sri lanka economy – Artifex.News https://artifexnews.net Stay Connected. Stay Informed. Wed, 11 Sep 2024 03:38:18 +0000 en-US hourly 1 https://wordpress.org/?v=6.6.2 https://artifexnews.net/wp-content/uploads/2023/08/cropped-Artifex-Round-32x32.png sri lanka economy – Artifex.News https://artifexnews.net 32 32 In southern Sri Lanka, a chant for change this poll season https://artifexnews.net/article68628670-ece/ Wed, 11 Sep 2024 03:38:18 +0000 https://artifexnews.net/article68628670-ece/ Read More “In southern Sri Lanka, a chant for change this poll season” »

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Buddhika Dissanayake says she has never had to think so hard before an election. “Earlier, we voted for the party that our family backed for generations, it was an easy choice,” says the middle-aged voter in Kurunegala district, in Sri Lanka’s North Western Province. With hardly a fortnight left for the island nation’s crucial presidential election, she is undecided.

Her dilemma is not uncommon among Sri Lankan voters gearing up for the September 21 contest, in which some 17 million voters will have a say. In the five years between 2019, when Gotabaya Rajapaksa was elected President, and now, the country’s political landscape and economic path have altered drastically, making this presidential poll unlike any other the island nation has seen.

In the eight presidential elections preceding this, the country’s two major political camps — the centre-left Sri Lanka Freedom Party (SLFP) and the centre-right United National Party (UNP), or their political offshoots — fielded a candidate each. Each of those elections, fought hard by two ideologically opposed contestants, yielded a clear winner.

But this time, voters are navigating a more complex electoral field with three main contestants. Incumbent Ranil Wickremesinghe, who replaced ousted President Gotabaya Rajapaksathrough a parliamentary vote, is running as an independent candidate. His two foremost challengers, Sajith Premadasa and Anura Kumara Dissanayake, are in opposition.

“We must think hard and choose carefully,” says Ms. Dissanayake, pointing to the daunting task facing the next head of state and government – fixing Sri Lanka’s broken economy.

Kurunegala is a district with high external migration, sending a large number of women for domestic work. The long median dividing a main road in town advertises agencies promising jobs abroad. As a counsellor to migrant workers on their safety, Ms. Dissanayake meets many who are desperately seeking jobs abroad, after the financial crisis and resultant austerity measures plunged their households in poverty.

“Whoever is elected must wipe out corruption that is rampant, and rebuild our economy,” she says. “We can’t let things remain this way”.

Also read: In Sri Lanka, a long and rocky road to economic recovery

When Sri Lanka’s economy crashed in 2022, it triggered a mass uprising that not only protested shortages and power cuts, but emphatically rejected the old, “corrupt” political order they despised. The agitating citizens demanded “system change”. 

Chant for change

It is that chant for change that has now evolved as the chief election logic guiding many Sri Lankan voters. “In 2022, when people chased away the Rajapaksas, they showed they have the power. In this election [the first since] we need someone new, someone different. We need change,” says homemaker Chula Mihirani, voicing a popular sentiment.

Local and global economists endlessly debate Sri Lanka’s economic recovery and debt treatment policies, but Ms. Mihirani’s sees the crisis persisting in her home. “The cost of living is unbearable. My son is sitting for his school final exam, we cannot afford private tuition or transport for him.” Thanks to their small paddy field, her family that solely relies on her husband’s earnings as a driver, is not starving although the yield has fallen. “They say things are improving, but for whom? We know that even this respite came because we have suspended repaying our foreign loans. Once that begins, it is going to get even harder,” she said.

Availability versus affordability

The last time economic concerns dominated a national election in Sri Lanka was in 1977, before the raging ethnic conflict took centre stage. Cashing in on voter resentment over then Prime Minister Sirimavo Bandaranaike’s policies of import substitution and food rationing, J.R. Jayewardene defeated her in a landslide.

Nearly half a century later, President Wickremesinghe, who is Mr. Jayewardene’s nephew, is seeking a mandate to take forward his government’s ongoing economic reform agenda, shaped by a $ 3-billion International Monetary Fund programme. While his backers credit him for removing fuel queues from the roads and bringing in some fiscal stability, critics point to the painful austerity measures — energy and fuel prices doubled; and indirect taxes soared to 18 % — that especially affect families like Ms. Mihirani’s. The stability that is hailed in Colombo is yet to reach their doorsteps.

