SRI LANKA NEWS-(MAY 2021)-Compiled by Victor Melder

Sri Lanka’s outstanding public debt increased substantially to 109.7% of GDP by end-2020 from 94.3% of GDP at end-2019, the Central Bank said in its Annual Report.  This increase was mainly due to the rise in Central Government debt coupled with the contraction in the nominal GDP in 2020.
Public debt, as defined by the Central Bank, includes Central Government debt, foreign project loans received by State-Owned Business Enterprises (SOBEs), and public guaranteed debt. In absolute terms, the outstanding public debt increased to Rs. 16,427.1 billion at end-2020 from Rs. 14,155.3 billion at end-2019. The outstanding Central Government debt, which is the largest component of public debt, increased to Rs. 15,117.2 billion at end-2020 from Rs. 13,031.5 billion at end-2019, accounting for 92% of the total public debt.  Public guaranteed debt increased by 26.7% to Rs. 986.4 billion at end-2020 from Rs. 778.3 billion at end-2019, and accounted for 6% of total outstanding public debt. However, outstanding debt relating to foreign project loans received by SOBEs declined to Rs. 323.5 billion at end-2020 from Rs. 345.5 billion at end-2019 due to the repayment of outstanding loans by the Sri Lanka Ports Authority (SLPA) and the Ceylon Electricity Board (CEB) during 2020. The SLPA and the CEB were the major holders of SOBE debt, accounting for 50.9% and 42.3%, respectively, at end-2020. (Daily Financial Times,  1.5.2021)

Government revenue took a nosedive in 2020, recording a decline of 27.7% to Rs. 1.36 trillion from Rs. 1.89 trillion with tax earnings also dropping 29.9% to Rs. 1.2 trillion from Rs. 1.7 trillion the previous year, the Central Bank said.  The Annual Report said revenue declined both in nominal terms and as a percentage of GDP, reflecting the combined impact of subdued economic performance due to the COVID-19 pandemic, the tax revisions implemented from late 2019, and the tax concessions granted to businesses and individuals affected by the pandemic.  Accordingly, total revenue declined by 27.7% to Rs. 1,368 billion in 2020 from Rs. 1,890.9 billion in 2019. Tax revenue declined by 29.9% to Rs. 1,216.5 billion in 2020 from Rs. 1,734.9 billion in 2019, mainly due to low revenue from income tax, VAT, NBT, CESS and excise duties. The relative share of revenue from direct taxes declined to 22.1% in 2020 from 24.7% in the previous year, mainly reflecting the impact of subdued incomes of businesses and individuals amidst the pandemic, the Report added.  “The share of revenue from indirect taxes accounted for 77.9% of total tax revenue in 2020. Non-tax revenue declined marginally by 2.9% to Rs. 151.4 billion, reflecting the reduction in revenue collection from fees and charges and profit transfers of SOBEs. As a percentage of GDP, total revenue declined to 9.1% in 2020 from 12.6% in 2019, reflecting the reduction in tax revenue to 8.1% in 2020 from 11.6% in 2019, while non-tax revenue collection remained unchanged at 1% in 2020.” 

Revenue from income tax declined, both in nominal terms and as a percentage of GDP, reflecting the reduction of revenue from all the categories of income tax in 2020. (Daily Financial Times, 1.5.2021

The Sri Lankan economy, alongside the global economic downturn induced by the pandemic, contracted by 3.6 per cent in real terms in 2020, recording its deepest recession since independence, the Central Bank said “The complex challenges encountered by the Sri Lankan economy in 2020 were efficaciously addressed through extraordinary policy interventions by the Government and the Central Bank. These interventions were essential to mitigate the socioeconomic impact of the spillovers of the COVID-19 pandemic and the resultant scarring of households and enterprises. Such interventions were also required to uphold the confidence in the economy, thereby averting acute stresses on macroeconomic and financial system stability. Mobility restrictions and other containment measures imposed locally and internationally, with a view to preventing the spread of COVID-19, hampered real economic activity across all sectors. The sharp contraction observed in industrial activities during the year was driven by the significant slowdown in construction and manufacturing activities. Services activities also registered a notable contraction due to the pandemic driven deceleration in transportation, other personal services, and accommodation, food and beverage services. The Agriculture sector, too, registered a contraction during the year as the impact of the pandemic outweighed the positive effects of timely policy support and favourable weather conditions. Investment expenditure contracted in 2020, reflecting subdued investor sentiments, while consumption expenditure displayed a marginal growth. The contraction of investment expenditure exceeded the reduction in national savings, resulting in a decline in the savings-investment differential in 2020. Meanwhile, the unemployment rate rose above 5 per cent for the first time since 2009, with a decline in the labour force participation rate, in the wake of uncertainties surrounding the pandemic. Reflecting the combined effect of the contraction in Gross Domestic Product (GDP) at current market prices and the depreciation of the Sri Lankan rupee against the US dollar, GDP per capita declined to US dollars 3,682 in 2020 from US dollars 3,852 in the previous year. The pandemic also caused a decline in the overall size of the economy to US dollars 80.7 billion in 2020 from US dollars 84.0 billion in 2019. In spite of the overall contraction, the economy began to show strong signs of recovery during the second half of 2020, responding to the pro-growth policy initiatives across the fiscal and monetary policy fronts,” the report said. (Sunday Times, 2.5.2021)

