SRI LANKA NEWS (JANUARY 2022)Compiled by Victor Melder.
Export earnings from rubber, coconut and cinnamon are on the verge of exceeding $ 4 billion, creating history by recording the highest annual income generated from these crops in a year, Plantation Industries Minister Dr. Ramesh Pathirana said. He also said that the Plantation Ministry was committed to make the tea industry a profitable industry in 2022. He said despite not being able to reach the target export earnings, tea crop was estimated to be 305 million kg in 2021.
He outlined that the tea industry was a key export crop which contributed significantly to the national economy. “If we want to build up the economy, then we must strengthen the planters. The COVID pandemic and fertiliser problems have caused some setbacks in the industry. But, amidst all these problems, we are working to strengthen the smallholders who contribute to the national economy. We have allocated Rs. 4,000 billion from Budget 2022 for this purpose. We hope to utilise these funds to develop new methods to increase tea production,” the Minister added. Dr. Pathirana also said that it was time to go beyond traditional cultivation, pointing out that only then would Sri Lanka be able to build a better plantation industry. (Daily Financial Times, 1.1.2022)
Around 120,000 Sri Lankans left Sri Lanka in 2021 seeking foreign employment, the State Ministry of Foreign Employment Promotion and Market Diversification said. The State Ministry said 30,000 have gone to Qatar, 27,000 to Saudi Arabia, 20,000 to UAE, 1,400 to South Korea, 1,100 to Singapore,1,600 to Cyprus and 800 to Japan despite the COVID-19 pandemic. (Daily Mirror Online, 1.1.2022)
India has reportedly agreed to provide a $ 1 billion loan to Sri Lanka, as a solution to the dollar shortage, for the import of essential food items and medicines. According to government sources, the loan will be given not as cash but as a loan facility for goods imported from India. It is learned that in addition India has agreed to provide US $ 500 million loan for fuel purchases and US $ 400 million as an exchange loan. Meanwhile, government sources said that a loan of US $ 1.500 billion was received from China recently and that a loan of US $ 500 million is to be received from Qatar on a one-year repayment basis. (Colombo Page, 2.1.2022)
Police spokesman SSP Nihal Thalduwa said that 18 people have been killed in road accidents since the dawn of the New Year 2022. He said that 08 persons were killed in road accidents yesterday alone. The other 10 persons who were seriously injured in previous road accidents died yesterday while being treated at hospitals. He further said that school children are also among the people killed. The police spokesman said the deaths of 18 people from fatal road accidents in one day is not something to be ignored. He further stated that speeding, carelessness and drunk driving are the causes of these accidents. (Colombo Page, 3.1.2022)
Among the records made last year — most of which didn’t necessarily bring in a sense of achievement—was the record phase at which money was printed, as the Central Bank, influenced by the Modern Monetary Theory (MMT), flooded the markets with liquidity to support the government bloat its fiscal deficit. As at the end of 2021, the Central Bank’s disclosed Treasury bill stock stood at Rs.1, 416.75 billion with overnight liquidity injections to the banking sector topping Rs.467.30 billion on December 31. However, other reports suggested that the estimated Treasury bill stock by the Central Bank had topped Rs.1.9 trillion by December end from Rs.1.8 trillion estimated by the end of November as on November 25 a Central Bank official put the book value of the Treasury bill stock at Rs.1,767 billion on the previous day. Going by the disclosed Treasury bill holdings, the Central Bank had printed money worth Rs.691.56 billion during 2021 after injecting Rs.650.27 billion in 2020 to provide liquidity to the markets to blunt the economic fallout coming from the pandemic and also to keep borrowing costs lower to support economic recovery. Treasury bill holdings by the Central Bank stood at Rs.78.01 billion on March 11, 2020 when the country reported its first local coronavirus case before the country came under lockdowns to contain the virus spread for two months. This unprecedented monetary stimulus generated multiple excesses in the economy by way of generating soaring prices, commodities shortages and massive crunch in foreign liquidity in the domestic market bringing the country closer to a foreign currency