SRI LANKA NEWS
(APRIL 2023)
Compiled by Victor Melder
Sri Lanka’s inflation, as measured by the change in the Colombo Consumers’ Price Index (CCPI) marginally eased to 50.3 percent in March 2023 from 50.6 percent in February, the Department of Census and Statistics reported Friday. The CCPI for all items for the month of March 2023 marginally increased to 195.0 from 189.5 in February. The Year on Year inflation of Food Group decreased to 47.6 percent in March from 54.4 percent in February and the Year on Year inflation of Non Food Group increased to 51.7 percent in March 2023 from 48.8 percent in the previous month. For the month of March 2023, on year‐to‐year basis, contribution to inflation by food commodities was 14.93 percent and the contribution of Non Food items was 35.46 percent. The Department of Census and Statistics (DCS) following internationally accepted guidelines, has revised the base year from 2013=100 to 2021=100 in order to accommodate the changing expenditure patterns and I Accordingly the data with respect to the new base, CCPI (Base 2021=100) are released monthly commencing from February 2023. DCS emphasizes that index numbers or inflation figures compiled under different base years cannot be compared. (Colombo Page, 1.4.2023)
The Bribery Commission informed the Fort Magistrate’s Court that it has started an investigation regarding the 17.5 million rupees cash found in the President’s House when the anti-government protesters entered the premises on July 9, 2022. The Criminal Investigation Department (CID) said although attempts were made according to the court order under the Money Laundering Act to obtain a statement from Mr. Gotabaya Rajapaksa, they were not successful. The Director General of the Bribery Commission had been ordered to appear in court regarding the discovery of nearly two million rupees in Mr. Gotabaya Rajapaksa’s office. The Magistrate ordered the court registrar to provide the Bribery Commission with copies of the reports of the Kompannavidiya Police Special Investigation Division and the Criminal Investigation Department regarding the relevant investigations. Speaking on behalf of the aggrieved party, President’s Counsel Mr. Maithri Gunaratne said that there is no progress in the investigations because pressure is being exerted under the senior police officer in question. The Auxiliary Division for the Protection of Victims and Witnesses of a Crime informed the court that they have called telephone records regarding the alleged incident in which the Senior DIG of the Western Province threatened the police officer who conducted the investigation. Accordingly, the authority was ordered to submit the investigation reports related to the incident on the next court date. The Magistrate ordered the Criminal Investigation Department to take action against the suspects who did not appear in the Criminal Investigation Department as per court orders for violating court orders. Lawyer Mr. Harigupta Rohanadhira appeared for Mr. Gotabaya Rajapaksa. The cash sum was found by the protesters who entered the President’s House during the struggle on July 09 last year in the office of the former President and handed over to the Colombo Fort Police. 73 suspects have been named in connection with the incident of unauthorized entry into the President’s House. (Colombo Page, 3.4.2023)
Sri Lanka Tourism is upwardly revising the tourist arrivals forecast for 2023 from 1.55 million to an ambitious goal of luring 2 million – a move influenced by the remarkable record rise in March arrivals. Sri Lanka recorded the highest post-COVID arrivals figure of 125,495 in March, propelling the cumulative figure to 335,679 in the first quarter, continuing the growth momentum of over 100,000 tourist arrivals in three consecutive months after 2019. “After a series of major setbacks from 2019, Sri Lanka’s tourism industry has made a strong comeback in 2023. Our earlier forecast was at 1.55 million arrivals for 2023, but given the significant rise in arrivals in the first quarter and the boost in Chinese arrivals, we decided to revise the target to 2 million,” Tourism Minister Harin Fernando said. The growth in the first quarter of