The carcass of a tusker had been recovered by the wildlife conservators from a farm on the banks of Karagahawewa tank in Thalawa this morning.The officials said the jumbo was about 12 years of age and seven feet tall and that it had been electrocuted to death. Police said they suspect the owner of the farms of laying live wires around the farm. However, he had fled from the area after the police initiated investigations. Thalawa Police are conducting further investigations. (Daily Mirror Online, 3.5.2021)

The Government of the Republic of Korea has agreed to provide concessional loans from the Economic Development Cooperation Fund (EDCF) of the Export Import Bank of Korea (KEximbank). Accordingly, the Government of the Republic of Korea and the Government of Sri Lanka have agreed to sign a new Framework Arrangement for the period of 2020-2022 to obtain loans through EDCF up to an aggregate commitment amount of USD 500 million to finance projects mutually agreed, the Finance Ministry said. The loan interest rate on this concessional loan is about as low as 0.15%-0.20% and the loan has a repayment period of about 40 years with a grace period of 10 years.(Times Online, 12.5.2021)

Construction of a 1,200-bed hospital with all state-of-the-art health facilities by Sri Lanka Army in Seeduwa for the benefit of the COVID patients is nearing completion. The Army-improvised COVID-19 hospital in Seeduwa, constructed with the support of Brandix Green Plant and Army Seva Vanitha Unit is the first-ever biggest COVID-19 hospital in the country. The construction work to convert the Brandix Green Plant in Seeduwa to a hospital is being continued 24 hours a day with the full manpower of the Sri Lanka Army. The Seeduwa new facility is the third such factory handed over by Brandix to combat COVID-19 in Sri Lanka, apart from similar quarantine facilities they made available at their sites in Punani and Rambukkana. The hospital is equipped with state-of-the-art health facilities and can be used for other clinical purposes. It is the first hospital in Sri Lanka to have emergency treatment facilities, isolation units, intensive care unit, dispensaries, patient resuscitation units and many more facilities and it was built in a short period of one week. Out of 86,000 beds in Government hospitals islandwide, about 5,000 beds were used for COVID-19 emergencies and the Army has initially provided around 3,000-3,500 beds as that capacity is not sufficient at present.
“We will primarily have 5,000 beds ready, and the target is to increase it to 10,000 beds around the country within the next couple of days. In this place, isolated medical facilities with separate cubicles and space could cope with 1,200 patients on an emergency basis. The military has already added more beds to the hospital capacity, intermediate care centres and provided even ICU beds, having established the ICUs by the Army itself,” the head of the NOCPCO said.The Army Commander further stated that the establishment of new hospitals will reduce the congestion in the general hospitals and the Army will ensure that there is no shortage of beds in the hospitals for the infected. (Daily Financial Times, 12.05.2021)

The Cabinet of Ministers has approved a proposal to prepare a new master plan for the Muthurajawela wetland area and to consequently declare it as a Ramsar wetland of international importance. The Cabinet of Ministers on Monday approved the proposal containing several measures targeted at conserving the Muthurajawela wetland area, which has been under threat due to a multitude of issues. A monitoring committee and a working committee comprised of the heads or representatives of applicable stakeholder institutions would be appointed. The monitoring committee would be tasked with the preparation of the proposed master plan. Further, the areas identified under the proposed master plan would also be declared  as a national reserve under the Fauna and Flora Ordinance and the whole wetland area  is to be declared as a Ramsar wetland by implementing the master plan. (Daily Mirror, 14.5.2021)

The Government has decided to reimpose whole day travel restrictions from Friday, May 21, 11 pm to Tuesday, May 25, 4 am and again from 11 pm on Wednesday, May 25 to 4 am on Friday, May 28. Effectively it would mean the travel restrictions will continue  from Friday this week (21) until next Friday (28) morning, excluding next Tuesday (25) where the restrictions will not be effective from 4 am to 11 pm on that day. The moves come in the wake of a steady increase of the number of COVID-19 cases. During the past 10 days more than 2,000 cases have been reported daily while the deaths too have been increasing with over 20 deaths per day on most days. Meanwhile, hundreds of patients who have been identified as COVID-19 positive remain at homes without a hospital for admissions. The government this morning brought more areas under isolation while lifting the isolation on few areas. Over 100 Grama Sevaka divisions remain under isolation. (Times Online, 17.5.2021)