debt default, as such money hit the Balance of Payments by way of higher demand for imports. Sri Lanka recorded its highest-ever 10-month BoP deficit of US$ 3.3 billion in October while its foreign currency reserves fell to the worrying level of US$ 1.6 billion in November, earning a rating downgrade by Fitch Ratings in December due to heightened concerns about a debt default in the months to follow. As major global central banks have either have already started raising their interest rates or have indicated a series of rate hikes starting next April in response to soaring prices, Sri Lanka is left with little choice but to follow suit as investors tend pull out their funds from the emerging and developing markets to developed market treasuries which provide them with positive returns with little risk compared to markets with junk ratings. (Daily Mirror Online, 3.1.2022)
The government yesterday undertook to make available jet fuel at the same price as kerosene (Rs. 87 a litre) to overcome the current kerosene shortage. Energy Ministry sources said there was no harm in using jet fuel for domestic purposes; internationally the word, kerosene, was not used. A jet fuel shipment was expected to arrive on 20 Jan., noting that jet fuel was much more expensive and would be processed and sold as kerosene at a loss. Energy Minister Udaya Gammanpila earlier said that Sapugaskanda Oil Refinery would be closed from Monday (today) due to lack of foreign exchange to purchase crude oil. The Ministry says the refinery will recommence operations before 30 Jan., as the supplies from the long-time Singapore contractor will begin on 26 Jan. It has assured that there will be no fuel shortage in the country. (Daily Island, 3.1.2022)
The Cabinet of Ministers yesterday approved a massive but critical relief package worth Rs. 229 billion to people already reeling from the soaring cost of living, with the hope that the stimulus will invigorate the economy especially via the economy including agriculture among others. Finance Minister Basil Rajapaksa told a media briefing at the Treasury post-Cabinet meeting that President Gotabaya Rajapaksa, Prime Minister Mahinda Rajapaksa and the rest of the Cabinet were fully aware of the difficulties being faced by the people owing to factors influenced by the COVID pandemic. “The President previously made several requests for the Cabinet to consider granting relief to the people amidst the challenging conditions. We have done so via multiple moves since the onset of the pandemic and we felt the time was right to come up with this latest stimulus,” Basil added. The package includes a Rs. 5,000 monthly allowance from January for all public servants amounting to over 1.4 million, over 600,000 pensioners and differently abled soldiers – all of which will cost Rs. 87 billion; and Rs. 1,000 additional payments to 1.7 million Samurdhi families. The Government will request the private sector to follow suit with a proportionate increase. “We hope the employers will also support private sector employees,” the Finance Minister added. Cabinet also approved the move to increase the guaranteed price for paddy from Rs. 50 to Rs. 75 per kilo if the Maha harvest was lower by 50% due to the delay in or non-application of fertiliser. “Whilst Maha season has seen satisfactory cultivation, there could be a 20-30% drop in harvest. The higher guaranteed price will be paid even if the harvest is lower by 50%,” Basil said, adding that the subsidy would be carried out without a corresponding increase in rice prices for consumers. Emphasising that the continuity of the home gardening initiative initiated soon after President Rajapaksa assumed office was the best solution for the current food shortage and high prices, Cabinet decided to pay Rs. 5,000 for households with a land area of below 20 perches to incentivise cultivation of fruits and vegetables and Rs. 10,000 for those with land over 20 perches. The scheme costing Rs. 31 billion will be administered through local governments. Basil also said that the estate community would be provided with subsidised wheat flour amounting to 15 kilos per month at Rs. 80 per kilo as against Rs. 120 per kilo sold at present. All EPF registered plantation workers will qualify for this scheme. Another move approved by Cabinet was to remove all taxes and levies on essential goods and drugs. Basil said the Government would use funds within the 2022 Budget for the stimulus and that no new taxes would be imposed. “We came to office promising taxation will be broadly consistent for three years and we will continue to do so,” the Finance Minister said, adding that the Government will focus on enhancing State revenue via an expanding economy. He also said that the foreign exchange crisis will be addressed via increasing exports as well as inward workers remittances. The Finance Minister expressed confidence in these two measures on the basis that tourist arrivals in 2021 improved to nearly 200,000 with improved outlook for 2022 whilst the number of Lankans migrating for employment rose to 220,000 by end-2021 after a two-year lull and the number will increase to 300,000 in the next few months. (Daily Financial Times, 4.1.2022)
