SRI LANKA NEWS IN BRIEF (MAY 2019) – Compiled by Victor Melder

Archbishop of Colombo Malcolm Cardinal Ranjith yesterday declined a bullet proof vehicle offered by Prime Minister Ranil Wickremesinghe. Addressing the media, after a meeting with former JHU Parliamentarian Ven. Omalpe Sobitha Thera, the Cardinal said that the government should focus on ensuring the security of all Sri Lankans instead of a select few. The Cardinal said that he was still not satisfied with the security measures adopted to deal with terrorists. “Some houses in Periyamulla, Negombo have been closed after the Easter Sunday bombings but they have not been checked,” he said. He also urged youth not to use social media to misinform people and spread hatred. Sobitha Thera said that the conduct of the Cardinal was an example to all Sri Lankans.  “All religious leaders must unite to get the country out of this,” the thera said. (Daily Island, 1.5.2019)

The Government has awarded a $ 91.27 million contract to India’s IRCON International Ltd. to upgrade the northern railway line. Sri Lanka Railways, under the Ministry of Transport and Civil Aviation, has awarded the contract to the public sector undertaking (PSU) under the Government of India to upgrade the northern railway line from Maho to Omanthai. “The company has been awarded an international railway contract worth approximately $ 91.27 million – equivalent to INR 6,350 million – from Sri Lanka Railways,” IRCON said in a release. IRCON said this is an item rate contract, financed through Exim Bank of India as per Indian lines of credit. According to a release, under the contract, IRCON will upgrade the single line broad gauge track from Maho to Omanthai – around 128 km – including associated infrastructure works. “The project is to rebuild the rail track to make it capable of carrying trains at speeds of 120 kmph with heavier loads and to ensure efficient, safe, and comfortable transport services for passengers and freight,” IRCON said. IRCON previously completed the upgrade of the 114 km Colombo-Matara coastal railway line under Indian line of credit, the reconstruction of Medawachchiya to Madhu Road railway line in the Northern Province, and the restoration of the northern railway line from Omanthai to Jaffna. (Daily Financial Tomes, 4.5.2019)

Selected Christian churches will resume Sunday services today after the Easter Sunday bombings, while all Catholic churches throughout the country will remain closed for services. As a security precaution, some of the Christian churches have adjusted the times of the services, in addition to implementing increased security measures, with volunteers keeping a close watch on those arriving for service. Parking restrictions will also be placed around churches. Catholic churches will not have holy masses today in view of the security situation. Instead, there will be a live telecast of the holy mass celebrated by Cardinal Malcolm Ranjith at the Archbishop’s House from 8 a.m. The Cardinal had previously advised the clergy only to refrain from conducting holy masses in the Colombo Archdiocese, but subsequently the Bishops’ Conference decided that that masses throughout the country should not be held, Archbishop’s House Spokesman Fr. Edmund Thilakaratne said. He said the decision was changed based on “information received”, but did not elaborate. However, the Cardinal, in a communication circulated  among the churches and Catholic institutions, said they had information from a “reliable foreign source” that attackers were planning to target a famous church and a Catholic Apostolic institution. Some Christian churches, however, said Sunday services would be held as scheduled and security measures would be taken for the safety of the congregation. (Sunday Times, 5.5.2019)

More than 600 foreigners, including Islamic preachers who have come on tourist visas, have been deported during the past week for violating visa regulations. Home Affairs Minister Vajira Abeywardena, under whose purview the Immigration Department comes, told the Sunday Times that at a meeting presided over by Prime Minister Ranil Wickremesinghe, a directive was issued to the Immigration Department higher-ups to deport all persons violating visas. Accordingly all those people arrested for violating visa regulations have been deported. An Immigration Department official said that at present, at least 200 foreigners were in involved in Islamic preaching in Sri Lanka. They were issued visas on the recommendations of the Muslim Affairs Ministry. He said that at the prime minister’s meeting, senior Immigration Department officials submitted a list of foreign Islamic preachers in Sri Lanka. He said that his Department issued them visas after obtaining security clearance from the Defence Ministry, in keeping with the usual procedure. (Sunday Tomes, 5.5.2019)

The death toll from the Easter suicide bomb attacks in Sri Lanka has risen to 257, authorities said Thursday. They warned that the final number of dead from the April 21 attacks on three churches and three Colombo hotels would rise further. “The death toll stands at 257 as of now,” Anil Jasinghe, government director general of health services, told AFP. “The death toll slowly increased because there were some in-hospital deaths. There are some body parts as well so it is actually 257-plus.” At least 40 of the dead are foreigners, with some missing tourists still to be accounted for. According to the latest count, 496 injured were admitted to hospitals, with 47 still being treated and 12 of those in intensive care. The government had given a toll of more than 350 but brought this down last week, blaming double counting of bodies that were badly mutilated in the six blasts. (Sunday Island, 5.5.2019)