Sparking fresh concerns, the country has seen over 2,000 new cases of COVID-19 daily for the past eight consecutive days, reflecting though that the high numbers are receding.  The country first clocked over 2,000 cases on 9 May, with an all-time-high figure of 2,672; and since then, the daily count has been over 2,000. Yesterday’s figure was 2,212.  The rise in the third wave of the COVID-19 pandemic is being managed by the Government and health authorities with increased testing, vaccination as well as stepped-up restrictions on the movement of people, among other measures.  Since 1 May, the number of new cases has topped the 34,000 mark whilst over 260 have died. The worsening third wave has heightened demand from various economic segments for urgent vaccination as well as letting the private sector procure vaccines for their employees and immediate family members. (Daily Financial Times, 17.5.2021)

An archaeological site believed to be date back to the 4th-8th Centuries has been uncovered from the Mannakulam Forest Reserve in Nedunkeni, Vavuniya.  The site was uncovered by archaeologists attached to the Department of Archaeology’s Vavuniya office based on information given by the 16th Sinha Regiment of the Sri Lanka Army.  Archaeological ruins at the site, which is spread over an area of about 50 metres, includes the remains of about 12 stone pillars and a stone inscription believed to be from the 8th-9th Centuries. (Times Online, 18.5.2021)

Both COVID-19 detections and deaths hit record highs yesterday as cases exceeded 3,000 for the first time and 36 fatalities were reported. The total death toll in the country now stands at 1051, though health officials have warned that the situation could worsen in the coming weeks if all necessary measures are not taken to prevent the spread of the virus. With daily detections remaining below 1,000 for over a year, Sri Lanka first recorded 1,111 patients on 27 April. Daily detections exceeded 2,000 on 9 May, with the detection of 2,672 patients. A total of 3,623 persons tested positive for COVID-19 yesterday. The increase in COVID-19 detections has come with the spread of the B117 UK variant in the country. A total of 151,343 persons have tested positive for COVID-19 to date.At present, 27,925 persons are under medical care, including 595 persons at the Punani Treatment Centre, 490 persons at the Neville Fernando Teaching Hospital, and 479 persons at the Bingiriya Treatment Centre. Hospitals also have 1,874 persons suspected of having COVID-19 under observation.  (Daily Financial Times, 20.5.2021)

Premier Mahinda Rajapaksa, in his capacity as Finance Minister, has applied special commodity levies (SCLs) on a range of mainly food items from a minimum of Rs 1 to Rs 800 per kg, to protect the country’s sparse foreign reserves, with retrospective effect from Tuesday (18). The new levies are Rs 1 tax on a kg of facemasks, the only non-food item to be taxed under this order.  Other levies, wholly pertaining to food items, in ascending order are a levy Rs 5 per kg on whole chickpeas; Rs 5 per kg on whole peas; Rs 10 per kg on split chickpeas; Rs 10 per kg on split peas; Rs 25 a kg on maize; Rs 50 per kg on red onions; Rs 50 a kg on garlic; Rs 100 per kg on dates; Rs 100 per kg on eels; Rs 100 per kg on dried chillies; Rs 100 per kg on Tuna; Rs 100 per kg on apples; Rs 100 per kg tax on sprats/salmon/ sardines/mackerel; Rs 125 per kg on oranges; Rs 125 per kg on crushed/grounded chillies; Rs 162 per kg on cumin seeds; Rs 162 per kg on fennel seeds; Rs 200 per kg on grapes; Rs 220 per kg on shelled ground nuts; Rs 350 per kg on quinces; Rs 350 per kg on fresh lemons; Rs 400 per kg on dried lemons; Rs 650 per kg on margarine and Rs 800 per kg on yoghurt.(Ceylon Today, 22.5.2021)

