ECONOMYNEXT – In 2024 Sri Lanka started to recover from a currency crisis triggered by rate cuts four years ago and the leaders who carried out the corrective policies with tax hikes were ousted in an election in September.
Sri Lanka’s first stabilization crisis after rates were controlled with printed money took place in 1954, which saw the ouster of a government which brought the budget into surplus.
That year also saw the rise of nationalism. Ironically the nationalists were wiped out in the 2024 elections.
The 2022 currency crisis, triggered by extreme macro-economic policy carried out using liquidity injections made including through statistical models developed with International Monetary Fund technical advice according some critics (potential output/flexible inflation targeting/data driven monetary policy) ended in default.
Sri Lanka lateest IMF program, also seem to have high public acceptance (other than income tax hikes), partly due to currency appreciation by the central bank which reduced some prices absolutely.
Absolute falls in prices (deflation) are almost unheard of in IMF programs, where currencies are encouraged to be depreciated for ‘competitiveness’ after cutting rates with inflationary operations.
In the age of inflation, ‘disinflation’ is the name of the game not a restoration of pre-crisis prices as was the case before 1920.
Macro-economists educated in Anglophone universities frown on falling prices and print money to deny productivity gains by private enterprise from being passed onto consumers with high positive inflation targets.
In 2024 Sri Lanka successfully restructured its defaulted debt.
Warnings have been issued that the central bank has made initial moves to push up excess liquidity with domestic operations in the last quarter, which if continued as private credit recovers, will lead to another external crisis in 2025.
The US where the Fed printed money claiming that its inflation was a supply chain phenomenon, is running into a stabilization crisis, classical economists have warned, with incoming President Donald Trump compounding any downturn with import protection as happened during the Great Depression.
December
Sri Lanka Christmas cake index deflates 7.3-pct in 2024
Sri Lanka should avoid stop-go cycles, Treasury Secy says after default exit
Fitch upgrades Sri Lanka out of default despite holdout Hamilton Reserve
Sri Lanka says 98-pct of bondholders agreed to exchange defaulted ISBs
Sri Lanka expecting two millionth tourist on Dec 26
Sri Lanka upgraded to Caa1 by Moody’s
November
Sri Lanka floods kill 12, over 370,000 under water or homeless
Sri Lanka’s NPP racks up two thirds majority in 2024 elections, winning 159 seats
Sri Lanka deflation not harmful, economy growing: CB Governor
Sri Lanka to announce single overnight policy rate from Nov 27
Sri Lanka reaches staff level agreement with the IMF
October
Sri Lanka deflation 0.8-pct in 12-months to Oct 2024, prices up 0.3-pct over 25 months
Explainer – How anti-India sentiment has receded in Sri Lanka’s current election
Sri Lanka battles African Swine Fever outbreak
US warns citizens off Sri Lanka’s Arugam Bay citing possible attack
September
The country held its presidential election this month, which saw its interim leader who had stabilised the country replaced.
Sri Lanka budget deficit down 40-pct to September, taxes up 39-pct
Sri Lanka sees deflation in year to September 2024
Sri Lanka CSE, DFCC Bank ring bell on first green bond issuance
August
Sri Lanka services exports rise 6.49-pct to US$318mn in August
Sri Lanka inflation 0.9-pct in 23-months to Aug 2024
Sri Lanka’s LTL group starts 220MW gas turbine of LNG capable IPP
Sri Lanka tax agency issues 4.7 mn TIN, opens over 500,000 tax files in 2024
Three Chinese warships arrive in Colombo
July
Sri Lanka foreign exchange inflows exceed imports by $619mn in July
Sri Lanka EPF gets back Rs231mn on Laugfs Gas share manipulation case
Sri Lanka passes Public finance bill
Sri Lanka legislators go to Court against IVS-VFS Global visa deal
Supreme Court issues interim order on appointment of Sri Lanka’s police chief: report
June
Joint working committee with Russia proposed to deal with Sri Lanka mercenaries
Sri Lanka bilateral debt repayments delayed till 2028: President
Sri Lanka expressway cashiers stealing 10 to 20-pct of toll revenue: official
Sri Lanka, China hold bilateral consultation in Beijing; policies to be reviewed
May
Sri Lanka manufacturing recovers strongly in May, financial services expand: PMI
Sri Lanka inflation 2.5-pct in 20-months to May 2024, food deflates 5.7-pct
Permanent residence for persons of Sri Lanka descent, foreign spouses
Sri Lanka IORA Business Conclave to explore untapped markets
April
Sri Lanka gross foreign reserves rise to 3.5 year high in April
Sri Lanka’s SOE losses reverse trend; to post Rs456bn profit in 2023: Minister
Sri Lanka changes fuel price formula ahead of polls; allow flexibility on profit margin
Sri Lanka’s Mattala Airport to be managed by India, Russia companies
Sri Lanka, Iran Presidents inaugurate Uma Oya hydro-electric project
March
Sri Lanka inflation 0.9-pct in March, prices up 4.3-pct over 18-months
Sri Lanka cuts onion protectionist tax by Rs70 after India export ban
McDonalds gets court order to stop Sri Lanka franchise: report
Sri Lanka central bank says senior management decided to review salary hike
Sri Lanka releases land held by military in North
No confidence motion against Sri Lanka Speaker taken up in parliament
February
Sri Lanka trade deficit up 77-pct to Feb, imports surge, rupee appreciates
Sri Lanka sets up fund to help children of Gaza
Sri Lanka, Vietnam to cooperate on agriculture
FAO Director General visits Sri Lanka tea factory, rubber institute
India visit doesn’t mean change of stance on Sri Lanka Telecom, Amul: AKD
January
Sri Lanka inflation rises to 6.5-pct in Jan 2024, above 5.0-pct target
Thai PM to witness signing of FTA with Sri Lanka
Sri Lanka parliament passes online speech law despite opposition
Sri Lanka UDA properties draw interest from China, Japan, Korea investors
Sri Lanka sails in to the breach as ships by-pass Middle East over Houthi attacks
(Colombo/Dec31/2024)
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