Finance Minister, Basil Rajapaksa said “People can say anything, but we have endeavoured to stabilise and strengthen the economy sans corruption,” Basil said, adding that in the past six months austerity measures enabled an expenditure saving of Rs. 53 billion in the public sector. Commenting on the 7 billion public debt servicing challenge in 2022, the Finance Minister said Cabinet approved the decision to initiate talks with the International Monetary Fund, the World Bank, the Asian Development Bank as well as major donors such as China, Japan, India, the US and the European Union for debt relief. “We are not going for a bailout from the IMF, but we will have talks. We are engaged in Article 4 Consultations with the IMF at present and it will release a report shortly. President Rajapaksa also met the World Bank officials. Both institutions commended the Government’s highly successful COVID vaccination drive,” Basil added. The Finance Minister said the $ 500 million maturing International Sovereign Bonds (ISBs) would be honoured in mid-January whilst the Government will explore options on the $ 1 billion worth of ISBs maturing in July. “Our ongoing measures will boost investor confidence,” he added. The Finance Minister hinted that artificially capping the US Dollar exchange rate at Rs. 203 had helped the country, as a depreciation would adversely impact the value of the country’s debt stock. (Daily Financial Times, 4.1.2022)
A saltwater crocodile attack was extremely rare, Dr. Anslem de Silva of the Amphibia and Reptile Research Organisation of Sri Lanka said commenting on the death of a swimmer in the sea off Colombo. De Silva said usually seawater crocodiles migrated between Wellawatte and Panadura canal. Police Headquarters said a man who was swimming in the seas off Dehiwala had died following an attack by a crocodile. Kalubowila Teaching Hospital Director Dr. Rukshan Bellana said that the deceased was a 57-year-old male. Police said the incident had taken place when the crocodile attempted to drag away the swimmer. Islands. (Daily Island, 4.1.2022)
The Sri Lanka Customs Department has been able to earn a record of Rs. 643.8 billion in 2021, as expected, Director General of the Sri Lanka Customs Major General (Retd.) GV Ravipriya has said. Although it was estimated at the beginning of the year 2021 to collect revenue of Rs. 963 billion, the target was reconsidered due to the closure of the country and the imposition of travel restrictions in the face of the global epidemic of Covid-19, the Director General said. Accordingly, a revenue target of Rs. 633.3 billion was set and he was able to achieve that goal by the end of the year. The official said his department had a revenue collection of Rs. 654 billion in 2020. The highest revenue earner in the year 2021 was the month of March and Rs. 6.52 billion income has been generated in the month. (Colombo Page, 7.1.2022)
The compulsory retirement age of government workers has been raised by three years to 65 years. A related circular has been issued by the Ministry of Public Services, Provincial Councils and Local Government. This retirement age extension is effective from 01 January 2022. (Ceylon Today, 7.1.2022)
Advocata’s Bath Curry Indicator (BCI), which tracks the monthly changes in the retail price of food, has recorded an increase of 15% from November 2021 to December 2021. It said much of this increase is driven by rising prices of vegetables. 100 g of Green Chillies at Rs. 18 increased to Rs, 71. This is a 287% increase in just one month. Similarly, prices of Brinjals have increased by 51%, red onions by 40% and beans and tomatoes by 10%. Overall, since 2019, prices have almost doubled, and compared to December 2020, prices have increased by 37%. This means that an average family of four, who spent Rs. 1,165 weekly on the BCI basket of food items in December 2020, now has to pay Rs. 1,593 for the same basket of goods just one year later.