On the other hand, supporters of Mr. Wickremesinghe see the availability of essentials as a significant improvement after the shortages of 2022. It is true that finding supplies is not as hard now, but poor families say affording them is.

Given this reality, voters in many such households are unable to see change begin with Mr. Wickremesinghe at the helm. Especially so, since he rose to presidency with the Rajapaksas’ support and ran a government made up of members of their discredited party.

Making a choice

Meanwhile, the once formidable Rajapaksa surname hardly figures in the context of the coming election, signalling voters have little appetite yet for their comeback. This, despite Mahinda Rajapaksa being the sitting MP for Kurunegala, from where he won handsomely in 2020, and his son Namal Rajapaksa running for president.

A total of 38 contestants are in the race, but the real contest is limited to three candidates. Some, particularly in Colombo, see value in continuity if Mr. Wickremesinghe wins, while those decidedly voting for change are divided between Mr. Premadasa and Mr. Dissanayake.

Also read: In Sri Lanka’s hill country, expectations low ahead of presidential polls

“Although Mr. Premadasa comes from an established political party, he has never had the chance to lead the country. With his experience, he will be able to govern well, I think,” says Fathima Rinosha, making a case for a known, even if untested, leader.

Mr. Premadasa is also seen as a preferred candidate in the hill country among Malaiyaha Tamil voters, including on the tea estates. Additionally, southern voters, who have troubling memories of the armed insurrections led by Mr. Dissanayake’s party [the Janatha Vimukthi Peramuna (JVP or People’s Liberation Front) with Marxist origins] in 1971 and 1987-89, seem more comfortable with Mr. Premadasa, observes Kurunegala-based women’s rights activist Sumika Perera.

In Focus podcast | Sri Lanka Presidential elections: Will they deliver on the political expectations of the 2022 protesters?

All the same, some voters say Mr. Premadasa does not represent a clean break from the old political system that they are tired of. He was with the UNP before breaking away to lead the Samagi Jana Balawegaya (SJB or United People’s Force). He is the son of Ranasinghe Premadasa, a former President, accused of unleashing state terror on JVP rebels. “Ranil and Sajith are two sides of the same coin,” says K. Wijerathna, a trader in the neighbouring Matale district, seeing them both as part of the political “establishment”.

“We use all our earnings to meet the increased living costs and don’t save a penny. The crisis has left wage labourers, traders, small businessmen, all of us suffering. We need a complete system overhaul to get out of this,” he says, near his store at the Dambulla Economic Centre, a national hub for wholesale and retail distribution of vegetables grown on the island. Mr. Wijerathna had to sell his vehicle. Many others are pawning all their jewellery or taking microfinance loans to cope. “No one can bring about radical changes tomorrow itself, but AKD [as Mr. Dissanayake is referred to] is the only leader who can weed out corruption and bring about change. He is not part of that corrupt political class,” he contends.

Ms. Mihirani is supporting Dissanayake for the same reason. Compared to his rivals from traditional, mainstream political camps, and whose uncle or father were presidents, “AKD” is furthest from Sri Lanka’s political elite. Further, his alliance is campaigning hard through public rallies and on the ground, through pocket meetings. In villages across Sri Lanka, especially in the south and central parts, posters of Mr. Dissanayake pop up frequently out of the road margins. Relatively fewer posters of other main candidates are visible.

S.H. Razi, a public sector worker in neighbouring Anuradhapura district, is not dewy-eyed about what is in store. However, he sees Mr. Dissanayake as the “only candidate” offering “some hope” since the aragalaya, or the people’s struggle of 2022. Sri Lanka’s youth learnt from India’s farmers and now we saw Bangladesh’s youth learning from their Sri Lankan counterparts,” he laughs. “That uprising gave us hope…we need to build on that”.

Voters’ buoyant endorsement of Mr. Dissanayake as the “symbol of change”, coupled with the lead many local polls give him, have made him a frontrunner in the contest, even as Mr. Premadasa steadily acquires support through poll alliances, especially with representatives of ethnic minorities. However, even voters know it is premature to be certain about anyone’s victory in an electorate as fragmented.

S.R. Karunaratne, a farmer from Kekirawa town in Anuradhapura, is in no hurry to decide, because he does not think any of the candidates have offered “a realistic economic plan” that will make life better for everyone. “In all these years we have relied on imports rather than building an export-oriented economy. Today we are so indebted to the world that even our children won’t be able to finish repaying all this debt,” said Mr. Karunaratne.  



