SRI LANKA NEWS
(SEPTEMBER 2024
Compiled by Victor Melder
The external sector remained resilient with increased inflows from workers’ remittances and tourist earnings despite an expansion in the trade deficit in July 2024. Workers’ Remittances Net: USD -23 million increased to USD 3,711 million in Jan-Jul 2024 compared to USD 3,364 million in the corresponding period in 2023. Monthly workers’ remittances exceeded US dollars 500 million for five consecutive months. Tourist Earnings were estimated to be USD 1,885 million from January to July 2024 compared to USD 1,094 million from January to July 2023. Total inflows to the services sector, excluding earnings from tourism, were estimated at US dollars 337 million in July 2024 in comparison to US dollars 311 million in July 2023. Services inflows to computer & IT/BPO-related services and the sea transport sector were the main contributors to the increase in inflows to the services sector excluding earnings from tourism in July 2024. Foreign investments in the government securities market recorded a net outflow of US dollars 23 million in July 2024 resulting in a cumulative net outflow of US dollars 221 million during January-July 2024 Foreign flows to the CSE, including both primary and secondary market transactions, recorded a net inflow of US dollars 12 million in July 2024 and a cumulative net inflow of US dollars 32 million from January to July 2024. The deficit in the merchandise trade account widened to US dollars 604 million in July 2024 from US dollars 367 million recorded in July 2023, driven by a relatively larger expansion in import expenditure. Earnings from merchandise exports recorded an increase of 10.8 per cent (y-o-y) to US dollars 1,130 million in July 2024. The increase was broad-based with the major contribution from industrial exports. Expenditure on merchandise imports recorded an increase of 25 per cent (y-o-y) to US dollars 1,734 million in July 2024. The Sri Lanka rupee appreciated in August 2024, despite some occasional depreciation pressures. The Sri Lanka rupee appreciated by 7.9 per cent against the US dollar during the year up to 30 August 2024. Meanwhile, reflecting cross-currency movements, the Sri Lanka rupee appreciated against other major currencies, such as the euro, the pound sterling, the Chinese yuan, the Japanese yen, the Indian rupee, and the Australian dollar during the year up to 30 August 2024. (Daily News 2.9.2024) The Land Valuation Indicator (LVI) for Colombo District rose 6.9 percent year-on-year in the first half of 2024, driven by increases across all sub-indicators — Residential, Commercial, and Industrial. Residential and Commercial LVIs each surged by 8.5 percent, while the Industrial LVI saw a more modest rise of 3.7 percent. On a semi-annual basis, LVI and its sub-indicators recorded stronger growth in the first half of 2024 compared to the latter half of 2023, with Industrial LVI lagging behind its counterparts. The LVI, which has evolved from the Land Price Index (LPI), initially covered five DS divisions in Colombo District from 1998 to 2008 on an annual basis and from 2009 to 2017 on a semi-annual basis. Since 2017, its scope has expanded to all 13 DS divisions, with the first half of 2017 as the base period. The LPI was renamed as the LVI in 2020, and it continues to be published semi-annually.The LVI calculation considers the varying nature of land use, with separate sub-indicators for Residential, Commercial, and Industrial lands. These are computed using the average per perch bare land price within each DS division, and the overall LVI is the simple average of these sub-indicators. (Daily Mirror, 2.9.2024)
Gross Official Reserves (GOR) stood at US dollars 5.7 billion at the end July 2024 compared to US dollars 4.4 billion at the end of December 2023. This includes the swap facility from the People’s Bank of China (PBOC), which is subject to conditionality on usability. Net purchases of foreign exchange from the domestic foreign exchange market by the Central Bank amounted to US dollars 121 million (based on trade date) in July 2024. Meanwhile, import coverage of GOR (including the PBOC swap) amounted to 3.8 months of imports as of the end of July 2024. (Daily News, 2.9.2024)The Land Valuation Indicator (LVI) for Colombo District rose 6.9 percent year-on-year in the first half of 2024, driven by increases across all sub-indicators — Residential, Commercial, and Industrial. Residential and Commercial LVIs each surged by 8.5 percent, while the Industrial LVI saw a more modest rise of 3.7 percent. On a semi-annual basis, LVI and its sub-indicators recorded stronger growth in the first half of 2024 compared to the latter half of 2023, with Industrial LVI lagging behind its counterparts.The LVI, which has evolved from the Land Price Index (LPI), initially covered five DS divisions in Colombo District from 1998 to 2008 on an annual basis and from 2009 to 2017 on a semi-annual basis. Since 2017, its