The BCI tracks the weekly retail prices in the Colombo market of the most commonly consumed food ingredients that might be used in a typical bath curry meal. The prices are collected from the ‘Weekly Indicators’ that the Central Bank publishes. (Daily Financial Times, 7.1.2022)
Covid -19 pandemic has exacerbated existing challenges and in Sri Lanka, around 500,000 people have fallen below the poverty line since the beginning of the pandemic. “Jobs have been lost, particularly among women, many of whom will never return to work. The implications of prolonged school closures will be more serious for children who couldn’t access online education, and the ‘silent learning crisis’ will impact future productivity and growth.” According to a World Bank report. The report highlights the need to have robust and resilient systems to reduce exposure and vulnerability to shocks. “Adapting and preparing for emerging challenges is also important. For Sri Lanka, the rapidly ageing population and the rising non-communicable disease burden pose a significant threat to human capital, and failing to prepare for these challenges could be disastrous.” Furthermore, the report says Sri Lanka could benefit from developing a human capital program that brings together key sectors and stakeholders for the implementation of comprehensive solutions that can help restore and accelerate human capital. Isolated interventions can only go so far in creating sustainable and meaningful change. Human capital challenges require integrated and holistic interventions, based on strong collaborations across key sectors. Additionally, human capital challenges are exacerbated by lack of access to and poor quality of basic services, including water, electricity, and transport. The report also says that Sri Lanka has achieved good results in human capital development with relatively low investment. This remarkable progress demonstrates the country’s potential, and provides a glimpse of what can be achieved with more efficient investment. Human capital challenges reveal inequalities along gender, geography, and income, which allow people to fall through the cracks. Investing now can help foster productive citizens who contribute to the national economy, reducing the cost and burden on the system. “Looking ahead, Sri Lanka must prepare for the challenge of rebuilding lives and reshaping futures. At this crucial juncture, a renewed focus and commitment to human capital development could support a smooth and resilient recovery.” (Daily News, 7.1.2022)
The People’s Bank (PB) has paid 6.9 million US dollars to China’s Qingdao Seawin Biotech Group over Sri Lanka’s rejection of two of its fertilizer shipments. Payment came after the Colombo Commercial High Court three days ago dissolved an enjoining order preventing the payment on letter of credit after parties to the case agreed for a settlement. The fertilizer consignment in question was under the spotlight over the past months after harmful organisms were found in its samples in September 2021. Sri Lanka then suspended the fertilizer importation and local fertilizer companies obtained a court order to the PB against making payments. The result was the PB being blacklisted by China.(Ceylon Today, 8.1.2022)
The Central Bank has partly sold the country’s gold reserves as it battles the ongoing foreign exchange crisis. Main Opposition SJB Parliamentarian Dr. Harsha de Silva tweeted saying CBSL has sold more than half of the country’s gold reserves, bringing it to $ 175.4 million at present from $ 382 million in mid-November. Citing latest CBSL data, the MP also said that there was no mention of whether the CNY 10 billion (accounted as equivalent to$ 1.5 billion) can be used for debt repayment. “This plane is crashing. The only question now is are we going to try and soft-land it on the beach and save the passengers or are we going to let it come down hard nose first and hit rock?” claimed the SJB MP via his tweet. (Daily Financial Times, 8.1.2022)
