Economic

Effective public financial management is a crucial, yet all too often overlooked conditions for achieving prosperity with government activities accounting for nearly half of the global economy,” Central Bank Governor Dr. Indrajit Coomaraswamy said.

First Capital Research’s June 2019 quarter recurring earnings dropped by 10.4%YoY for 271 companies. On a recurring basis June 2019 quarter earnings plunged by 10.4%YoY as subdued performance in banking (-20%YoY), consumer services (-92%YoY) and telecommunications (-27%YoY) sectors negated the positive performance of food, beverage and tobacco (+121%YoY) and diversified financials (+35%YoY) sectors.

Sri Lanka implements One Village One Product (OVOP) concept with the aim of changing lives and helping rural poor.

The Government has “failed comprehensively” to use the rare opportunity given in 2015 to formulate economic reforms, renowned economist Dr. Razeen Sally said yesterday, pointing out that even the incremental political and institutional changes it had managed to achieve were in danger of being reversed in the near future.

Dr. Sally, who is a visiting Associate Professor of the Lee Kuan Yew School of Public Policy of the National University of Singapore and a former advisor to the Finance Ministry, delivering the Central Bank’s 69th Anniversary Oration yesterday gave a deeply-analytical, hour-long snapshot of global developments since the Great Depression and how political changes and economic transformations have gone hand-in-hand to create the environment that Sri Lanka currently finds itself caught up in.

Describing himself as a “failed policy advisor to the Sri Lankan Government”, Dr. Sally recalled that Sri Lanka since independence followed mercantilism rather than the export-oriented industrial policies favoured by East Asian countries.

The introduction of the open economy in 1977 was spotlighted by him as the most important moment in Sri Lanka’s economic history, but acknowledged that it had mixed results, with protectionism intervening in fits and starts till 2005.

During the presidential terms of Opposition Leader Mahinda Rajapaksa, Dr. Sally said Sri Lanka under the ‘Mahinda Chinthana’ entered a period of de-liberalisation in the context of an “illiberal democracy, chauvinist ethnic agenda, a combination of crony capitalism and crony socialism that was highly centralised and a foreign policy tilting strongly towards China”. However, this came to an unexpected end in 2015 – but the results were far from impressive in Dr. Sally’s view.

“This was a once-in-a-generation window of opportunity for a combination of liberal and economic reform in Sri Lanka, probably the best since 1987. Ranil Wickremesinghe saw it that way and he and other senior UNP ministers have intermittently paid lip service to it since. On the political front we have seen modest successes but I suspect those successes are not major enough not to be reversed in the near future. I have my worries about that.

“On the economic front it failed comprehensively. We have had some modest success in macroeconomic stabilisation, not least to correct the excesses of the present Government as well as excesses of the last Government, but I wonder whether that will hold into the medium term. I have my doubts about that as well,” he said.

Dr. Sally went on to say that his observations were based on being a policy advisor for three years when he experienced the “utter shambles” of the decision-making process at top ministries where meetings began late, ended late, there was no agenda, too many people speaking and no one listening or taking notes. He questioned whether any top private sector corporate head would ever run a meeting in this manner.

Dr. Sally then also critiqued the appointments made by the Government exempting Central Bank Governor Dr. Indrajit Coomaraswamy, who he insisted should be supported to promote the independence of the monetary institution further.

“This Government came into power almost wholly devoid of talent and expertise, quite in contrast to the economic team that was put in place in July 1977. The LTTE and JVP did a spectacular job at destroying Sri Lanka’s political elite. The new Government came into power without an economic plan and it never developed one.

“What it eventually came up with was two things – firstly, a Christmas wish-list of things that were going to happen by 2025, and, secondly, rhetorical nonsense about a Sri Lanka take-off and Sri Lanka becoming the next Singapore, which I consider to be ‘Orwellian duckspeak’,” he said, referring to the term George Orwell coined and later made famous in his book ‘1984’.

The collective failures of the Government have resulted in citizens being faced with an unenviable choice, Dr. Sally said, referring to a lecture he delivered three years ago titled ‘Sri Lanka: Three scenarios for the future’, where he described the options of economic take-off, continued drift for Sri Lanka, and third, a relapse into what defined the former Government.

Dr. Sally referred to the latter as “a kind of Rajapaksa Government package of illiberal democracy, centralised crony capitalism, China as first friend, and a Sinhala Buddhist first ethnic agenda”.

The Board of Investment of Sri Lanka signed an Agreement with Sugano Packing Materials Co., Ltd., a Japanese Company to establish a plant that will be manufacturing flexible packaging that will be utilized by, among other sectors, the local tea industry. The packaging produced in Ja-Ela, Sri Lanka would be mainly flat bottomed bags.

The Laksala handicraft boutique chain owned by the Sri Lanka Handicrafts Board has taken measures to regularise the commissions being paid to registered tour guides and tour operators.

Kalin Sarasin, widely regarded as the leader who transformed tourism in Thailand, will be in Sri Lanka next week to address a top business forum where he will share key lessons among other insights.

Central Bank announced that Sri Lanka rupee appreciated against the US dollar, (1.2 per cent). Pound sterling (4.1 per cent), the Euro (4.8 per cent) and the Indian rupee (4.0 per cent) while depreciated against Japanese yen (1.9 per cent) last week.

Reuters: Rupee closed at its lowest level in over seven months as foreign fund outflows from government securities rose, while stocks extended losses for the third straight session.

Prime Minister Ranil Wickremesinghe yesterday argued that unlike previous governments, many projects had been implemented since 2015, but the Government had not spoken about their accomplishments as much as previous administrations, leading to the public being less aware of the work accomplished.

Priority will be given to Jaffna products in duty free shop stalls in Palali airport, Petroleum Resources and Civil Aviation Minister Arjuna Ranatunge said in Jaffna.

The Consumer Affairs Authority (CAA) has decided to take legal action against Prima Ceylon Ltd. after they announced a price hike of a kilo of wheat flour by Rs. 5.50, effective since midnight yesterday, an official said.

The Government has decided to reduce the price of fuel by Rs. 2, the Finance Ministry said yesterday.

Reuters: Rupee closed at its lowest level in over seven months as foreign fund outflows from government securities rose, while stocks extended losses for the third straight session.

ප්‍රීමා සමාගමේ නිෂ්පාදිත සෑම තිරිඟු පිටි කිලෝවක්ම අද (06) සිට රු 5.50කින් ඉහළ ගොස් ඇත.

Lanka Government Network (LGN)2.0 project has been completed connecting around 800 government instructions including ministries departments etc amidst allegations of mal practices and corruption.

Sri Lanka’s provincial administration is about to crash as the now defunct Provincial Councils has no legal authority to collect revenue and make legitimate payments.

Central Bank Governor Dr. Indrajit Coomaraswamy yesterday said Cabinet approval had been given to appoint a Steering Committee and a Technical Evaluation Committee for the mobilisation of the issuance of a $ 500 million samurai bond.