scope has expanded to all 13 DS divisions, with the first half of 2017 as the base period. The LPI was renamed as the LVI in 2020, and it continues to be published semi-annually.The LVI calculation considers the varying nature of land use, with separate sub-indicators for Residential, Commercial, and Industrial lands. These are computed using the average per perch bare land price within each DS division, and the overall LVI is the simple average of these sub-indicators. (Daily Mirror, 2.9.2024 The external sector remained resilient with increased inflows from workers’ remittances and tourist earnings despite an expansion in the trade deficit in July 2024. Workers’ Remittances Net: USD -23 million increased to USD 3,711 million in Jan-Jul 2024 compared to USD 3,364 million in the corresponding period in 2023. Monthly workers’ remittances exceeded US dollars 500 million for five consecutive months. Tourist Earnings were estimated to be USD 1,885 million from January to July 2024 compared to USD 1,094 million from January to July 2023. Total inflows to the services sector, excluding earnings from tourism, were estimated at US dollars 337 million in July 2024 in comparison to US dollars 311 million in July 2023. Services inflows to computer & IT/BPO-related services and the sea transport sector were the main contributors to the increase in inflows to the services sector excluding earnings from tourism in July 2024. Foreign investments in the government securities market recorded a net outflow of US dollars 23 million in July 2024 resulting in a cumulative net outflow of US dollars 221 million during January-July 2024 Foreign flows to the CSE, including both primary and secondary market transactions, recorded a net inflow of US dollars 12 million in July 2024 and a cumulative net inflow of US dollars 32 million from January to July 2024. The deficit in the merchandise trade account widened to US dollars 604 million in July 2024 from US dollars 367 million recorded in July 2023, driven by a relatively larger expansion in import expenditure. Earnings from merchandise exports recorded an increase of 10.8 per cent (y-o-y) to US dollars 1,130 million in July 2024. The increase was broad-based with the major contribution from industrial exports. Expenditure on merchandise imports recorded an increase of 25 per cent (y-o-y) to US dollars 1,734 million in July 2024. The Sri Lanka rupee appreciated in August 2024, despite some occasional depreciation pressures. The Sri Lanka rupee appreciated by 7.9 per cent against the US dollar during the year up to 30 August 2024. Meanwhile, reflecting cross-currency movements, the Sri Lanka rupee appreciated against other major currencies, such as the euro, the pound sterling, the Chinese yuan, the Japanese yen, the Indian rupee, and the Australian dollar during the year up to 30 August 2024. (Daily News 2.9.2024)
The Land Valuation Indicator (LVI) for Colombo District rose 6.9 percent year-on-year in the first half of 2024, driven by increases across all sub-indicators — Residential, Commercial, and Industrial. Residential and Commercial LVIs each surged by 8.5 percent, while the Industrial LVI saw a more modest rise of 3.7 percent. On a semi-annual basis, LVI and its sub-indicators recorded stronger growth in the first half of 2024 compared to the latter half of 2023, with Industrial LVI lagging behind its counterparts. The LVI, which has evolved from the Land Price Index (LPI), initially covered five DS divisions in Colombo District from 1998 to 2008 on an annual basis and from 2009 to 2017 on a semi-annual basis. Since 2017, its scope has expanded to all 13 DS divisions, with the first half of 2017 as the base period. The LPI was renamed as the LVI in 2020, and it continues to be published semi-annually. The LVI calculation considers the varying nature of land use, with separate sub-indicators for Residential, Commercial, and Industrial lands. These are computed using the average per perch bare land price within each DS division, and the overall LVI is the simple average of these sub-indicators. (Daily Mirror, 2.9.2024)
Gross Official Reserves (GOR) stood at US dollars 5.7 billion at the end July 2024 compared to US dollars 4.4 billion at the end of December 2023. This includes the swap facility from the People’s Bank of China (PBOC), which is subject to conditionality on usability. Net purchases of foreign exchange from the domestic foreign exchange market by the Central Bank amounted to US dollars 121 million (based on trade date) in July 2024. Meanwhile, import coverage of GOR (including the PBOC swap) amounted to 3.8 months of imports as of the end of July 2024. (Daily News, 2.9.2024)
