SRI LANKA NEWS
(JANUARY 2024)
Compiled by Victor Melder
Nearly a half of Sri Lanka’s households are adopting livelihood-based coping strategies to buy food, says a recent report published by the World Food Programme. The WFP’s ‘Sri Lanka – Household Food Security Survey: Preliminary Findings, December 2023’ says that 43 percent of households were adopting livelihood-based coping strategies to cope with the lack of adequate food. Borrowing money to buy food and purchasing food on credit were the most commonly adopted strategies, by 27 and 26 percent of households, respectively, says the report, adding that households remain vulnerable to future shocks and stresses. “According to the survey, a high proportion of estate households (80 percent) adopted livelihood-based coping strategies, followed by 50 percent of urban households. In the rural sector, 41 percent of households are resorting to coping strategies. In terms of household characteristics, 43 percent of male-headed households and 42 percent of female-headed households are turning to livelihood-based coping strategies. While this is not a significant difference, a larger proportion of female-headed households are adopting more severe coping strategies compared to male-headed households such as selling assets and spending savings,” it said. The report has identified six livelihood-based coping strategies such as borrowing money, purchasing food on credit, spending savings or skipping debt payment, selling jewellery to buy food, reducing the spending on education and health and selling household assets. It has been observed that 27 percent of households relied on borrowing money while 26 percent opted for purchasing food on credit. Five percent of the household sample of the survey resorted to selling household assets and 16 percent chose to sell jewellery to buy food. It has been observed that 19 percent of the sample relied on the strategy of spending savings or skipping debt payment while 14 percent reduced spending on education and health. According to the survey, households relying on social protection schemes, such as Samurdhi, as their main source of income have the highest levels of food insecurity (57 percent), followed by households dependent on humanitarian assistance (49 percent), and unskilled agricultural labour (37 percent). The lowest percentage of food insecure households are among those who have regular and stable income sources. When comparing the survey results with March 2023, agricultural producers reported a significant deterioration in their food security status. For instance, a larger proportion of households relying on the production and sale of vegetables and fruits, and staple crops such as rice are food insecure during the current reporting period compared to March which was Maha harvest season. The report said: “WFP and FAO jointly conducted a second CFSAM in March 2023, where a significant improvement in food security was noted, with 17 percent of the population estimated to be food insecure. This 11-percentage point decrease is attributed to better food consumption due to reduced prices and improved income during the harvesting period. “Between August and October 2023, WFP conducted a panel survey of 8,741 households that were interviewed in March through a face-to-face data collection approach to produce representative estimates at national and regional levels. The survey employed a 2-stage stratified cluster sampling methodology in which a fixed number of primary sampling units (PSUs) were randomly selected at the first stage and within each PSU, 10 households were selected for interview. “This preliminary report provides an update on the overall food security situation since March 2023, and it comes as part of WFP’s efforts to expand its evidence generation initiatives to inform the response among government and humanitarian/development partners in Sri Lanka.”. (Daily Island, 3.1.2024)
The International Monetary Fund (IMF) would evaluate Sri Lanka’s economic progress next week, with a team of officials expected to arrive in the country, the Finance Ministry said. Finance State Minister Shehan Semasinghe yesterday told Mirror Business that a team from the IMF would be in Colombo and would engage in technical meetings. The team will also meet with President Ranil Wickremesinghe. The visit will be the first for the year 2024. While unsure of the duration of their stay in the country, Semasinghe shared that the team would evaluate the progress made thus far in the IMF-backed reform programme. “It is not going to be an assessment per se. It is a routine staff visit before the upcoming review,” he said. The second review under the 48-month Extended Fund Facility (EFF) arrangement is scheduled to be held in March-April this year and will look at the performance for the July to December 2023 period. Following the completion of the first review in December 2023, the IMF stressed the need for Sri Lanka to enter into agreements with its official and private creditors before the second review takes place. The finalisation of the first review paved the way for the disbursement of US $ 337 million. This brought the total IMF financial support disbursed to about US $ 670 million. Following the executive board discussion in December, the IMF said Sri Lanka’s macroeconomic policy reforms have begun to bear fruit and the economy is showing tentative signs of stabilisation, with rapid disinflation, significant revenue-based fiscal adjustment and reserves build-up. Noting that the performance under the EFF-supported programme has been satisfactory, the IMF said all quantitative performance criteria for end-June were met, except the one on expenditure arrears. Other than tax revenues, all indicative targets were met as well. To meet the IMF’s tax revenue requirement, Sri Lanka made several changes to its tax regime, with the major change being in the Value Added Tax (VAT). The total amount of Sri Lanka’s EFF arrangement is about US $ 3 billion as of the time of programme approval on March 20, 2023. The programme supports Sri Lanka’s efforts to restore macroeconomic stability and debt sustainability, safeguard financial stability and enhance growth-oriented structural reforms. (Daily Mirror, 6.1.2024)
Workers remittances inflow in 2023 had increased by 57.5% to $ 6 billion, the latest Central Bank data revealed. The achievement of $ 6 billion was possible with December 2023 bringing in $ 570 million as against $ 475.6 million a year ago. In 2022, full year workers’ remittances were $ 3.78 billion, down by 31% from $ 5.5 billion in 2021. The 2022 performance was the lowest in 12 years.
