News

Sri Lanka’s former Finance Minister Mangala Samaraweera has accused the newly elected government of lacking an economic vision as state revenue fell by two thirds this year, with the economy showing negative growth.

Colombo district MP and senior politician Susil Premajayantha was yesterday (26) assigned the state ministerial portfolio that was first assigned to MP Wijedasa Rajapakshe.

A cold war is brewing between Minister Namal Rajapaksa and Minister Mahindananda Aluthgamage,  the 'Lanka Lead News' website maintained under the guidance of Minister Wimal Weerawansa reported.

Land value in the Colombo district has been hit by the COVID-19 pandemic making it a victim with the annual growth rate declining during the first half of this year. This has brought down the prices of residential, commercial and industrial properties, the Central Bank data showed .

The US’ first-ever sanctioning of Chinese companies involved in building artificial islands in South China Sea may affect the fate of several of Beijing’s under-construction One Belt, One Road (OBOR) projects including the strategically-sensitive Port City Colombo project.

Sri Lanka will be facing a tyre shortage soon as a result of the prevailing restrictions on imports imposed by the government to promote import substitution and prevent foreign exchange out flows, several tyre dealers, traders and buyers complained.

The Cabinet of Ministers this week granted approval to the construction of two flyovers estimated to cost around Rs. 6 billion near the railway station in Slave Island in Colombo.

The proposal to construct these flyovers was submitted to the Cabinet of Ministers by the Minister of Highways.

The flyovers will be constructed above the railway tracks along Sri Uttarananda Mawatha and Justice Akbar Mawatha in Slave Island.

The flyover constructed near Sri Uttarananda Mawatha will be 420m in length, while the flyover near the Justice Akbar Mawatha will be 350m in length.

The two flyovers are expected to help address the daily traffic congestion reported from the area.

Prime Minister Mahinda Rajapaksa yesterday (25) called on the first time parliamentarians to cast aside their personal and political agendas and support the passage of the proposed new Constitution.

Attorney-at-Law Lalith U. Gamage, The Governor of the Central Province Lalith U. Gamage has temporarily suspended the Mayor of the Matale Municipal Council, Daljith Nandalal Aluvihare, from holding his post with immediate effect. In Extraordinary Gazette dated the 25th and issued today, Retired High Court Judge Sarojini Kusala Weerawardena was appointed to inquire and report within 3 months time, whether the Mayor of the Municipal Council Matale has committed any misdeeds described in Section 277(1) of the amended Municipal Council Ordinance (Chapter 252).

It adds the Commission shall have the powers of a Commission appointed under the Inquiry of Commission Act, pertaining to this inquiry.

The Extraordinary Gazette further noted, Sandanam Prakash presently the Deputy Mayor of the Matale Municipal Council, is directed to perform the duties and use of powers of the Mayor of the Matale Municipal Council with immediate effect.

President Gotabaya Rajapaksa has appointed Agriculture Minister Mahindananda Aluthgamage as his representative to the parliamentary Constitutional Council.

Minister Aluthgamage when inquired confirmed the appointment.

SLPP MP Pramitha Bandara Tennakoon has introduced a Private Member's Bill declaring the minimum age of marriage for children as 18 years.

Sri Lanka’s expectation of encouraging borrowings by lowering interest rates as a key tool to stimulate the economy during the COVID-19 crisis period has very little impact on spending and investment, several economic analysts and bankers said. Low interest rates cannot rescue Sri Lanka in the present stage of economic calamity; they simply cause the money to flow to people who have other interests in the system, eminent economic analyst and former Central Bank (CB) Deputy Governor W.A Wijewardena told the Business Times.

Economic rehabilitation requires the country to use its human, physical and knowledge capital for enhanced production, he pointed out adding that cheap money or flooding the economy with credit will not help the country to attain that goal.

As it is, the Central Bank has to go for further reduction in interest rates to discourage banks from parking their excess money amounting to about Rs. 160 billion with the CB; that will be suicidal because savers will not get enough remuneration for their efforts, he added.

In that way, more problems are being created for the economy and the current low interest rate regime should be managed properly, Mr Wijewardena said stressing that there were no further possibilities for interest rate cuts in the economy.

On the other hand, commercial banks and non-bank financial institutions have not responded promptly in passing the benefit of interest rate reductions.

Banks have equated monthly installments of borrowers, and also make it difficult to take new loans by not easing restrictions, several bank customers complained.

One-year fixed deposit rates fell to 5.5 per cent currently from 11.5 per cent in December 2019 and one-year Treasury bill rate fell to 4.8 from around 8.5 per cent

Providing a relief to borrowers, the average prime lending rate of commercial banks fell to 7.4 per cent from 9.7 per cent.

However, the lowering of interest rates has pushed three million depositors and their seven million dependants in great difficulties.

The interest rate in Sri Lanka is determined by the demand for credit, the excess of deposits and inflation, former senior banker and economic analyst S.A.P. Suriyapperuma told the Business Times.

The CB’s Monetary Board also sets interest rates with the aim of raising Sri Lanka’s savings rate, which has been a public policy for nearly 50 years.

As a result of these policies, Sri Lanka’s savings have increased to 26 per cent from 18 per cent over the past 30 years, he revealed, adding that after the loan interest rate was set between 4 and 11 per cent, the banks immediately brought down the deposit rate to 5 per cent.

Low interest loans should be made available to investors and businessmen. But the provision of refinancing facilities on state intervention should be made through funds obtained from foreign funds and innocent depositors should not be held captive for this purpose, he pointed out. (Bandula Sirimanna)