Sri Lanka Customs has achieved record revenue of Rs.1,000 billion (Rs. 1 trillion) during the first eight months of this year, thanks to the opportunity given to the administrative authority and officials to operate independently without external interference for the first time in history. The International Monetary Fund (IMF) has set a revenue target of Rs.1,534 billion for 2024. With the Rs.1,000 billion targets already met within the first eight months, Customs Director General Sarath Nonis is confident that the annual target can be achieved within the next four months of the year. DG Nonis notes that the previous highest revenue record was Rs.975 billion in 2023. He also points out that typically, 25%-30% of total customs revenue comes from car imports, but this figure has dropped below 6% due to restrictions on car imports in both years. Director General Sarath Nonis highlighted that the dedication of the entire customs staff has been instrumental in combating fraud, corruption, and smuggling. The department continues to enhance its administrative activities under an annual action plan, ensuring regular transfers and updates to customs procedures and quality improvements. (Daily News, 7.9.2024)
Workers’ remittances in August rose to an over three-year high of $ 578 million boosting the year to date figure to $ 4.28 billion, up 11% from the corresponding period of last year. The previous highest was $ 612 million in March 2021. Workers’ remittances inflow in 2023 rose by 57.5% to $ 6 billion from 2022’s figure of $ 3.78 billion, the lowest in 12 years. In 2021, the remittances figure was $ 5.5 billion. The 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. (Financial Times, 9.9.2024)
Despite the shortfall in arrivals, Sri Lanka’s tourism industry has managed to rake in over $ 2 billion in revenue during the first eight months of 2024. Tourism earnings from January to August registered over $ 2.16 billion, reflecting a substantial 66.1% year-on-year (YoY) increase, the latest Central Bank data release showed. The tourism earnings for the first eight months have now matched the total revenue generated for the entire year of 2023, showcasing a yield improvement. However, the sector is still grappling with a 25% shortfall in revenue, compared to its benchmark performance in 2018. In August, the industry registered earnings of $ 282.1 million, marking a noteworthy 25% YoY increase. The $ 345.7 million recorded in February remains as the highest monthly earnings registered in 2024 thus far. As per the latest Sri Lanka Tourism Development Authority (SLTDA) data released, the average expenditure per tourist, per day from January to August 2024 was $ 181. 15. In a month-to-month comparison, the SLTDA fell short of its projected arrival figures and missed monthly targets throughout the first eight months of the year so far. The average duration of stay in August was 9.46 days, with the overall average tourist stay at 8.64 nights. July recorded the highest average duration so far in 2024 with 9.65 days. The cumulative tourist nights recorded from January to August was 11,773,452. Industry leaders have voiced concerns about a decline in earnings since mid-April, following changes to the visa system. The delayed enforcement of the Electronic Travel Authorisation (ETA) system, despite a Supreme Court order for its immediate reactivation, was cited as a contributing factor to the drop in both revenue and tourist arrivals. As a result, industry stakeholders pointed out that around 45,000 arrivals, and earnings by an estimated $ 75-80 million, were lost in August alone. The industry warned that the country may struggle to attract even 2 million tourists if the issues persist. Sri Lanka Tourism has set a target of 2.3 million arrivals and $ 2.4 billion in revenue for 2024, an ambitious goal that appears increasingly challenging to meet. (Financial Times, 10.9.2024)
Sri Lanka Tea Production for the month of August 2024 totalled 21.28 M/Kgs, recording an increase of 2.92 M/Kgs vis-à-vis 18.36 M/Kgs of August 2023. All Elevations have recorded an increase, while the High Grown elevation saw a marginal decline of 0.39 M/Kgs in comparison with the corresponding period of 2023. January-August 2024 cumulative production totalled 172.03 M/Kgs, recording a decrease of 2.56 M/Kgs vis-à-vis 174.59 M/Kgs of January-August 2023. Compared to the corresponding period in 2023, all elevations except for the Medium Grown elevation have shown negative variances in the year 2024. Compared to 171.54 M/Kgs of January-August 2022, cumulative production of 2024 shows an increase of 0.49 M/Kgs. On a cumulative basis, apart from the Medium Grown elevation, all elevations have shown a decrease over the corresponding period of 2022. (Daily Island, 23.9.2024)