Manufacturing activities contracted, recording the all-time low index value of 41.0 in April 2019 with a decline of 25.9 index points from March 2019, the Central Bank said yesterday. The decline of manufacturing PMI is mainly driven by the significant drop in New Orders and Production, especially in manufacturing of food, beverages and tobacco and manufacturing of textiles, wearing apparels, leather and related activities products. This decline was mainly due to the New Year holidays in April and the security concerns that arose following the Easter Sunday attacks, which affected the smooth functioning of factory operations. Most respondents, especially in the textile and apparel sector, highlighted that they had to restrict working hours in factories due to security concerns, and were unable to achieve the desired production levels. Employment also dropped significantly, as a higher number of employees were absent after the New Year holidays. The Stock of Purchases decreased due to the decline in new orders at the end of the New Year season, and brought forward stocks of raw material from previous month. Suppliers’ Delivery Time lengthened at a higher rate due to increased security measures after the Easter Sunday attack.  All sub-indices excluding Suppliers’ Delivery Time of PMI Manufacturing recorded values below the neutral 50.0 threshold, signalling an overall contraction in manufacturing activities in April 2019 compared to March 2019. Services sector deteriorated in April 2019 compared to March 2019, underpinned by decline in all five sub-indices, namely, New Businesses, Business Activity, Employment, Backlogs of Work and Expectations for Activity. This is the first time that Services PMI recorded a value below the neutral 50.0 threshold, signalling overall deterioration in Services sector, since May 2015, when conducting of the survey began.



The deterioration in New Businesses, Business Activity, and Expectations for Activity was mainly due to Easter Sunday attack and prevailing uncertainty in the country. This was observed across a majority of the sub-sectors in the Services sector, particularly in accommodation, food & beverage, and other personal services sub-sectors, which largely depend on the tourist arrivals and wholesale and retail trade, and transportation sub sectors, which largely depend on the day-to-day activities of the people. Respondents cited that limitation of business hours due to imposition of island-wide curfews and low productivity of the staff due to fear as reasons for deterioration in Business Activity. However, they expect this situation to be normalised by June 2019.
Prices Charged in the Services sector increased at a slower rate in April 2019 due to price increases related to the New Year festival. Also the expected Labour Cost in the Services sector increased at a slower rate due to realisation of expected salary increments in April 2019. (Daily Financial Times, 16.5.2019)

Former defence secretary Gotabaya Rajapaksa, accused by rights groups of war crimes during the final months of Sri Lanka’s long-running civil war a decade ago, has confirmed he plans to run for the presidency in the wake of the Easter Sunday attacks that have shattered the country’s uneasy peace. Rajapaksa, the brother of former president Mahinda Rajapaksa, told Al Jazeera that he would stand as a candidate in elections due by late 2019. “Definitely I’m contesting,” Rajapaksa said with a chuckle during an interview in the book-lined study of his home in the capital, Colombo, photos from his military career hanging from the walls. “I have decided long time. Otherwise, there’s no need for me to renounce my US citizenship.” There has long been speculation that Rajapaksa, a Sri Lanka-US dual citizen, will campaign for the presidency. Rajapaksa has to renounce his US citizenship in order to run for president. His name does not appear on the most recent quarterly filing to the US registry on those who have lost their citizenship, which covers the three months until the end of March. He insists he is not being an opportunist in revealing his plans in the wake of the attacks on churches and luxury hotels that killed more than 250 people and have fuelled a wave of mob violence against Muslim communities. I don’t consider it as an opportunity,” he told Al Jazeera. “It is not the elections, but it is our country and nation. Something I focused on is destroyed. I’m worried and saddened because of that.” (Daily Mirror, 19.5.2019)

