage “Chinese enterprises to invest and do business in the country”, so as to help Sri Lanka transform and upgrade its economy and achieve sustainable development. Xi added that “China is glad to see Sri Lanka becoming a commercial centre in the Indian Ocean.”

Xi acknowledged that Sri Lanka was one of the first countries to join the Belt and Road Initiative and China stands ready to work with Sri Lanka “to jointly promote high-quality Belt and Road cooperation and push for new progress” in developing China-Sri Lanka strategic cooperative partnership featuring sincere mutual assistance and lasting friendship. Senior Chinese officials Cai Qi and Wang Yi attended the meeting.

The President Media Division (PMD) in its communique said the Chinese President acknowledged that Sri Lanka’s speech at the United Nations General Assembly, delivered by President Wickremesinghe, reflected the country’s strategic independence and its neutral stance.

During the discussions, President Xi reaffirmed China’s adherence to the “One China” policy and conveyed gratitude for Sri Lanka’s support for the “Belt and Road” initiative. He underscored the port city and Hambantota port as pivotal projects within this framework, pledging to boost imports of Sri Lankan goods to China and amplify investments in Sri Lanka.

Furthermore, he affirmed China’s intent to provide supportive, practical, and timely assistance for Sri Lanka’s debt optimisation program.

Touching on the historical ties between China and Sri Lanka, President Jinping referenced travel accounts by the Faxian monk and Zheng He, the PMD communique said.

It said in response, President Wickremesinghe expressed his appreciation for China’s longstanding support to Sri Lanka and commended President Xi Jinping for his consistently friendly attitude towards Sri Lanka.

Wickremesinghe also unveiled Sri Lanka’s vision to establish a maritime economic corridor linking China, Myanmar, Sri Lanka, and South Africa. Acknowledging the challenges inherent in such a venture, President Jinping encouraged Sri Lanka to take the lead.

The conversation underscored the pivotal role of Sri Lanka as an economic hub in the Indian Ocean region, with President Wickremesinghe reaffirming the country’s commitment to preserving peace and the identity of the region.

He advocated for collaborative efforts between India and China to propel development in Asia.

PMD said President Wickremesinghe further revealed Sri Lanka’s aspiration to attain developed status by 2048, citing the robust foundation laid by the eight-step program unveiled at the third “Belt and Road” forum for International Cooperation.

He informed the Chinese President about plans to construct a Sri Lankan Buddhist temple and stupa in commemoration of the visit of Faxian monk to Sri Lanka and President Xi Jinping expressed China’s support for these activities.

Additionally, the leaders delved into discussions concerning the ongoing conflict in the Gaza Strip.

Notable figures present at the event included Foreign Affairs Minister Ali Sabry PC, President’s Senior Adviser on National Security and Chief of Staff Sagala Ratnayaka, Central Bank Governor Dr. Nandalal Weerasinghe and President’s Private Secretary Sandra Perera.

https://www.ft.lk/top-story/China-renews-support-for-Sri-Lanka/26-754334

Abolition of time-tested Exchange Control Act Only 18 opposed it and 113 skipped vote

By Shamindra Ferdinando

Amidst allegations that the abolition of the time-tested Exchange Control Act of 1953 contributed to the country’s bankruptcy and foreign exchange crisis, The Island, in terms of the Right to Information Act No 12 of 2016 requested from the Office of Secretary General of Parliament, the names of the MPs who had voted for the new law (Foreign Exchange Act No 12 of 2017) and those who opposed it.

According to parliamentary records, 94 voted for the Bill and 18 voted against it while 113 skipped the vote. The TNA voted with the UNP and the SLFP-led UPFA for the new law. The then Prime Minister Ranil Wickremesinghe, who moved the second reading motion in his capacity as the Minister of National Policies and Economic Affairs was among those who skipped the vote on July 25, 2017.

Justice Minister Wijeyedasa Rajapakse voted for the new law, which, he says, has helped unscrupulous exporters park export proceedings overseas to the tune of USD 100 bn. Two of the strongest critics of current economic policies namely Dr. Harsha de Silva and Eran Wickremaratne voted for the new law enacted in 2017.

Former Governor of the Central Bank Dr. Indrajith Coomaraswamy has publicly alleged that the new exchange law was not formulated in consultation with the Central Bank. The Governor led Central Bank team which appeared before the Parliamentary Select Committee (PSC) probing the 2019 Easter Sunday carnage declared that the new law hindered its regulatory powers.