Highest ever workers remittances were in 2016 at $ 7.24 billion whilst between 2014 and 2018 the annual average was $ 7 billion suggesting a monthly inflow of around $ 600 million. (Daily Financial Times, 8.1.2024)
In what appears to be an idiosyncratic development in the financial sector, the spending via credit cards has continued to narrow and so has the consumer base holding a credit card, as the numbers have continued to shrink. According to the data available through October, the total outstanding credit card balance has continued to shrink by another Rs.309.0 million from a month earlier, after falling by Rs.169.0 million in September. The persistent monthly decline has put the total outstanding credit card balance at Rs.143,992 million by the end of the first 10 months of last year, only slightly changed from Rs.143,098 million at the start of 2023. It becomes idiosyncratic, as private sector credit has continued to expand at a modestly healthy clip for five consecutive months through October, since the interest rates started easing. And specially on credit cards, the Central Bank capped the maximum rate at 28.0 percent, cutting the rate by seven percentage points, effective from September, as part of its targeted monetary policy measures to speed up the policy pass through. However, 28.0 percent remains still very much elevated and doesn’t really encourage the card holders to spend from their card. As the rates have further declined from the September levels at a faster pace, it is expected that the Central Bank could further slash the ceiling rate in cards and select other products, at an upcoming policy meeting. Meanwhile, as inflation has cooled to mid-single digit levels, there are expectations for the consumer spending to pick up gradually, although the recent increase in the Value Added Tax could dampen the effects for a certain degree. Cards are a distant proxy for consumer spending in Sri Lanka, as still a large section of the population transacts in cash and operates with no credit cards or access to a card. For instance, Sri Lanka had a total of 1,913,858 active cards by the end of October, which had also shrunk from both September levels and at the start of the year. At the beginning of the year, there were 1,952,991 active cards but the base came gradually down, as the banks tightened the eligibility criteria as part of their broader credit tightening policy and many people on average to high-paying jobs, who were using cards, migrated en masse.The last two years alone saw Sri Lanka losing about 650,000 people from both blue and white collar types for countries that can offer them better income and living conditions. (Daily Mirror, 9.1.2024)
Pavithra Wanniarachchi . The Knuckles Range, world heritage site, is one of the most beautiful mountain ranges in the Central Highlands. Pavithra Vanniarachchi, Minister of Irrigation and Wildlife Conservation, said that the present government has implemented the “Knuckles Conservation Project” under the Ministry of Irrigation to protect this picturesque area located 1906 m above sea level and spanning an area of 21,000 hectares. She also emphasised that a sustainable programe should be implemented to uplift the economic strength of around 13 lakhs of farming and plantation families living in the Knuckles mountain area through this project. The minister made these comments in a discussion held today at the Ministry of Irrigation regarding the upcoming work programme carried out by the “Knuckles Conservation Project”. She further stated that improving the land and water management system, protecting the highly sensitive forest system and directing the farmers to implement organic agro-industrial methods while preserving environmental friendliness are the main objectives of the project. The Minister said that US$ 39.775 million from the Green Climate Fund and US$ 9.200 million from the Government of Sri Lanka are to be spent for the implementation of the entire project and explained to the officials that this money should be appropriated for the betterment of the people.. (Daily Island, 12.1.2024)
Colombo, Jan 11(Daily Mirror) – Sri Lanka Transport Board (SLTB) loses Rs. 10 million daily because of fraudulent hold back of ticket revenue by the bus conductors and drivers, Minister of Transport Bandula Gunawardene told Parliament today. “Those who man SLTB buses hold back a portion of funds they collect by issuing tickets without handing over the total amount they collect to SLTB. The SLTB therefore loses Rs. 10 million daily as a result of this issue,” the Minister said. “We will introduce a prepaid QR card system to overcome this issue,” he added. (Daily Mirror, 11.1.2024)