tourist arrival is 18% compared to the same period last year, but still 53% lower than the first quarter of the benchmark year 2018. Russia continues to lead as the top source market reflecting 23.8% or 79,891 of total arrivals during the first quarter of 2023, followed by India with 13.8% or 46,432, the United Kingdom with 8.4% or 28,111, Germany with 7.7% or 25,849, and France with 5% or 16,744. Tourism earnings in the first two months of 2023 were at $ 331.7 million reflecting a 3.3% increase from the corresponding period of last year, whilst February earnings stood at $ 169.9 million, the Central Bank data showed. Sri Lanka lost over $ 10 billion in foreign exchange earnings, which generate over $ 4.3 billion annually, due to the pandemic during the past two years. (Daily Financial Times, 4.4.2023)
The contentious Advanced Personal Income Tax (APIT) has racked in nearly Rs. 26 billion in the first quarter, according to the Inland Revenue Department. It said that the highest collection had been in March to the tune of Rs. 12 billion whilst in February it was Rs. 10.5 billion and Rs. 3 billion in January. Inland Revenue Commissioner General D.R.S. Hapuarachchi said the APIT is seeing increased compliance judging the progressive collection. Following the passing of Inland Revenue Bill 2022 in Parliament in December 2022, changes to APIT scheme became effective 1 January whereby if one’s salary is greater than Rs. 100,000 they will be subject to APIT. (Daily Financial Times, 6.4.2023)
Sri Lanka’s inflation fell rapidly up to March with the credit system externally anchored at a peg of around Rs 360/370 to the US dollar. However, from March 7th the peg turned ad- hoc after appreciating, following the lifting of a surrender rule, Central Bank Governor Dr. Nandalal Weerasinghe said. “With these developments foreign reserves have risen to US $ 2.7 billion in the month of February, injecting about Rs 160 billion through the ad-hoc peg, Dr. Weerasinghe said. The Governor said that Sri Lanka has already used part of the IMF money to settle an Indian credit line extended after the country defaulted. “In the past the Central Bank received IMF funds into its balance sheet to build reserves without distributing reserve money or triggering any liquidity shocks, Dr Weerasinghes said. The Governor said that this time the government is the borrower and the country has signed a tri- partite agreement. But it is serviced through the Central Bank. (Daily Island, 6.4.2023)
Earnings from the tourism industry exceeded half a billion dollars in the first quarter of 2023, in tandem with the record number of arrivals Sri Lanka welcomed in first three months of the year. Tourism earnings in the first quarter of 2023 were at $ 529.8 million, reflecting a 9.8% increase from the corresponding period of last year, whilst March earnings stood at $ 198.1 million, the latest Central Bank data released showed.
For the first time after 2019, Sri Lanka Tourism recorded over 100,000 tourist arrivals in three consecutive months of 2023, whilst March recorded the highest post-COVID arrivals figure of 125,495. The growth in the first quarter of tourist arrival is 18% compared to the same period last year, but still 53% lower than the first quarter of the benchmark year 2018. Just last week, Sri Lanka Tourism upwardly revised the tourist arrivals forecast for 2023 from 1.55 million to an ambitious goal of luring 2 million – a move influenced by the remarkable rise in March arrivals. Sri Lanka has been listed among the top 23 Best Places to Travel this year, by the prestigious Forbes magazine in its March edition under the Europe/Asia category. In February, Forbes magazine recognised Sri Lanka as a ‘Top Wildlife Safaris Outside of Africa’. In addition, the country was ranked ninth in a list of the 50 most Instagrammable places in the world in 2023, based on Big 7 Travel social media data, whilst the destination was also ranked among the top 24 countries to travel in 2023 by Travel Triangle, a leading online holiday marketplace. Sri Lanka lost over $ 10 billion in foreign exchange earnings, which generate over $ 4.3 billion annually, due to the pandemic during the past two years.