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Fixing Sri Lanka’s economy, wiping out racism top priority, says JVP leader Anura Kumara Dissanayake https://artifexnews.net/article68601908-ece/ Tue, 03 Sep 2024 15:02:29 +0000 https://artifexnews.net/article68601908-ece/ Read More “Fixing Sri Lanka’s economy, wiping out racism top priority, says JVP leader Anura Kumara Dissanayake” »

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COLOMBO:

Fixing Sri Lanka’s battered economy and wiping out racism will be top priority for a National People’s Power (NPP) government, Anura Kumara Dissanayake, among the frontrunners in the September 21 race, said on Tuesday.  

He spoke to The Hindu amid a hectic campaign at the headquarters of the Janatha Vimukthi Peramuna (JVP), a party with Marxist origins that is leading the NPP alliance.  Sri Lanka is “poised for a renaissance project”, departing from the old political order, Mr. Dissanayake, 55, said, adding: “People are voting for change.” Multiple domestic polls have given the articulate opposition politician a lead in the contest.

The JVP leader, who was elected to parliament from Colombo, along with Opposition Leader Sajith Premadasa, have emerged as key challengers to incumbent President Ranil Wickremesinghe, who is also running for President.

The NPP’s campaign began “long ago,” Mr. Dissanayake said, referring to his party’s steady efforts soon after its poor performance in the last election in 2019, when he contested and came third, with just 3.16 % of the total votes. It was the election that Gotabaya Rajapaksa won with a clear majority. Mr. Dissanayake’s vote share must swell to over 50 % for him to clinch the presidency.

Also read: Sri Lanka needs a national liberation movement, not mere regime change: Anura Kumara Dissanayake

His prospects improved dramatically in these five years not only because of an impressive grassroots campaign. Sri Lanka has witnessed momentous changes, with a mass uprising ousting Mr. Gotabaya from office when a crushing economic crisis gripped the country in 2022. In addition to demanding his resignation, the people’s movement called for “system change”.  That sentiment, too, has since propelled Mr. Dissanayake to prominence with many, especially youth, seeing him personify the change they sought.

“The people have very high expectations now,” said Mr. Dissanayake, pointing to the “challenge” this presents. “We must somehow channel all this enthusiasm, energy, and hope in constructive ways for positive change.” Sharing a three-fold objective for the first five years if he were president, he said: “If we can fix the economy and make it work for all; build a country with no racism or religious intolerance; and set a course for social justice, I would consider it a success.”

Apart from vowing to eliminate corruption, the NPP has said it will renegotiate Sri Lanka’s ongoing programme with the International Monetary Fund, as has Mr. Premadasa’s main opposition alliance. Both parties know they face an electorate that is grappling with painful austerity measures introduced by the Wickremesinghe government, amid enduring high living costs, and that whoever wins will inherit bleak economic prospects.   

The NPP has two bogeys raised by its critics — the JVP’s two armed insurrections in the 1970s and 1980s, and its economic management, given the party’s roots in state socialism. Critics fear an NPP government may roll-back the private sector role in the economy, and raise welfare spending widening the budget deficit, instead of deepening market deregulation and trade liberalization as set out in the ongoing IMF programme.

While the JVP, that is the political core of Mr. Dissanayake’s electoral alliance, is ‘Marxist-Leninist’ in its founding ideology — the NPP manifesto makes no radical pitch for anti-capitalist policies. Mr. Dissanayake himself points to several comparable promises on welfare schemes in “all main manifestos”. “In fact, our welfare project will cost the state much less than others’,” he claims. On his plans to increase government revenue to reduce the budget deficit, he said, making the tax collection system efficient would boost income, “without imposing any new taxes”. The NPP manifesto has envisioned domestic production-based economic growth that it expects will augment current state revenue.

“Our party has demonstrated its commitment to democratic politics for 35 years now. And we have outlined our economic vision very clearly for everyone to see. All this fear mongering by our rivals about our past and future have not gained any traction among voters,” he said confidently.

India partnership

Speaking on foreign investment, Mr. Dissanayake said there is a “need to work with India”, especially in the energy sector. “Sri Lanka has enormous potential for producing renewable, especially wind, energy,” he said pointing to potential Indian collaboration in building infrastructure for the same.    