The Inland Revenue Department (IRD) has achieved its highest ever tax revenue of Rs. 1,550.6 billion in 2023 exceeding the target of Rs. 1,492 billion given to them for the year which is 104 percent of the set revenue target of Rs.1,492 billion given for 2023. Deputy Commissioner General Inland Revenue Department, Saman Shantha (Media Committee Chairman) told Daily News yesterday (12), that those who are over 18 should not be afraid to obtain the Taxpayer Identification Number (TIN) certificate, as registering with Inland Revenue Department for a TIN does not mean that they require to pay taxes as only those individuals earning a fixed annual income of over Rs. 1.2 million are required to pay income tax. He said that since the initiation of issuing TIN certificates for those over 18 years old which commenced on January 01, over 50,000 TIN certificates have been already issued since 03 January up to now. He said that people are well aware that those who are over 18 years of age require registering and obtaining TIN certificates and there have been a very high number of requests and applications that have been received since 01 January, 2024 to obtain TIN certificates. The Deputy Commissioner of Inland Revenue said that so far within less than half a month for such a large number of people obtaining TIN certificates shows the level of success of the program to register over 18 years citizens to obtain TIN certificates. He said that due to the high demand in people over 18 years coming to Inland Revenue Department to apply for TIN registration, from next week more officers will be assigned to issue TIN certificates, as it takes around 2 to 3 days after receiving the TIN application from an individual to verify details for accuracy and to process and issue the TIN certificate which he said will speed up from next week. Saman Shantha said that it will take around two months from now to be able to identify and categorize which groups have registered for TIN certificates more. The Deputy Commissioner General added that the target of Tax Revenue to achieve in the year 2024 is set at Rs.2,024 billion. The total revenue collected by Inland Revenue for the year 2023 is Rs.1,550,589 Million compared to the total of Rs. 861,233 earned in 2022. The Inland Revenue Department has succeeded in raising the tax revenue by 80 percent up to Rs.1,550.6 Billion for 2023 and by doing so has made a commendable contribution to maintain the financial position of the Government at a very strong base. The Department has achieved a remarkable revenue collection growth of 25 percent in Corporate and Non-Corporate Income Tax, 59 percent in Value Added Tax (VAT), 473 percent in Advance Personal Income Tax and 684 percent in Advance Income Tax when compared to 2022. (Daily News 13.1.2024)
Despite forecasts predicting a decrease in vegetable prices after the festive season, the actual prices have remained high. Most vegetable varieties are now priced at over Rs. 1,000 per kilo, with carrots and beans reaching the highest levels, surpassing Rs. 1,200 per kilo. Yesterday, the country witnessed its highest recorded vegetable price, with a kilo of carrots reaching Rs. 1,400 at the New Manning Market in Peliyagoda. The escalating prices have led to a decline in vegetable consumption, as many consumers express their inability to afford them at these prices. People report that the prices of nearly all vegetable varieties have increased, creating significant financial challenges for consumers. The current market prices reveal that beans are priced at Rs. 1,000 per kilo. However, there have been fluctuations in the prices of other vegetables, with green chillies and tomatoes decreasing to Rs. 800 and Rs. 350 per kilo respectively. On the other hand, the cost of lime has seen an increase, reaching Rs. 500 per kilo. Traders in Nuwara Eliya’s Dedicated Economic Centre said the prices of vegetables had sky rocketed and that it resulted in a sharp drop in purchases. They pointed out that the price of carrot was Rs.2000 a kilo, cabbage Rs.680, leeks Rs. 500, capsicum Rs.650, tomatoes Rs. 800, beetroot, Rs.500, broccoli, a variety in demand among foreign tourists, Rs.3600, basil Rs. 2600, cauliflower Rs.,1300. Meanwhile many customers said it is with great difficulty that they manage to have one vegetable curry for a meal. They pointed out that the price hike in the retail market was unprecedented and that the vegetables available were of poor quality. (Daily Mirror, 17.1.2024)