The Central Environmental Authority (CEA) are planning to monitor the dangerous particulate matter below PM 10, from June 5 to coincide with the World Environment Day (WED). CEA Director General Hemantha Jayasinghe told The Island that President Maithripala Sirisena would launch the program. Particulate matter 10 contains microscopic solids or liquid droplets that are so small that they can be inhaled. They are injurious to health. Some particles less than 10 micrometers in diameter can get deep into a person’s lungs and some may even get into his or her bloodstream. In Battaramulla, the CEA would introduce a colour code system. CEA Director General said that they would be in a position to monitor air quality 24 hours a day from June; the CEA had installed monitoring machines in Battaramulla and in Kandy and they would be operational next month. Besides there would mobile monitors countrywide, he added. The latest world Air Pollution Report has identified Sri Lanka as the 18th worst country as regards air pollution. An official said on condition of anonymity: “Air Quality Management authorities are doing nothing other than isolating themselves in their ivory towers. It is high time measures were adopted to monitor all pollution levels. Hundreds of factories that emit hazardous gases are not checked. Routine checks would force them to bring down the level of dangerous components in the air.” The report reveals that during 2018, four of the five most polluted countries in the world were in South Asia. Of the 85 cities monitored in this region, 99 per cent failed to meet the WHO annual guideline for PM2.5. As a whole, cities here average a PM2.5 concentration of 60 µg/m³, which is six times the recommended limit of 10 µg/m³. Delhi typically receives most media coverage as one of the world’s “pollution capitals”, the Indian capital “only” ranks 10th for annual PM2.5 concentration. At the initial stages, the Vehicle Emission Testing (VET) Program brought down the permitted levels of Particulate Matter (PM 10) and Sulphur levels in most of parts of the country. However, for number of years, monitoring didn’t take place. Earlier, VET officials monitored Sulphur Dioxide (SO2), Carbon Dioxide (CO2), Water Vapour (H2O), Carbon Monoxide (CO) and Nitrous Oxide Gases (Nox) content and the percentage of Particulate Matter (PM) in cities. (Daily Island, 20.5.2019)

Public debt is estimated to have increased significantly to about 90% of GDP at end-2018, the International Monetary Fund (IMF) said in its latest staff report, with losses of State Owned Enterprises (SOEs), particularly Ceylon Electricity Board (CEB), Ceylon Petroleum Corporation (CPC) and SriLankan Airlines, accounting for 1.3% of GDP. The increased debt reflected weaker economic performance and the sizable depreciation of the rupee as at the end of last year. Based on disaggregated data for 2018, the composition of public debt includes debt owed by the central Government (83.3% of GDP), outstanding amount of loans guaranteed by the central Government (5.2% of GDP), and outstanding Fund credit (1.6% of GDP). Domestic debt (mostly treasury bills and bonds) accounted for about 42% of GDP. External debt consisted of multilateral and bilateral loans (20.6% of GDP), international sovereign bonds and syndicated loans (15.4% of GDP), and non-residents’ holdings of Treasury bills and bonds (1.1% of GDP) Daily Financial Times, 21.5.2019)

Headline inflation as measured by the year-on-year change in the National ConsumerPrice Index (NCPI, 2013=100)1 increased to 3.6 per cent in April 2019 from 2.9 per cent in March 2019 due to the monthly increases of prices of items in both Food and Non-food categories. Meanwhile, in April 2019, year-on-year Food inflation was -1.2 per cent while Non-food inflation continued its increasing trend for the fourth consecutive month recording a 7.5 per cent in the current month. The change in the NCPI measured on an annual average basis increased to 1.9 per cent in April 2019 from 1.7 per cent in March 2019. When monthly change is considered, the NCPI increased by 0.7 per cent in April 2019 with the increases observed in the prices of the items in both Food and Non-food categories. Within the Food category, prices of vegetables, milk powder, potatoes, fresh fish, limes and big onions recorded notable increases. Consequently, within the Non-Food category, prices of the items in Alcoholic Beverages and 1The National Consumer Price Index (NCPI, 2013=100) is compiled by the Department of Census and Statistics. Year-on-Year % Change Annual Average % Change Tobacco; Transport; Miscellaneous Goods and Services; Health; and Clothing and Footwear sub-categories increased during the month. The core inflation, which reflects the underlying inflation in the economy, increased to 6.3 per cent in April 2019 compared to 5.8 per cent in March 2019 on year-on-year basis, due to increases in prices of items in the Food category, mainly in milk powder, and the Non-food category particularly in Alcoholic Beverages and Tobacco; and Miscellaneous Goods and Services sub-categories. Annual average NCPI Core inflation also increased to 3.7 per cent in April 2019 from 3.3 per cent in March 2019. (Daily Island, 24.5.2019)

Construction of three wind power plants are set to take place next month  in a bid to contribute a total of 700 Megawatts (MW) of electricity to the national power grid. These power plants will be set-up in Mannar, Pooneryn, and Batticaloa, the Power and Energy Ministry said adding that the project will take place under its observation. According to the Ministry, the power plants at Mannar and Pooneryn are expected to produce 300 MW of electricity while the Batticaloa power plant is expected to produce 100 MW. (Times online, 25.5.2019)