Adani Green is investing $442 million in a wind power project in the island’s Northern Province. The project has run into controversy over energy pricing and environmental concerns in the northern Mannar district, and for its entry without a transparent bid.

“We welcome foreign capital, including from the private sector. But all investments should come through a fair tender process,” he said, referring to Adani Green’s current offer of $0.0826, or 8.26 cents, per kWh. “If the government had gone for a fair tender process, we could have got it for half the price.”          

Numbers to govern

Meanwhile, Mr. Dissanayake has promised to abolish the Executive Presidency that rights advocates have, for long, seen as dangerous concentration of power in one individual. “I am determined to do that as soon as possible, but there could be delays,” he said. The presidential form of government is closely linked to the country’s electoral system and laws, and its abolition is tied to changing some of those laws, for which he would need all political parties’ support, he explained.

Further, Mr. Dissanayake’s alliance currently has three members in the 225-member legislature, raising questions about how he would go about forming a Cabinet to govern, should he win presidency. “We have at least three options to consider before the [imminent] parliamentary elections. Whatever it is, we will adhere to the Constitution”. Outlining the options, he reminded that in the event of his election, his vacant parliamentary seat would be filled by another from his party, allowing for a four-member Cabinet (including him) to be formed; or the President could hold all portfolios; or a caretaker government could be formed with support other parties in the present parliament. “All this will depend on the situation and how others respond.”

Tamils’ support

While the surge in Mr. Dissanayake’s popularity in many parts of the country is visible, he does not seem to have made major inroads yet into the north that is home to the war-affected Tamils. It would be the “duty” of an NPP government to address long-pending issues around war-time accountability, truth, and justice that Tamils want, he said. “Our aim is to make domestic mechanisms credible and sound, so the Tamil people will be able to trust them. Past governments were determined to hide the truth and delay the processes.”

On the pending political settlement, Mr. Dissanayake said his government would take forward past efforts towards drafting a new constitution, referring to the initiative the Maithripala Sirisena and Ranil Wickremesinghe government began in 2015 and later abandoned. Island-wide consultations were held at the time to collect proposals from citizens. Subsequently, a team of constitutional experts prepared a draft that the main Tamil political group, the Tamil National Alliance (TNA), endorsed on the basis that it “went beyond” the currently available 13th Amendment. “Some of us were part of the process…we don’t have to re-invent the wheel. We will build on that effort,” said Mr. Dissanayake.



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Sri Lanka cuts rates by 25 basis points to foster growth https://artifexnews.net/article68440059-ece/ Wed, 24 Jul 2024 02:51:53 +0000 https://artifexnews.net/article68440059-ece/ Read More “Sri Lanka cuts rates by 25 basis points to foster growth” »

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The Central Bank of Sri Lanka has cut key rates to aid growth. File
| Photo Credit: Reuters

Sri Lanka’s central bank cut interest rates by 25 basis points in a surprise decision on July 24 to support economic growth and propel the South Asian nation out of its worst financial crisis in decades.

The Central Bank of Sri Lanka (CBSL) reduced the Standing Deposit Facility Rate to 8.25% and the Standing Lending Facility Rate to 9.25%, it said in a statement.

“The Board underscored the need to signal its desire to continue eased monetary conditions to sustain the revival of economic activity towards the full potential, in the absence of significant inflationary pressures,” the CBSL said.

Nine out of 14 economists and analysts polled by Reuters had predicted the monetary authority will keep interest rates unchanged to hedge against political uncertainty.

The central bank had also reduced rates by 50 basis points in March as it continued an easing cycle that has seen rates drop by 725 bps since June last year, partially reversing the 1,050 bps in increases since April 2022.

Sri Lanka’s economy is expected to grow 3% in 2024 after Colombo secured a $2.9 billion lending programme from the International Monetary Fund (IMF) early last year.

The island’s economy shrank 7.3% in 2022 and 2.3% last year after a record shortfall of dollar reserves and huge debt sparked a severe financial crisis.



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Drought dents Sri Lanka’s economic hopes, farmers’ livelihood https://artifexnews.net/article67247557-ece/ Tue, 29 Aug 2023 07:32:10 +0000 https://artifexnews.net/article67247557-ece/ Read More “Drought dents Sri Lanka’s economic hopes, farmers’ livelihood” »

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H.J.M Seneviratne cuts yellow paddy stems that dried following drought, at his paddy field in Anamaduwa, Sri Lanka.
| Photo Credit: Reuters

H.J.M Seneviratne (63) slices through yellowed paddy stems dried out by a drought that has destroyed more than 95% of his crop and is threatening crisis-hit Sri Lanka’s summer rice harvest.