Tea exports for the month of December 2023 totaled 20.75 M/Kgs, showing an increase of 1.45 M/Kgs vis-à-vis 19.30 M/Kgs of December 2022. Packeted tea together with tea bags and green tea has seen an improvement against the corresponding month of 2022, whilst tea in bulk and instant tea have shown a decline. Iraq remains at No. 1 amongst major importers of Ceylon Tea with a total of 32.75 M/Kgs, a decline of 24% YoY against 43.24 M/Kgs in 2022. Türkiye has emerged in 2 nd place with 30.41 M/Kgs and growing by 95% YoY surpassing Russia (3 rd Position) and the U.A.E (4 th Position) where exports have declined by 8% and 18% YoY respectively. China has moved up to No. 5 with an increase of 10% against the same period in 2022. Sri Lanka tea production for January-December 2023 totalled 256.04 M/Kgs, recording an increase of 4.20 M/Kgs vis-à-vis 251.84 M/Kgs of January-December 2022. Compared to the corresponding period in 2022, all elevations have shown positive variances in the year 2023 aside from the Low Grown Elevation. However, compared to 299.49 M/Kgs of January-December 2021, cumulative production of 2023 shows a decrease of 43.45 M/Kgs. On a cumulative basis, all elevations show a decrease over the corresponding period of 2021. Also for the month of December 2023, Lanka tea production totaled 19.81M/Kgs, showing an increase of 0.10 M/Kgs vis-à-vis 19.71 M/Kgs of December 2022, according to Forbes & Walker (Pvt) Ltd. All elevations except for the low grown elevation have shown an increase in comparison with the corresponding period of 2022. (Daily News, 18.1.2024)
Sri Lanka issued 849,829 passports last year, underscoring the ongoing trend of individuals seeking to migrate for greener pastures amidst the economic crisis but still fell short from all time high of 2022. In 2023 numbers indicated a visible decline compared to the all-time high of 911,757 in 2022. The latest data from the Immigration and Emigration Department shows that passport issuance in 2023 has decreased marginally by 61,928 or 6.79% compared to the previous year. As per the department’s history, 2022 marked an unprecedented peak with 911,757 amidst the uptick of pent-up demand for passports from the latter part of 2021 reflecting the intensified race for migration with the economic crisis. The output of 2022 is 38% higher than the previous high of 658,725 in 2016. In 2021, the total number of passports issued was 382,499, in 2020 it was 207,691, in 2019 570,675, in 2018 604,824 and 2017 562,011. The rise in passport demand gained momentum from the latter part of 2021 and was exacerbated in 2022, coinciding with the economic crisis and multiple challenges faced by the public daily. The intensified demand for foreign employment opportunities became a prominent feature of the migration trend. February 2023 recorded the highest outcome, with 101,166 passports issued in a single month, while the lowest was in December with 53, 431. In January a total of 89,016 was issued followed by February with 101,166, March with 94,856, April with 61,169, May with 88,477, July with 76,068, August with 87,429, September with 57,835, October with 54,651, November with 58,095 and December with 53,431 passports. Despite the Government’s fee hike on passports from 17 November 2022, with charges for normal service set at Rs. 5,000 and one-day service at Rs. 20,000, the Immigration and Emigration Department said no deceleration was seen in applications received. According to Foreign Employment Ministry, over 297,000 individuals have left the country through official channels to take up employment overseas in 2023. “Total departures for foreign employment during January-September 2023 were recorded at 224,133 recording a monthly average of 24,904. During the first nine months, nearly 59% of departures for foreign employment is concentrated in the semi-skilled and low-skilled categories,” the latest Central Bank data showed. The Sri Lanka Bureau of Foreign Employment (SLBFE) said the number of people leaving overseas for employment is steadily increasing. Analysts pointed out that the persistently high numbers of passports issued and departures for foreign employment reflect the challenges faced by individuals seeking opportunities abroad amidst economic uncertainties. (Daily Financial Times, 22.1.2024)
Sri Lanka’s consumer price inflation rate rose to 4.2% year-on-year in December from 2.8% in November, the statistics department said on Monday. The National Consumer Price Index (NCPI) captures broader retail price inflation and is released with a lag of 21 days every month. Food prices rose 1.6% in December after falling 2.2% in November on the year, the Department of Census and Statistics said in a statement. Prices for non-food items, however, fell 6.3% in December from 7.1% year-on-year in November. Sri Lanka racked up record high inflation last year after its economy was pummelled by the worst financial crisis in decades, triggered by a plunge in foreign exchange reserves. (Daily News, 23.1.2024)