The Railway Department has incurred a loss of 10 billion rupees in the year 2021, said the General Superintendent of Sri Lanka Railways Dhammika Jayasundara. Last year the Railway Department spent Rs. 14 billion but the revenue was around only Rs. 400 million, the official said. The General Manager also said that talking about losses without an increase in train fares would not be such a fair process. The General Manager said that the Railway Department had earned around Rs. 8 billion in previous years and the revenue had decreased last year due to the Covid pandemic situation. Although bus fares have been increased from time to time, train fares have not been increased after a small increase in 2018. The Department of Railways is ready to talk about profits and losses if bus fares and train fares are compared and there is no point in talking about profit or loss if the train is operated as a service, the General Manger said. (Colombo Page, 8.1.2022)
The Health Ministry has alerted people about the number of hospitalizations and deaths caused by accidents which steadily increase day by day. Health Ministry Consultant Community Physician, Non- Communicable Disease Unit, Dr. Samitha Siritunga said around 35,000 people are being hospitalized while around 35 individuals die of accidents daily. “Annually, six to seven million admissions take place in hospitals island-wide, out which 1.3 million admissions are accident victims,” he said. ” As per our calculations, the number of total hospital admissions per year has been estimated to increase 15 million by 2025, which means that one in five persons susceptible to get injured due to accidents” he argued. In addition, Dr. Siritunga said some 12,000 persons succumb to accidents annually. An accident is an event, that happens unintentionally resulting in damage, injury, harm and disability. The types of accidents include accident at work, industry-prone hazards, road mishaps, accidents involving animals, sports related injuries, clinical negligence and other accidents etc. (Daily Mirror Online, 9.1.2022)
Sri Lanka’s tea industry performed well in 2021 earning 1.3 billion U.S. dollars despite lower yields and higher costs of production. Chairman of the Sri Lanka Tea Board Jayampathy Molligoda says that Sri Lanka earned approximately 1.3 billion U.S. dollars from the export of 288 million kilos of tea in 2021. In a press release, Molligoda said the cost of production of Sri Lankan tea is among the highest in the global market and tea production peaked in 2013 and has declined since then. He said auction prices in Kenya and India are cheaper than in Colombo. He said Sri Lanka needs to “focus more on the front end of the value chain” by marketing the clean, sustainable and wellness aspects of Ceylon Tea. It said: The total export quantity is 288 million kilos. During the year 2020, the export revenue was Rs 230 billion (US $ 1,213 million) and the export quantity was 266 Mn kilos. It is significant to mention the average fob price at customs, which was Rs 867/= per kilo in 2020 has further increased to Rs 915.97 per kilo, whereas in 2019 it was only Rs 823/ per kilo of tea exported. The sales and tea production statistics for the month of December are yet to be finalised, however some 296 million kilos have been sold and closer to 300 million kilos tea production have been achieved for the full year. Last year tea production was only 279 million kilos. The negative side is that our tea estate productivity has been declining over a period of time; the year 2000 the tea production was 305 million kilos and has increased to 328 million in 2010. The peaked production of 338 million kilos in 2013- since then there has been a gradual decline of tea production, which is 2.6 % decline based on CAGR. The cost of production of tea producers has been increasing due to many factors which includes low productivity, both land and labour, high overheads and adverse impact of climate change and Covid-19. (Sunday Island, 9.1.2022)
There are approximately 18 crocodiles ranging in length from 5 to 10 feet that have been identified in the canals from Wellawatte to Kotte to Nugegoda, Chairman of the National Environmental Council (NEC) Dr. Jagath Gunawardena said, citing a partial census.