Minister Fernando said the short-term and medium-term strategies rolled out by Sri Lanka Tourism will assist to reach the year-end goal. (Daily Financial Times, 7.4.2023)
Workers’ remittances to Sri Lanka crossed the US$ 500 million mark for the first time since April 2021, data released by the Central Bank last evening showed. For March 2023, Sri Lanka recorded workers’ remittances inflow of US$ 568.5 million compared to US$ 318.4 million in March 2022. The cumulative inflows for the first three months of the year stood at US$ 1413.2 million compared to US$ 782.5 million in the corresponding period of 2022, which is an increase of 80.6 percent. Sri Lanka saw a record 320,000 people migrating in 2022, the highest for any year. If the current uptrend in workers’ remittances persists, such income could hit US$ 6 billion this year. Sri Lanka is currently seeing some easing in the domestic foreign exchange market with increased inflows, lower imports and positive sentiments stemming from the country’s deal with the International Monetary Fund. As a result, the rupee which depreciated over 80 percent last year, had appreciated by 13 percent against the US dollar as at April 6, 2023. (Daily Mirror, 7.4.20223)
The Transport and Highways Ministry will seek foreign investments to reconstruct the British-era rail track from Nanu-Oya to Ragala via Nuwara-Eliya, a Minister said. The 31-kilometre narrow-gauge rail track was constructed during the British time. However, it had been dismantled later by the British rulers, apparently due to lack of commercial viability. Minister Bandula Gunawardana told Daily Mirror that the government would call for an Expression of Interest from prospective foreign investors to reconstruct this line under the BOT (Build, Operate, Transfer) model. He said the sixth highest altitude railway station of the world is located on this line in Kandapola. “There is a lot of potential for tourism development,” he said (Daily Mirror, 10.4.2023)
At least 564 persons have been killed in 534 fatal road accidents reported across the country from January 01 to April 09 this year, police said. Police spokesman SSP Nihal Thalduwa said the number of minor, as well as serious accidents reported during the period, were 2,446 and 1,345 respectively. He said around 2,500 to 3,000 fatal accidents are being reported each year and more than 90 per cent of those reported were due to reckless driving. “When compared with the last two years, the numbers of accidents reported due to road engineering faults, bad weather and technical faults of vehicles were very limited,” he said. Accordingly, the number of accidents reported during the last two years due to road engineering faults, mechanical faults and adverse weather were 6, 26 and 06 respectively. Also, 34 accidents due to drivers falling asleep at the wheel were reported in 2021 while the number of accidents last year was 50. The spokesman said that the number of accidents can be reduced if the drivers can maintain high-speed driving, do not drive under the influence of alcohol and adhere to traffic rules. “Cyclists and pedestrians should also be more vigilant when using the roads, especially during the night,” SSP Thalduwa advised. (Daily Mirror, 10.4.2023)
A total of 175 persons who met with various accidents were admitted to the National Hospital of Sri Lanka (NHSL) in the past 48 hours. Out of 175 patients 145 were men. As per statistics available as of this morning (15) showed there are 35 admissions due to road accidents, 48 due to fall injuries from both heights and low places. In addition, seven were admitted after being injured while working at home, and another five who were injured due to their occupation. The Accident Service of National Hospital, Colombo, reports a significant decrease in the number of firework injuries at the dawn of the Sinhala and Tamil New Year. According to a spokesperson of the NHSL Accident Service, there had only been one injury reported by midnight of 14 April. Six people were injured while participating in New Year sports, while 44 were injured in violent incidents .Two people were injured in an attempted suicide, and 15 people were injured as a result of alcohol consumption. (Ceylon Today, 18.4.2023)