The minimum basic salary for private sector employees has been increased to Rs. 21,000, effective from this month. According to the Ministry, this new minimum wage must be considered when calculating the Employees’ Provident Fund (EPF), Employees’ Trust Fund (ETF), and gratuity payments. Private sector employers are now required to pay a minimum national monthly salary of Rs. 21,000 from September this year. This includes a basic monthly wage of Rs. 17,500, along with Rs. 3,500 as allowances specified under the Budgetary Relief Allowances of the 2005 and 2016 Acts. The National Minimum Wage Act No. 03 of 2016 mandated a national minimum wage of Rs. 10,000 per month for all private sector employees from January 1, 2016, with a daily minimum wage of Rs. 400 for daily-wage workers. An amendment in 2021 raised the minimum monthly wage to Rs. 12,500 and the daily wage to Rs. 500, effective from August 2021. However, due to the economic crisis and the rising cost of living, wages in the private sector have not been increased since 2021. This issue was discussed multiple times at the National Labour Advisory Council, resulting in a proposal to increase the national minimum wage by Rs. 5,000 – from Rs. 12,500 to Rs. 17,500 –and the daily wage by Rs. 200 – from Rs. 500 to Rs. 700. Following these deliberations, a draft amendment to the National Minimum Wage Act was submitted to Parliament, which was approved on September 3, 2024. After being signed by the Speaker, the amendment is set to take effect from this month. (Daily News, 17.9.2024)
Anura Kumara Dissanayake won the executive presidency by polling 5,740,179 votes (5,634,915 votes in the first count, and 105,264 more votes in the second count) in the ninth presidential election held on Saturday. Dissanayake won the Kalutara, Galle, Matara, Puttalam, Anuradhapura, Kegalle, Gampaha, Colombo, Ratnapura, Hambantota, Monaragala, Kurunegala, Matale, Kandy and Polonnaruwa electoral districts. SJB presidential candidate, Sajith Premadasa, obtained 4,530,902 votes (4,363,035 votes in the first count and 167,867 in the second). Premadasa won the Digamadulla, Badulla, Batticaloa, Jaffna, Nuwara Eliya, Vanni and Trincomalee districts. As no candidate polled more than 50% of the valid votes to secure the presidency straightaway, the Election Commission (EC) counted the second and third preferences for the first time in Sri Lanka. Independent candidate Ranil Wickremesinghe secured 2,299,767 votes (17.27%) and SLPP candidate Namal Rajapaksa received 342,781 votes (2.57%). P. Ariyanethiran, described as the ‘common Tamil candidate’ secured 226,342 votes (1.70%), while all other candidates secured 556,772 votes (4.18%). Earlier, President Ranil Wickremesinghe, in his capacity as the Defence Minister, imposed a curfew from 10 pm on Saturday to 6 am on Sunday. It was extended till noon Sunday and lifted thereafter. (Daily Island, 23.9.2024)
President Anura Kumara Dissanayake dissolved Parliament, effective from midnight yesterday, calling elections on November 14. Nominations will be accepted from October 04 to 12 noon on October 11 and the new Parliament will convene on November 21. The Gazette Notification announcing the President’s decision to dissolve Parliament was issued by the Government Printer yesterday night. The President dissolved the Parliament by virtue of the powers vested in him by Article 70 of the Constitution and in pursuance of the provisions of Section 10 of the Parliamentary Elections Act, No. 1 of 1981. The membership of the current Parliament of Sri Lanka, was determined by the results of the 2020 Parliamentary Election held on August 5, 2020. According to the Constitution of Sri Lanka the maximum legislative term of the Parliament is 5 years from the first meeting. However, by May 2022, the country faced an unprecedented economic crisis, leading to political and social unrest. These culminated in events leading to then Prime Minister Mahinda Rajapaksa’s resignation on May 9, 2022, following widespread protests. President Gotabaya Rajapaksa appointed Ranil Wickremesinghe as Prime Minister on 12 May 2022. Following the resignation of President Gotabaya Rajapaksa in July 2022, Wickremesinghe became acting president and was subsequently elected as the President of Sri Lanka by Parliament on 20 July 2022. The National People’s Power (NPP) Leader Anura Kumara Dissanayake won Sri Lanka’s Presidential Election held on September 21 and he took oaths as the President on Monday (23). (Daily News, 25.9.2024)
President appoints three-member cabinet. President Anura Kumara Dissanayake – The Defence, Finance, Economic Development, Policy Formulation, Planning and Tourism, Energy, Agriculture, Land, Livestock, Irrigation, Fisheries and Aquatic Resources Ministries. Prime Minister – Dr. Harini Amarasuriya Justice, Public Administration, Provincial Councils, Local Government and Labour, Education, Science and Technology, Women, Child and Youth Affairs and Sports, Trade, Commercial, Food Security, Co-operative Development, Industries and Entrepreneur Development and Health Minister. Minister Vijitha Herath – Minister of Buddha Sasana, Religious and Cultural Affairs, National Integration, Social Security and Mass Media, Transport, Highways, Ports and Civil Aviation, Public Security, Foreign Affairs, Environment, Wildlife, Forest Resources, Water Supply, Plantation and Community, Infrastructure and Rural and Urban Development, Housing and Construction. (Daily News, 25.9.2024)