He noted that he saw approximately 18 crocodiles from Nawala, Narahenpita, and Wellawatte across Nugegoda where the Diyawanna Oya flows from that area around Parliament, adding that the crocodiles which emerged from Wellawatte and Dehiwala were those associated with the Diyawanna Oya.He said that dredging the Wellawatte Canal and Diyawanna Oya had enhanced the crocodile population. “Crocodiles need water that is mixed with brackish water. Now brackish water has made its way inland, and is found in the lake surrounding Thalawathugoda. Wellawatte to Nawala has concrete on either side, much like a drain. As a result, the crocodile has nowhere to climb out and thus it swims back and forth,” he explained. In addition, he said crocodiles were now moving to the beaches owing to blocked waterways and move from one canal to another. As the water flows down the canal, crocodiles come out at night to eat the fish, but no way does it imply they are hunting humans for food. (Ceylon Today, 13.1.2022)
Sri Lanka ruled out an IMF bailout on Wednesday and said it plans to seek another loan from China to address an economic crisis that has led to food and fuel shortages. The island’s tourism-dependent economy has been battered by the pandemic, with supermarkets rationing goods and rolling blackouts imposed by power utilities unable to fund oil imports. International rating agencies have warned of a looming sovereign default on Sri Lanka’s $ 35 billion foreign debt as the Treasury battles a crunch on foreign exchange reserves and a gaping budget deficit. But Central Bank governor Ajith Nivard Cabraal rejected mounting calls from local and international economists to seek an International Monetary Fund bailout and debt restructure. “The IMF is not a magic wand,” he told a news conference in Colombo. “At this point, the other alternatives are better than going to the IMF.” Cabraal added that talks with China over a new loan were at an “advanced stage,” and a fresh agreement would service existing debt to Beijing “They would assist us in making the repayments… the new loan coming from China is in order to cushion our debt repayments to China itself,” he said. Beijing is already the island’s biggest bilateral lender, accounting for at least 10% of Sri Lanka’s external debt. Cabraal’s remarks come days after a visit from Chinese Foreign Minister Wang Yi who discussed a debt payment restructure with President Gotabaya Rajapaksa. Sri Lanka has borrowed heavily from China for infrastructure in the past, some of which ended up as white elephants. Unable to repay a $ 1.4 billion loan for a port construction in the South, Sri Lanka was forced to lease out the facility to a Chinese company for 99 years in 2017. The United States and India have warned that the Hambantota port, located along vital east-west international shipping routes, could give China a military toehold in the Indian Ocean. Cabraal did not give an indication of the size of the loan sought from China, but said talks were also underway with India for a $ 1 billion credit line to fund a broad range of imports. He also said Colombo would repay a $ 500 million sovereign bond that matures next Tuesday despite local business leaders publicly asking him to withhold the repayment and seek IMF help. (Daily Financial Times, 13.1.2022)
Sri Lanka’s debt-ridden government is now negotiating a fresh financial relief package from Japan amounting to between $2billion and $3.5 billion similar to Indian assistance of US$ 900 million granted to Sri Lanka recently, with the aim of overcoming the current economic crisis. The exact amount of the planned swap of the loan into dollars is yet to be finalised as it depends on the outcome of the ongoing negotiations, a senior official who wished to remain anonymous told the Business Times. The loan from Japan may be from a Japanese agency or institution and it will be issued in Japanese yen and carry an interest rate of just 0.05 per cent, informed sources said. The Finance Ministry will also enter into foreign financing agreements with foreign development partners including Japan and lending agencies to support the public investment program this year. Sri Lanka anticipates more financial commitment considering the urgent needs of the country to support the budgetary activities, he pointed out. Sri Lanka faces one of its worst economic crises, with foreign reserves which stood at around $3.1 billion, enough for a few months of imports. It also has foreign debt obligations over $6 billion this year, including repayment of bonds worth $500 million in January 18 and $1 billion in July. The cash strapped government is to pursue further loans from other multilateral lending agencies (such as the World Bank) and other bilateral agencies, particularly those in India and China. For the development support it will seek access to financial assistance from multilateral lending agencies and foreign governments. The Finance Ministry has requested Japan to restructure (Sri Lanka’s) debts and access to preferential credit for imports of essential goods, as the island nation struggles in its worst economic crisis, Under the Indian line of credit, Sri Lanka is to purchase 500 mini buses for commuter transport services and 750 jeeps for the Police Department. (Sunday Times, 16.1.2022)
The fossilised skeletal remains of a herd of Rhinoceros that died in a meteoric shower more than 80,000 years ago have been unearthed from an 80ft deep gem mine at the foot of Rilaulu hill range in Lunugala in Madulsima. Biologist of the Post Graduate Institute of Archaeology Kelum Nalinda Manamendra Arachchi said scientists who examined the fossils confirmed that they were the skulls of Rhinoceros that lived in the Pleistocene age. He said it was sad that the relevant authorities had not taken any interest in these finds to conduct further research, although nearly 16 years had elapsed since the first of the fossils were found. “The first of the fossils had been unearthed from the 80ft deep gem mine in 1996. I with then Director General of Archaeology Dr. Shiran Deraniyagala visited the scene and collected the remains of two skulls. The Faculty of Bio-Science of the Peradeniya University and Dr. Mohan Abeyratne examined the fossils and confirmed that they were those of Rhinoceros that lived 80,000 years ago,” he said He further said scientists were of the opinion that the pre-historic animal that lived in this area of thick rain forests 80,000 years ago would have died due to a meteoric shower. He stressed the need to conduct further research at the site. (Daily Mirror Online, 18.1.2022)
Two persons have been arrested by the wildlife officials after two wild elephants were found dead in paddy fields in Tirappane and Bakamuna. The Tirappane Police have commenced investigations following a tip-off that a wild elephant between the age of 18 and 20 was found dead in a paddy field at Orukmankulam in Tirappane on Thursday. Police said gunshot wounds were found on the head of the dead wild elephant. The owner of the paddy field where the dead elephant was found has been arrested by wildlife officials. Meanwhile, the Bakamuna Police are conducting investigations after a 15-year-old elephant was found dead after it came into contact with an unauthorized electric perimeter fence setup at a farm at Samagipura in Bakamuna. The Wildlife officials have arrested the owner of the farm where the wild elephant died. (Daily Mirror Online, 29.1.2022)
Soaring food prices are stoking inflation, with the latest data released yesterday by the Department of Census and Statistics (DCS) affirming the former’s continued upward pressure on cost of living. DCS said headline inflation in December was 14% as against 11.1% in the previous month and said it was mainly due to the higher price levels prevailing in both food and non-food groups.