Sri Lanka’s nationwide inflation in March 2023 determined under the National Consumer Price Index (NCPI) marginally increased to 49.2 percent from 53.6 percent recorded in February 2023 on a year-on-year basis, the Department of Census and Statistics reported Friday. The NCPI for all items for the month of March 2023 is 204.8. The month-on-month change was contributed by decreases in food items of 0.94 percent and increases in non-food items of 1.30 percent. Year-on-Year inflation of the food group decreased to 42.3 percent in March 2023 from 49.0 percent in February and the Year-on-Year inflation of the non-food group decreased to 54.9 percent in March from 57.4 percent in February 2023. Contributions to the inflation rate of March 2023 from food group and non-food group are 18.92 percent and 30.28 percent respectively. The Department of Census and Statistics has released the National Consumer Price Index (NCPI) with a new index reference period and Inflation rate from February 2023. The NCPI with an index reference period 2013=100 has been updated to a new index reference period of 2021= 100. (Colombo Page, 22.4.2023)
Despite the declining volumes, tea prices are on the rise year-on-year where national sales average both in rupee and dollar terms. Forbes and Walker Tea Brokers said in March as well as in the first quarter of 2023 all elevations have recorded significant gains compared to the corresponding period of 2022. However, the national Tea Sales Average (TSA) for March recorded a decline of Rs. 175.20 to Rs. 1,263 ($ 3.82) compared to the February 2023 average of Rs. 1,438.20. Sri Lanka’s tea crop in February marginally increased by 3.04% to 18 million kilos mainly Medium and Low Grown – slightly recovering from the fall last year due to fertiliser shortages and low rain. Tea production for January 2023 was 19.14 million kilograms, down from 22.8 million kilograms in 2022. Forbes said in comparison to the March 2022 average of Rs. 848.08 ($ 3.35), the TSA shows a significant increase of Rs. 414.92 YoY, whilst gaining 0.47 in dollar terms as well. In dollar terms, the March 2022 average of $ 3.82 is an increase of $ 0.47 when compared to the March 2023 average of $ 3.35.Forbes, giving a breakdown of elevation averages for March said, the High Grown average of Rs. 1,303.85 ($ 3.94) reflected a decline of Rs. 98.70 month-on-month vis-à-vis Rs. 1402.55 ($ 0.08) of February 2023. However, when compared to the March 2022 average of Rs. 761.39 ($ 3.01), the rise was a significant Rs. 542.46 YoY, whilst in dollar terms it was $ 0.93. The Medium Grown average for a calendar month totalling Rs. 1,127.89 ($ 3.41) for March 2023 was a decline of Rs. 129.38 month-on-month vis-à-vis Rs. 1,257.27 ($ 3.46) of March 2022. But when compared to March 2022 average of Rs. 737.88 ($ 2.91), it is also a significant increase of Rs. 390.01 YoY, whilst in dollar terms it was $ 0.50 Low Grown too recorded a decline month-on-month of Rs. 1,282.79 ($ 3.88) in March 2023 was a decline of Rs. 207.20 month-on-month vis-à-vis Rs. 1,489.99 ($ 4.10)) of February 2023. Nevertheless, when compared to the March 2022 average of Rs. 914.02 month-on-month is an increase of Rs. 368.77 YoY with a gain of $ 0.27 in dollar terms. Forbes also said all elevations recorded significant gains during the period of January-March 2023 when compared to the corresponding period of 2022, both in rupee and dollar terms Sri Lanka’s tea production is yet to pick up after being hit by the poorly thought-out fertiliser policy, with the output contracting for three consecutive months in 2023. (Daily Financial Times, 18.4.2023)
Data from the Sri Lanka Tea Board showed that tea production dipped by about 3 percent year-on-year (YoY) to 21.34 MnKgs in March. However, it must be noted that the dip in production is lower than the 16 percent YoY drop in January and 12 percent in February. The analysis by Forbes & Walker Tea Brokers showed that the High Growns and Low Growns have shown a marginal decline, whilst the Medium Growns record a marginal gain. When compared to 28.81 Mnkgs of March 2021, March 2023 shows a decrease of 7.47 MnKgs. The cumulative production for the January-March 2023 period totalled 58.52 MnKgs, recording a decrease of 7 percent when compared with the corresponding period in 2023. Similarly, on a cumulative basis, all elevations have recorded a considerable decrease, in comparison with the corresponding period 2022. Further, when compared to 74.51 MnKgs of January-March 2021, the cumulative production of 2023 showed a decrease of 15.99 MnKgs. Here again, all elevations show a decrease over the corresponding period of 2021. According to the statements made by the Sri Lanka Tea Board previously, tea production is expected to pick up from 2Q23, as by then the usage of fertilisers, after the end of the agro-chemical ban, is expected to boost crop growth. The Tea Board expressed confidence in having improved crop growth from April and expects the output to increase from then on. Tea production is expected to recover to 300 MnKgs in 2023, after the lowest production of 251.50 Mnkgs, since 1995, was recorded in 2022. (Daily Mirror, 20.4.2023)