The island’s economy was crushed last year by its worst financial crisis in more than seven decades, caused by a severe shortage of foreign exchange reserves that triggered widespread unrest and ousted its former President.

Helped by a $2.9 billion bailout from the International Monetary Fund (IMF) Sri Lanka has slowly stabilised its economy since March, rebuilding its decimated reserves, moderating inflation and strengthening its currency.

But even before the country’s agriculture sector could recover from sky-rocketing prices of inputs from fertiliser to power, the rains failed.

“I’ve been a farmer for forty years but I’ve never experienced a harder time than this,” Seneviratne said, standing in the middle of a dusty field near Anamaduwa, a town in north western Sri Lanka, clutching a fistful of straw-like paddy stems with hollow rice kernels. “We haven’t had enough rain since May. The harvest is so bad we don’t even have seed paddy for the next season.”

The southwest monsoon that farmers rely on for the Yala or summer harvest was scanty this year because of the El Nino weather pattern and the weather department estimates there will be no rains until October.

Typically, Seneviratne’s four acres yield about 4.5-6 tonnes of paddy for the summer harvest but this time he predicts he will get only about 150 kg. All but one of the eight water tanks, large ponds in which rainwater is collected for irrigation, in the area have dried out, destroying about 200 acres of paddy.

The paddy loss could be as much as 75,000 acres, according to Agriculture Minister Mahinda Amaraweera while other experts say full losses could be even higher as estimates are yet to be completed. Sri Lanka planted 1.3 million acres for the summer harvest, according to the Agriculture Ministry.

“We have lost at least 80,000 metric tonnes of paddy as per the latest data and it could be more,” said Buddhi Marambe, a professor of crop science at Sri Lanka’s Peradeniya University. Last year, when the crop was decimated by a lack of fertilizer because of the economic crisis, the season produced 1.5 million tonnes of paddy.

The drought could reverse a recent trend of falling food prices, which dipped an annual 2.5% in July after rising 94% year-on-year last September.

Sri Lanka’s central bank warned last week that the dry weather coupled with higher global oil and commodity prices could also “weigh on expected growth in the near term,” as the island struggles to limit economic contraction to 2% this year after shrinking 7.8% in 2022.

Sri Lanka’s northern neighbour India is also expected to have the driest August in more than a century prompting it to restrict exports of certain categories of rice. Sri Lanka has previously imported rice from India to bridge production shortfalls.

Sri Lanka has so far ruled out rice imports this year, a statement from the President’s office said, as regions that have escaped the drought have produced higher yields.

Prices of rice have remained largely unchanged at retail, edging up about 10 Sri Lankan rupees (about 3 U.S. cents) to 220 rupees per kg from last month. So far, rice stocks have staved off any impact but prices could tick up in coming months with a scanty harvest.

Experts say they are worried that if Sri Lanka doesn’t receive the rains it needs next March because of the continuing El Nino, the country will be left with scant reserve stocks and will have to resort to large-scale, expensive imports.

El Nino, a warming of water surface temperatures in the eastern and central Pacific Ocean, is linked to extreme weather conditions from tropical cyclones to heavy rainfall to severe droughts.

During the last El Nino in 2016/17, Sri Lanka suffered its worst drought in 40 years and rice output fell by nearly 50% year-on-year to 2.4 million metric tonnes over both its harvests.

Rice is the staple food of the country’s 22 million people and its biggest crop. According to government data, two million people in the country are rice farmers out of 8.1 million people engaged in fishing and agriculture in the largely rural economy.

To limit the El Nino impact, Buddhi Marambe says farmers will have to plant early during the Maha paddy season that starts in October as rains next March and mid-year are uncertain.

“If rains fail in March it will impact our main paddy season and we could have a very, very dry second season as well in the middle of 2024.”

The drought has also wiped out the small chilli, peanut and banana plants Seneviratne’s wife, W.M. Makamma, 62 grows to feed her family. “Before the crisis we used to cook for all three meals but now it’s only two,” she said. “We’ve stopped buying eggs, chicken or fresh fish. Lunch is a cup of black tea. I feel like we have fallen completely and its very hard to get back up.” ($1 = 323.5000 Sri Lankan rupees)



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