Inflation of the food group increased to 21.5% in December from 16.9% in November. The year-on-year inflation of the non-food group increased to 7.6% from 6.2%. DCS said contributions to the inflation rate of December 2021 from the food group and non-food group are 10.0% and 4.0% respectively. Whilst contributions of food and non-food groups to the inflation in December 2020 were 3.4% and 1.2% respectively, resulting in a headline inflation of 4.6%. Comparing the month-on-month changes, the National Consumer Price Index (NCPI) in December 2021 increased to 161.0 from 155.3 reported in November 2021. This shows an increase of 5.7 index points or 3.7% as compared to November 2021 The month-on-month change was contributed by increases of index values of food items by 3.0% and non-food items by 0.68% respectively. DCS said price increases of food items were reported for Vegetables, Rice, Green chillies, Big onions, Potatoes, Eggs, Bread, Coconuts, Chicken, Wheat flour, Milk powder, Biscuits, Red onions, Mysore dhal, Fresh fruits, Coconut oil, Chili powder, Buns, Jak, Dried chillies and Infant milk powder. However, decreases in index values were reported for Green gram, Sugar and Limes. The increases in index values of non-food groups in December 2021 compared to the previous month was mainly due to the price increases in groups of items ‘Alcoholic Beverages, Tobacco and Narcotics’ (Arrack and Betel leaves), ‘Clothing and Footwear’, ‘Housing, Water, Electricity, Gas and Other fuels’ (Kerosene oil and Firewood), ‘Furnishing, Household equipment, and Routine household maintenance’, ‘Transport’ (Petrol, and Diesel), ‘Restaurants and Hotels’ and ‘Miscellaneous Goods and Services’. Further, very slight price increases were reported in groups of ‘Health’ and ‘Recreation and Culture’. The price indices of ‘Communication’ and ‘Education’ groups remained unchanged during the month.
Core inflation, which reflects the underlying inflation by excluding volatile items of food, energy and transport groups in the economy as measured by the year-on-year change based on NCPI for the month of December 2021 was increased to 10.8% from 8.8% reported in the month of November 2021. “We expect continued pressure from food inflation in the near term,” Asia Securities said. The spike in December in Sri Lanka was contrary to a decline in food prices globally, according to the Food and Agriculture Organisation (FAO). FAO said world food prices fell slightly in December as international prices for vegetable oils and sugar fell significantly from lofty levels. The FAO Food Price Index averaged 133.7 points in December, a 0.9% decline from November, but still up 23.1% from December 2020. The index tracks monthly changes in the international prices of commonly traded food commodities. Only the dairy sub-index posted a monthly rise in December. For 2021 as a whole, averaging across the entire year, the FAO Food Price Index averaged 125.7 points, as much as 28.1% above the previous year. The FAO Cereal Price Index decreased 0.6% from November, as falling wheat export quotations amid improved supplies following southern hemisphere harvests more than offset firmer maize prices underpinned by strong demand and concerns over persistent dryness in Brazil. For the full year, however, the FAO Cereal Price Index reached its highest annual level since 2012 and averaged 27.2% higher than in 2020, with maize up 44.1%, wheat up 31.3%, but rice down by 4.0%. The FAO Vegetable Oil Price Index declined 3.3% in December, with weaker quotations for palm oil and sunflower oil reflecting subdued global import demand that may be linked to concerns over the impact of rising COVID-19 cases. For 2021 as a whole, the FAO Vegetable Oil Price Index reached an all-time high, increasing 65.8% from 2020. The FAO Sugar Price Index decreased by 3.1% from November, reaching a five-month low, reflecting concerns over the possible impact of the Omicron COVID-19 variant on global demand as well as a weaker Brazilian Real and lower ethanol prices. For 2021 as a whole, the FAO Sugar Price Index rose 29.8% from the previous year to its highest level since 2016.
The FAO Meat Price Index was broadly stable in December but over 2021 as a whole, the FAO Meat Price Index was 12.7% higher than in 2020. The FAO Dairy Price Index was the only sub-index to increase in December, rising 1.8% from the previous month, as international quotations for butter and milk powders increased amid lower milk production in Western Europe and Oceania. Cheese prices declined marginally, reflecting a preference for Western European dairy producers. In 2021, the FAO Dairy Price Index averaged 16.9% higher than in 2020. (Daily Financial Times, 22.1.2022)
Sri Lanka’s exports have reportedly increased by 23 per cent amidst a challenging environment, Trade Minister Bandula Gunawardena said. Taking to Twitter, Gunawardena noted that despite the challenges faced, both locally and globally, in the face of the Covid-19 pandemic, Sri Lanka’s total exports increased by USD 2.82 billion in 2021, with a total of USD 15.12 billion being earned. Sri Lanka recorded a total of USD 12.3 billion in exports for the year 2020, surpassing the USD 12 billion mark (earned through exports) for the first time. It was further highlighted that Sri Lanka’s monthly trading exports crossed the USD 1 billion mark within the first eight months of 2021. While expressing his gratitude over the efforts of those in the exports industry, Gunawardena emphasised the fact that despite not having to combat a pandemic, the previous Government was able to muster only an increase of USD 11.9 billion in exports during their five-year term. (Ceylon Today, 29.1.2022)