National carrier SriLankan Airlines has issued a clarification on news reports on being forced to ground five of its aircraft for several months due to the lack of engines and spare parts. A statement issued by the SriLankan states: “SriLankan Airlines would like to clarify the circumstances of the five grounded aircraft in response to certain recent misleading news items that have been published on the subject. The aircraft, belonging to the Airbus A320 NEO family, are currently awaiting engines after shop visits as the global industry faces a shortage of engines and long lead times for engine repairs for this type of aircraft as a result of a technical reliability issue. SriLankan Airlines is currently working with its suppliers to work out a solution and the global supply of engines is also expected to improve in the months ahead. SriLankan Airlines can therefore confirm that the aircraft are on ground owing to a global shortage and not because of a lack of finances as incorrectly stated in some news reports.” The state-of-the-art Airbus A320neo and A321neo aircraft joined the national carrier post-2017. The A320neo can carry 150 passengers while the A321neo can accommodate 188 passengers. (Ceylon Today, 23.4.2023)
Government revenue has more than doubled to Rs. 317 billion in the first quarter from a year ago thanks to higher rates and enforcement. The Inland Revenue Department yesterday revealed collection of tax revenue for the first quarter at Rs. 316.6 billion as against Rs. 146.5 billion in the first three months of last year reflecting a Rs. 170 billion or 116% increase. “The causes for this favourable growth could be attributed to things such as new tax policy, a gradual improvement of the country’s economic situation and enhanced efficiency of tax administration,” the IRD said. Corporate and Non-Corporate Income Tax was Rs. 109.2 billion as against Rs. 74 billion a year ago and Value Added Tax was Rs. 113.5 billion up from Rs. 60.6 billion. Pay as You Earn/Advanced Personal Income Tax had garnered Rs. 25.5 billion up from Rs. 4.6 billion. Social Security Contribution Levy brought in Rs. 39.2 billion in new revenue in the first quarter of 2023. IRD said though the Social Security Levy (SSL) was implemented with effect from 1 October 2022, it was not relevant to the first quarter of 2022. However the drop in share market transactions resulted in a reduction in the Share Transaction Levy while the abolition of Economic Service Charge (ESC), Nation Building Tax (NBT) and Debt Repayment Levy resulted in a reduction in other taxes, the IRD added. (Daily Financial Times, 25.4.2023)
With yesterday’s minor tremor of 4.4 magnitude on the Richter scale, there were a total number of nine tremors reported this year in Sri Lanka from January 1 until yesterday, the Geological Survey and Mines Bureau (GSMB) said. Geophysicist Nilmini Thaldena also said that yesterday’s tremor that was reported 25.8 kilometres away from Hambantota was the largest tremor, reported in Sri Lanka since January 1 this year. She also said that although the Bureau was conducting investigations to find out the reason for these tremors in Sri Lanka, they were still unable to find any reasons for it. (Daily Mirror, 25.4.2023)
The Parliament approved the Arrangement under the Extended Fund Facility (EFF) of the International Monetary Fund (IMF) today (28) with a majority of 95 votes. A total of 120 MPs voted in favour of the Resolution while 25 voted against it. The main opposition Samagi Jana Balawegaya (SJB), the Tamil National Alliance (TNA), Sri Lanka Freedom Party (SLFP) did not back the resolution. President Wickremesinghe had previously noted that the key points of the IMF agreement would be enacted into law, once the resolution on the implementation of the EFF programme is passed in the Parliament. (Ceylon Today, 30.4.2023