Sixty nine out of the 173 children who had contracted leprosy, by the end of last year, are from the western province, Dr. Dammika Jayalath, Western Provincial Director of Health Services said. She said that of the total number of reported leprosy cases around 40 percent are from the western province. There are 1,550 reported cases in Sri Lanka and 599 are from the western province, Dr. Jayalath said. Colombo district is on top with 315 cases among the districts, 168 are from the Gampaha district, and 116 are from the Kalutara district, she said. The children have contracted the disease from their elders at home, she mentioned. Therefore, it’s vital to prevent the spread of the disease among adults, she added. (Daily Island, 27.1.2024)
The Research Intelligence Unit says that during the firm’s extensive 21 years of tracking land prices in Sri Lanka, the current period stands out as the flattest so far. In the aftermath of the economic crisis, it noted that the anticipated rebound in land prices has proven to be a more sluggish than first expected. The research firm that specialises in the Sri Lankan real estate market says that the average land prices in Colombo city, denominated in LKR, experienced a marginal increase from Rs. 14.024 million per perch in November to Rs. 14.038 million per perch in December. Similarly, when assessed in USD terms, the prices rose from $ 42,725 per perch in November to $ 42,965 per perch in December. Its monthly real estate market surveillance update flagged Colombo 5 as having the highest growth rate of average land price per perch within the Colombo city land market. It has increased nearly by 3% (Y-o-Y) during the time period from December 2022 – December 2023. In the suburban areas of Colombo, the trend continued with average land prices in LKR terms rising from Rs. 2.474 million per perch in November to Rs. 2.486 million per perch in December 2023. In USD terms, this equated to an increase from $ 7,538 per perch to $ 7,611 per perch over the same period. RIUNIT ongoing research captured Rajagiriya as having the highest growth rate of average land price per perch in the Colombo suburban land market. It has increased nearly by 6% (Y-o-Y) during the time period from December 2022 – December 2023 Whilst the land market is still on a positive incline, the rate of increase is extremely sluggish at present. Moreover, we at RIUNIT have witnessed high growth rates even during the civil conflict before 2009. However, we do expect the market to pick up toward the latter part of 2024.
The Research Intelligence Unit (RIUNIT), is the first agency to start collecting land price data in Sri Lanka and other Asian countries since 2003. Its market data and intelligence has formed the basis of RIUNIT’s Real Estate Research Division’s advisory work which has facilitated the development of more than 70% of Colombo’s large residential, commercial, retail and mixed developments by both local and foreign developers and investors. (Financial Times, 29.1.2024)
The International Monetary Fund (IMF) has published its evaluation of Sri Lanka’s performance in the first phase or ‘first term’ of the ongoing Extended Fund Facility (EFF) program, which commenced in March 2023. Verité Research said yesterday it updated its ‘IMF Tracker’, based on all information available, including in the IMF evaluation titled ‘First Review Under the Extended Arrangement Under The Extended Fund Facility’. Sri Lanka had ‘met’ (with some delays) 60 of the 73 commitments due by end-November 2023. The 13 remaining commitments were ‘not met’. Of these 13, eight have been carried forward into the second term, or the period leading up to the second review. Five were irreversibly ‘not met’, and therefore, cannot be carried forward. The IMF has now modified, or extended, the due dates of the 27 commitments which were scheduled after end-November. These have been classified as ‘pending’ in IMF Tracker, along with the eight commitments carried forward. In addition to these 35 (27 + 8) commitments, Sri Lanka and the IMF added 75 new commitments to the program. Therefore, the second term began with 110 commitments ‘pending’ on Sri Lanka’s IMF program. The first review was focused on commitments that were due by June. Yet, there are four governance and transparency related commitments that were ‘not met’ even by the end of November. Foremost among these is 1) launching an online transparency platform related to public procurement and tax exemptions and 2) establishing a transparent and merit-based selection process for the directors of Commission to Investigate Allegations of Bribery or Corruption (CIABOC) in the Anti-Corruption Act. IMF Tracker is the only platform that is publicly tracking Sri Lanka’s commitments under its 17th IMF program. (Financial Times, 30.1.2024)