The following MPs voted for the new law: S.B. Dissanayake, Nimal Siripala de Silva, Gamini Jayawickrama, John Amaratunga, Lakshman Kiriella, Gayantha Karunatilleka, Rajitha Senaratne, Ravi Karunanayake, Kabeer Hashim, Sajith Premadasa, Mano Ganesan, Thilanga Sumathipala, Anura Priyadarshana. Yapa, Tilak Marapana, Vajira Abeywardena, S.B. Nawinna, Sarath Fonseka, Navin Dissanayake, Wijeyadasa Rajapakse,(Mrs.) Chandrani Bandara, (Mrs.) Thalatha Atukorale, D. M. Swaminadan, Abdul Haleem, Sagala Ratnayake, Daya Gamage, Faizer Musthapha, A. H. M. Fowzie, Dilan Perera, Lakshman Seneviratne, Ravindra Samaraweera, Niroshan Perera, Ruwan Wijewardene, Mohan Lal Grero, A.D. Premadasa Champika, Sujeewa Senasinghe, Wasantha Senanayake, Wasantha Aluvihare, Dr. Mrs. Sudarshini Fernandopulle, Eran Wickramaratne, Mrs. Sumedha G. Jayasena, Ameer Ali Shihabdeen, Lasantha Alagiyawanna, Faizal Cassim, Dr. Harsha De Silva, Ashok Abeysinghe, Karunarathna Paranawithana, Manusha Nanayakkara, Lucky Jayawardana, Vadivel Suresh, Edward Gunasekara M.S. Thowfeek, J.M. Ananda Kumarasiri, J.C. Alawathuwala, Seyed Ali Zahir Moulana, Ranjith Aluvihare, Abdullah Mahrooff, Srinal de Mel, Anura Sidney Jayarathne, K.K. Piyadasa, A.A. Wijetunge, Ajith Mannapperuma, Nalin Bandara Jayamaha, Hector Appuhamy, Sisira Kumara Abeysekara, Thushara Indunil Amarasena, A.Aravindh Kumar, Ananda Aluthgamage, K. Thurairetnasingam, Mavai S.Senathirajah, A. Adaikkalanathan, Sivagnanam Shritharan, E. Sarawanapawan, M.A. Sumanthiran, Charles Nirmalanathan, Gnanamuthu Srineshan, Ashoka Priyantha, Chandima Gamage, Mylvaganam Thilakarajah, Mohamed Navavi, Sujith Sanjaya Perera, Bandulal Bandarigoda, Imaran Maharoof, Ashu Marasinghe, Ishak Rahuman, Malith Jayathilake, Mujibur Rahuman, Harshana Rajakaruna, Jayampathy Wickramaratne, Thusita Wijemanne, Mrs. Rohini Kumari Wijeratne, Hesha Withanage, Sandith Samarasinghe, Chathura Senaratne and Wijepala Hettiarachchi.

The following MPs voted against D. V. Chanaka, Piyal Nishanta de Silva, Prasanna Ranaweera, Kanchana Wijesekara, Indika Anurudda Herath, Mrs. Sriyani Wijewickrama, Thenuka Vidanagamage, Shehan Semasinghe, Vijitha Herath, Bandula Gunawardane, C. B. Ratnayake, Nihal Galappathi, Gamini Lokuge, Rohitha Abeygunawardana, Wimalaweera Dissanayake, Udaya Shantha Gunasekara, Ranjith de Soysa and Roshan Ranasinghe. The then Speaker Karu Jayasuriya was in chair at the time the vote was taken.

Before the vote was taken the then UPFA MP Vasudeva Nanayakkara said the new law would lead to disaster. Quoting Washington-based Global Financial Integrity, MP Nanayakkara said that USD 1.99 bn had been moved out of the country through illegal means annually.

https://island.lk/abolition-of-time-tested-exchange-control-act-in-terms-of-rti-act-house-releases-names-of-mps-who-voted-for-new-law/

July exports decline by 12% YoY to $ 1 b

Cumulative earnings in first seven months down by 10.26% to $ 6.89 b
Apparel and textiles, rubber and rubber-based products, coconut and coconut-based products drop due to sluggish demand
Services exports in January-July up by 17.32% to $ 1.22 b
Exports to major markets US and EU plunge

Sri Lanka’s export sector in July managed to sustain over $ 1 billion performance compared to June 2023, though on a year-on-year (YoY) basis, it fell by 12% due to sluggish demand in major markets.