The Election Commission has sought Rs. 11 billion from the Treasury to conduct the General Election, an official said yesterday. President Anura Kumara Dissanayake has dissolved Parliament declaring a snap General Election to be concluded on November 14 after polling. Election Commission’s Chairman R.M.L.A. Rathnayake told Daily Mirror that his office sought Rs.11 billion to cover expenditure related to the conduct of the election. The President is empowered to make allocations from the Treasury for the purpose. For the Presidential Election that was concluded recently, the government allocated Rs.10 billion . (Daily Mirror, 27.9.2024)
The Monetary Policy Board of the Central Bank of Sri Lanka (CBSL), during its meeting on 26 September 2024, decided to maintain the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) at 8.25 percent and 9.25 percent, respectively. The decision was based on a thorough analysis of macroeconomic conditions, as well as an evaluation of both domestic and global risks and uncertainties, the CBSL stated. The Central Bank’s primary objective remains to stabilise inflation at 5 percent in the medium term while ensuring the economy operates at its full potential. The Board noted that inflation is projected to remain well below the 5 percent target in the coming quarters, with the possibility of deflation in the near term due to adjustments in administratively controlled prices and improved supply conditions. The CBSL also reported that, despite occasional volatility, the Sri Lankan rupee had appreciated by over 7 percent against the US dollar so far in 2024. The Central Bank made significant foreign exchange purchases from the domestic market to bolster Gross Official Reserves (GOR).As of the end of August 2024, GOR stood at USD 6.0 billion, including a swap facility from the People’s Bank of China, the release stated. (Daily Island, 28.9.2024)
Hundreds of vehicles used by former secretaries of various ministries were found abandoned at Galle Face in Colombo soon after the dissolution of parliament last night. National Peoples’ Power (NPP) member Wasantha Samarasinghe yesterday visited the area and said if Anura Kumara Dissanayaka had not been elected as President, the vehicles parked at Galle Face would still be running on tax payers money. On Tuesday (24) former ministry secretaries had parked their official vehicles at the Galle Face ground in-front of the President Secretariat. While inspecting the yard he said this is not the correct place to park these vehicles, but these vehicles have been parked here. This shows how public assets have been misused during the past years. “Information of 833 vehicles belonging to the Presidential Secretariat were recorded. 29 vehicles have gone missing by 2022. Therefore, we need to question all the former presidents if they swallowed those vehicles when they resigned from their posts. There are 253 belonging to the Presidential Secretariat which are being used for unofficial work. These are the vehicles that were parked at the Sri Lanka Foundation Institute and near Laksala,” he said. “This is a clear example of how the NPP government is working to stop the waste of public funds. It marks the beginning of ending fraud, corruption, and the misuse of public assets and money,” he said. “We have already requested details regarding the vehicles issued by the Presidential Secretariat, including information on who used them and who is responsible for them. He pointed out that while officials may have done their duties, these vehicles were abandoned without any accountability. “This is just the start under the NPP government. These are clear signs that public assets were previously misused. Now, those responsible are forming alliances and parties to regain power and continue wasting public resources.” “More details will come to light before the general election. We’re receiving lists of those accountable for the Easter attacks, the Bond Scam, and the Bar License scandals,” he further said. He also highlighted that bar licenses were reportedly sold for Rs. 30-40 million during the previous government. “At the same time, if we could recover the Rs.10 to Rs.18 Billion allegedly belonging to the Rajapaksas, supposedly hidden in Uganda, we wouldn’t need to depend on loans. (Daily Mirror, 27.9.2024)
The Commissioner General of Elections, Saman Sri Ratnayake has said that President Anura Kumara Dissanayake signed the relevant document authorising the release of Rs. 11 billion needed for conducting the 2024 general election. Ratnayake disclosed the authorization of funds following discussions over the weekend on preliminary preparations for the upcoming general election. Preparations were discussed at meeings attended by District Secretaries and Deputy District Secretaries, and District Returning Officers, Assistant Election Commissioners, and Deputy Election Commissioners. (Daily Island, 30.9.2024)