Headline inflation as measured by the year-on-year (Y-o-Y) change based on the National Consumer Price Index (NCPI) has been compiled as 5.5% for April as against 5.1% in March. Core inflation, which reflects the underlying inflation by excluding volatile items of the Food, Energy and Transport groups in the economy, as measured by the Y-o-Y change based on NCPI for the month of April 2021, has decreased to 4.1% from 4.3% in March 2021. The Department of Census and Statistics said contributions to the inflation rate of April from the Food group and Non-Food groups are 4.3% and 1.2%, respectively. Whilst contributions of Food and Non-Food groups to the inflation in April 2020 were 5.2% and 0.7%, respectively, resulting in headline inflation of 5.9%. With respect to April 2020, the reported increase in the percentage of Food group was mainly due to higher price levels prevailing in the month of April, particularly prices of vegetables, rice coconuts, turmeric powder, coconut oil and Mysore dhal. Comparing the month-on-month changes, NCPI in April has increased to 142.2 from 142.1 reported in March. This shows an increase of 0.1 index points, or 0.1%. The month-on-month change was contributed by increases of index values of Food items by 0.02% and Non-Food items by 0.06%, respectively.  Price increases of Food items were reported for coconut oil, fresh fish, fresh fruits, chicken, rice, green gram, dried fish, Mysore dhal, cowpea, sugar, gram, and chilli powder. However, decreases in index values were reported for coconuts, vegetables, big onions, red onions, green chillies, potatoes, eggs, tamarind, turmeric powder, and limes.
The increases in index values of Non-Food groups in April compared to the previous month were mainly due to the price increases in groups of items Clothing and Footwear, Furnishing, Household Equipment and Routine Household Maintenance, Transport (lubricating oil), and Miscellaneous Goods and Services. Further, a very slight price increase was reported in the group of ‘Alcoholic Beverages, Tobacco and Narcotics’ as well. Meanwhile, the price indices of Housing, Water, Electricity, Gas and Other Fuels, Health, Communication, Recreation and Culture, Education, and Restaurants and Hotels groups remained unchanged during the month. (Daily Financial Times, 24.5.2021)

Two newly discovered Day-gecko species have been named ‘Gunasekara’s Day-gecko’ (Cnemaspis gunasekarai) and ‘Gunawardana’s Day-gecko’ (Cnemaspis gunawardanai) to honour leading environmental activist, conservationist and former Customs Deputy Director Samantha Gunasekara and leading environmental activist, conservationist and Environmental Lawyer Dr. Jagath Gunawardena. “Two new species are of the alwisi group (podihuna clade). They are endemic to Sri Lanka and confined to isolated rocky hills in the lowland Wet Zone and the lowland Dry Zone respectively. Both species are Critically Endangered according to IUCN Red List criteria,” the research paper explained. “Gunasekara’s Day-gecko species occurs in Ritigala, which is a wet forest patch on an isolated mountain range in the Anuradhapura District. It has been named after Samantha Gunasekara, for his dedication and contributions to biodiversity conservation in Sri Lanka, as well as his generous friendship and support towards the authors. His valuable contributions to the Sri Lanka Customs Department in controlling biodiversity trafficking, illegal pet trade, and bio-piracy, as well as to popularizing conservation among the general public, are highly commendable.. “Gunawardana’s Day-gecko species occurs in two localities, Pilikuttuwa and Maligatenna in the Gampaha District. It has been named after Dr. Jagath Gunawardana for his major efforts and contributions to biodiversity conservation in Sri Lanka, as well as his support, motivation, and encouragement for the first three authors to accomplish their research and career goals. 16 new species of the genus Cnemaspis Strauch have been discovered from Sri Lanka during the past five years. “With the description of these two new species, the richness of the Cnemaspis fauna in Sri Lanka reaches 40 species, all with 100 per cent endemism to the island,” it observed. (Daily News, 29.5.2021)

The payment of Rs 5,000 allowance for Samurdhi recipients, low-income earners, and those who had lost their income due to the COVID-19 pandemic will resume from 2 June, State Minister of Samurdhi, Household Economy, Micro Finance, Self-Employment and Business Development, said. He added that while the allowance of Rs 5,000 will be first paid to Samurdhi recipients, a total of 6 to 6.5 million families are entitled to the allowance and that the Government has made the necessary allocations.  Semasinghe further said details of those eligible for the Rs 5,000 allowance has already been collected adding that if any individual has been receiving an allowance less that Rs 5,000 from the Government, such allowance will be increased to Rs 5,000 from 2 June. (Ceylon Today, 29.5.2021)

Authorities are still trying to determine the enormity of the environmental damage caused by the burning MV X-Press Pearl container vessel, with toxic debris from the ship washing up along an increasingly large stretch of coastline and leaving marine life devastated. Debris from the vessel had washed up along the coastline from Marawila in Puttalam to Maggona in Kalutara. Accordingly, debris has now washed up on beaches across four districts in two provinces. The Marine Environment Protection Authority (MEPA) noted that the coastline from Dikovita to Kochchikade had suffered severe environmental damage due to the disaster, while extensive cleanup operations were ongoing at 21 separate beaches. With an increasing number of dead marine life washing up along beaches in the affected region, fears are rising of an unprecedented environmental catastrophe. However, the authorities now say fears of an even worse disaster brought on by an oil spill from the stricken vessel have receded, at least for the moment. The fire on large parts of the vessel had been brought under control by yesterday. An escalation of the fire on Friday night had those engaged in firefighting operations worried. This had been largely brought under control again by last afternoon, officials said. (Sunday Times, 30.5.2021)

The COVID-19 death toll in the country climbed to 1,441 with 36 more deaths being confirmed by the Director-General of Health Services, the Government Information Department said. (Daily Mirror Online, 31.5.2021)