As per the provisional data released by the Export Development Board (EDB) yesterday, earnings from merchandise exports increased by 2.18% month-on-month to $ 1.02 billion in July 2023, but down by 11.79% YoY.

The EDB said the drop in merchandise exports is due to the lower demand shown in export products, especially in apparel and textiles, rubber and rubber-based products and coconut and coconut-based products.

From January to July 2023, cumulative merchandise exports saw a substantial decline of 10.26% to $ 6.89 billion compared to the corresponding period of 2022.

The estimated value of services exports for the period of January to July 2023 was $ 1.22 billion, registering an increase of 17.32% over the corresponding period of 2022. The services export estimated by EDB consists of ICT/BPM, construction, financial services and transport and logistics.

The EDB has set a forecast performance of $ 18.51 billion in merchandise and service exports in 2023. This comprises $ 15.93 billion from merchandise exports up from $ 13.01 billion achieved in 2022 and $ 2.58 billion from services exports.

Major Exports in July 2023

Export earnings of coconut kernel products and coconut fibre products increased by 3.95% and 0.92%respectively in July 2023 compared to July 2022.

export earnings from coconut milk powder, coconut cream and liquid coconut milk which are categorised under the coconut kernel products increased by 41.64 %, 23.05% and 10.16% respectively in July 2023 compared to July 2022.

Being the largest contributor to the coconut-based sector, coco peat, fibre pith and moulded products which are categorised under the coconut fibre products, increased by 1.99% to $ 15.35 million in July 2023 in comparison to July 2022.

In addition, export earnings from spices and essential oils increased by 10.68% to $ 37.53 million in the month of July 2023 compared to the month of July 2022 with a strong performance in the export of pepper (222.27%).

Export earnings from ornamental fish increased by 32.35% to $ 1.80 million in July 2023 compared to July 2022.

The value of ICT exports is estimated to increase by 45.5% to $ 132.25 million in July 2023 compared to July 2022. In addition, the value of transport and logistics services exports is estimated to increase by 26.45% in July 2023 compared with July 2022.

Export earnings from apparel and textiles have decreased by 22.28% YoY to $ 427.48 million in July 2023 compared to July 2022.

In addition, export earnings from tea which made up 12% of merchandise exports, decreased by 1.97% YoY to $ 115.2 million in July 2023 compared to July 2022. The earnings from the export of tea packets decreased by 1.93% YoY to $ 55.49 million.

Export earnings from rubber and rubber finished products have decreased by 11.13% YoY to $ 79.31 million in July 2023, with negative performance in exports of pneumatic and retreated rubber tyres and tubes (-5.76 %) and industrial and surgical gloves of rubber (-25.08%).

In addition, export earnings from the EEC decreased by 1.04%YoYto $ 40.82 million in July 2023 with poor performance in exports of electrical transformers (-32.13 %).

Export earnings from seafood decreased by 16.46% to $ 17.25 million in July 2023 compared to July 2022. This decrease was mainly due to the poor performance in the export of shrimps (-70.51%) and frozen fish (-4.27%).

On monthly analysis, export earnings of coconut-based products decreased by 5.67% in July 2023 compared to July 2022. Export earnings of coconut shell products decreased by 31.14% to $ 11.52 million in July 2023 compared to July 2022. Earnings from activated carbon, which is categorised under the coconut shell products decreased by 30.37% to $ 10.64 million in July 2023 compared to July 2022.

Major exports during January – July

Earnings from the export of tea, spices and concentrates, gems and jewellery and EEC increased by 8.03%, 11.57%, 19.06 %and 10.0% respectively during the period of January – July 2023 compared with the corresponding period of 2022.

Earnings from the export of tea increased by 8.03% to $ 750.72 million due to the increase of all the subcategories of the tea sector except bulk tea and tea bags. earnings from tea packets, instant tea, green tea and other tea increased by 13.5%,44.71 %, 57.65% and 48.41% in the period of January-July 2023.

In addition, export earnings from spices and essential oils increased YoY by 11.57% to $ 216.73 million in the period of January to July 2023. Export earnings from cloves increased YoY by 247.25% to $ 35.94 million in the period of January to July 2023.