The Central Environmental Authority (CEA) said the air quality monitoring machines installed in Battaramulla and in Kandy would be operational next month and the Authority would be in a position to monitor air quality 24 hours a day from June. CEA Deputy Director of Laboratory Services, Kamal Priyantha told the Daily Mirror that they were planning to monitor the dangerous Particulate Matter (PM) in air below 10 from June 5 to coincide with the World Environment Day (WED). Particulate matter 10 contains microscopic solids or liquid droplets that are so small that they can be inhaled. They are injurious to health. Some particles less than 10 micrometers in diameter can get deep into a person’s lungs and some may even get into his or her bloodstream. In Battaramulla, the CEA would introduce a colour code system. Besides, there would be mobile monitors countrywide. The latest world Air Pollution Report has identified Sri Lanka as the 18th worst country as regards air pollution. At the initial stages, the Vehicle Emission Testing (VET) Programme brought down the permitted levels of Particulate Matter (PM 10) and Sulphur levels in most of parts of the country. However, for number of years, monitoring didn’t take place. Earlier, VET officials monitored Sulphur Dioxide (SO2), Carbon Dioxide (CO2), Water Vapour (H2O), Carbon Monoxide (CO) and Nitrous Oxide Gases (Nox) content and the percentage of Particulate Matter (PM) in cities. (Daily Mirror, 26.5.2019)

Rs.50 million will be given to every government MP for rural development work, informed sources said. “This is being carried out based on a request made by Prime Minister Ranil Wickremesinghe,” sources said. In addition, the government has also decided to grant Samurdhi benefits to 600,000 on May 30, 2019. The Prime Minister has also directed that the development projects such as Gam Peraliya and Enterprise Sri Lanka which came to a halt as a result of last year’s October 26 constitutional coup and the Easter Sunday bombings be resumed (Daily Mirror, 26.5.2019)

During the first quarter of 2019, the deficit in the trade account contracted to US dollars 1,661 million from US dollars 2,982 million recorded in the first quarter of 2018, as export earnings increased by 5.6 per cent (year-on-year) while import expenditure declined by 19.3 per cent. In March 2019, the deficit in the trade account narrowed to US dollars 592 million, compared to US dollars 871 million in March 2018. The considerable reduction in the trade deficit in March 2019 was due to a notable decline in import expenditure by 12.6 per cent (year-on-year) which was further supported by the increase of export earnings by 2.6 per cent (year-on-year). The financial account was further strengthened in March 2019 with the proceeds of the ISBs amounting to US dollars 2.4 billion, net inflows of foreign investments to the government securities market during the month, although some net outflows were observed from the Colombo Stock Exchange (CSE). Along with the significant reduction in the trade deficit and significant inflows to the financial account, the Sri Lankan rupee appreciated against the US dollar by 3.8 per cent by end March 2019 compared to end 2018. Despite the marginal depreciation of the rupee in the aftermath of the Easter Sunday bomb attacks, it recorded an appreciation of 3.8 per cent during the year up to May 28, 2019. (Daily News 30.5.2019)

On May 13, 2019, the Executive Board of the International Monetary Fund (IMF) completed the Fifth Review under Sri Lanka’s Extended Fund Facility (EFF) approving the disbursement of the sixth tranche amounting to SDR 118.5 million (approximately US dollars 164.1 million). The Executive Board also approved an extension of the arrangement by one year, until June 2020, and reshaped the remaining disbursements. The country’s gross official reserves stood at US dollars 7.6 billion, which was equivalent to 4.3 months of imports at end March 2019. Merchandise exports recorded the highest ever monthly earnings of US dollars 1,137 million in March 2019 registering a moderate growth of 2.6 per cent, due to the higher base in March 2018. The growth in exports was driven by the improved performance in industrial and mineral exports while agricultural exports declined. Tourist arrivals in March 2019 was 244,328, registering a year-on-year growth of 4.7 per cent. This growth was mainly driven by tourists arriving from India, the UK, China, Germany and France. Foreign investments to the government securities market recorded a net inflow of US dollars 41 million in March 2019. On a cumulative basis, net inflows to the government securities market amounted to US dollars 53 million during the first quarter of the year. (Daily News 30.5.2019)

During the first quarter of 2019 tourism earnings reached $ 1.3 b, recording a growth of 4.6% over the corresponding period of 2018, latest data by the Central Bank showed. Earnings from tourism in March recorded a growth of 4.7% year-on-year, according to the external performance data released by the Central Bank on Tuesday.  Tourist arrivals in March 2019 numbered 244,328, registering a year-on-year growth of 4.7%. This growth was mainly driven by tourists arriving from India, the UK, China, Germany and France.
Tourist arrivals during the first quarter of 2019 amounted to 740,600, a growth of 4.6% over the corresponding period of 2018. In March 2019, earnings from tourism were estimated at $ 459 million, with cumulative earnings amounting to $ 1,390 million during the first quarter of 2019. In March 2019, workers’ remittances amounted to $ 571 million. On a cumulative basis, workers’ remittances amounted to $ 1,617 million during the first three months of 2019. (Daily Financial Times, 31.5.2019)