Meanwhile, earnings from the export of EEC increased by 10.0% to $ 296.58 million in the period of January to July 2023 compared to the corresponding period of 2022.

earnings from export of printed circuits, switches/boards and panels, boilers/ piston engines/ pumps and vacuum pumps and other EEC increased by 49.86%, 13.28% and 827.71%respectively in the period of January to July 2023 compared to the corresponding period of 2022.

The value of ICT exports is estimated to increase by 17.78% to $ 793.8 million in the first seven months of 2023 compared to the corresponding period of 2022. In addition, construction and financial services exports are estimated to increase by 130.21%and 37.77% respectively in the period of January to July 2023 compared with the corresponding period of 2022.

Earnings from export of apparel and textiles decreased by 18.10% to $ 2.88 billion during the period of January -July 2023 compared to the same period of 2022. The export of apparel declined by 18.98% and the export of textiles declined by 7.64% from January to July 2023.

in addition, export earnings from rubber and rubber finished products decreased by 12.67%to $ 529.08 million in January-July 2023 compared with the same period of 2022 attributed to lower exports of industrial and surgical gloves of rubber (-26.49%) and pneumatic and retreated rubber tyres and tubes (-6.02%).

For the period of January to July 2023, export earnings from coconut and coconut-based products decreased by 19.68% to $ 402.80 million from the same period last year. earnings from all the major categories of coconut-based products decreased in the period of January – July 2023 compared with the corresponding period of 2022 due to the poor performance in the export of coconut oil (-24.96 %), desiccated coconut (-35.75%), coconut milk powder (-12.37 %), coconut cream (-21.13 %), liquid coconut milk (-12.28%), cocopeat (-16.61%) and activated carbon (-16.81%).

further, export earnings from seafood decreased by 8.10%to $ 149.63 million during the period of January to July 2023 compared to the year 2022 due to the poor performance in frozen fish (-6.74 %), fresh fish (-5.93 %) and shrimps (-38.02%).

Export performance in major markets

Out of the top 10 export markets, only UAE has shown strong performance during the month of July 2023 and the period of January to July 2023 compared to the corresponding period in the previous year.

Further, India, UAE and France have shown strong performance during the month of July 2023 compared to July 2022.

Exports to the US – Sri Lanka’s single largest export destination, decreased 15.60% to $ 253.79 million in July 2023 compared to July 2022. Further, exports to the US decreased by 18.5% to $ 1.62 billion in the period of January to July 2023 compared to the same period in 2022.

Exports to FTA partners

Exports to Free Trade Agreement (FTA) partners accounted for 6.5% of total merchandise exports and have increased by 27.99% to $ 87.98 million in July 2023 compared to July 2022.

Exports to India increased by 29% while exports to Pakistan increased by 16.93% in July 2023 compared to July 2022.

Strong performance recorded in India led by increased exports of pepper (240.44 %) and areca nut (75.13%). Better performance recorded in Pakistan led by increased exports of sheet rubber and desiccated coconut.

During the period of January to July 2023 exports to FTA partners accounted for 7.2% of total merchandise exports decreased by 2.37% to $ 534.45 million compared with the corresponding period of the previous year.

Exports to India and Pakistan decreased by 1.37% and 13.01% respectively during the period of January to July 2023 when compared with the corresponding period of 2022.

Decreased exports to India led by poor export performance of animal feed (-2.24%), pepper (-12.53%), areca nut (-7.92%) and wood pulp (-47.79%) and decreased exports to Pakistan led by export of sheet rubber (-18.49%) and desiccated coconut (22.98%).

Sri Lanka’s export performance in regions

Exports to the European Union (EU) which comprised 21% of Sri Lanka’s exports during the month of July 2023 fell by 16.18% YoY to $ 230.47 million. Further, during the first seven months, exports to the European Union (EU) decreased by 12.79% YoY to $ 1.54 billion compared to the corresponding period of the previous year.

During the period of January to July 2023, the breakdown of exports to the top five EU markets which accounted for 78% of Sri Lanka’s total exports to the EU were; Germany $ 349.9 million (down by 22.33%), Italy $ 381.23 million (up by 6.13 %), Netherlands $ 197.11 million (down by 15.72%), Belgium $ 132.51 million (down by 28.89%) and France $ 152.25 million. (down by 1%).

https://www.ft.lk/top-story/July-exports-decline-by-12-YoY-to-1-b/26-752366