FINANCIAL CHRONICLE™
Dear Reader,

Registration with the Sri Lanka FINANCIAL CHRONICLE™️ would enable you to enjoy an array of other services such as Member Rankings, User Groups, Own Posts & Profile, Exclusive Research, Live Chat Box etc..

All information contained in this forum is subject to Disclaimer Notice published.


Thank You
FINANCIAL CHRONICLE™️
www.srilankachronicle.com


Join the forum, it's quick and easy

FINANCIAL CHRONICLE™
Dear Reader,

Registration with the Sri Lanka FINANCIAL CHRONICLE™️ would enable you to enjoy an array of other services such as Member Rankings, User Groups, Own Posts & Profile, Exclusive Research, Live Chat Box etc..

All information contained in this forum is subject to Disclaimer Notice published.


Thank You
FINANCIAL CHRONICLE™️
www.srilankachronicle.com
FINANCIAL CHRONICLE™
Would you like to react to this message? Create an account in a few clicks or log in to continue.

Encyclopedia of Latest news, reviews, discussions and analysis of stock market and investment opportunities in Sri Lanka


Submit PostSubmit Post
ශ්‍රී ලංකා මූල්‍ය වංශකථාව - සිංහල
Submit Post



Latest topics

» Amendments to be incorporated into Colombo Port City Bill – GL
by samaritan Today at 4:07 pm

» FUTURE of BROWNS INVESTMENT PLC (BIL)
by ADVENTUS Today at 4:04 pm

» KGAL - THE SLEEPING GIANT
by THASSIM Today at 2:34 pm

» CHRISSWORLD THE IPO
by Wickyz Today at 2:10 pm

» hospital sector
by cheetah Today at 1:51 pm

» ACCESS ENGINEERING ( AEL.N )
by samaritan Today at 1:14 pm

» GLAS will be winner with Super Gain.
by Eranga87 Today at 12:36 pm

» BOGA heating .....
by Thushara Ayya Today at 11:12 am

» THE COLOMBO FORT LAND & BUILDING PLC (CFLB.N0000)
by David VKMS Today at 10:46 am

» Haycarb’s bottom line likely to boost with Tesla’s electric vehicles push worldwide (HAYC)
by MarketWch Today at 6:27 am

» First capital holdings CFVF.N0000
by SL-INVESTOR Yesterday at 9:11 pm

» CONTRADICTARY statements BY BUYER & SELLER RE: MGT & GREG
by GHERATH72 Yesterday at 9:02 pm

» TOKYO CEMENT COMPANY (LANKA) PLC
by ADVENTUS Yesterday at 4:27 pm

» NATIONAL DEVELOPMENT BANK PLC (NDB.N0000)
by shihan 93 Yesterday at 1:16 pm

» Sunshine holding future potential
by Zahara khan Yesterday at 12:43 pm

» Sri Lanka Bonds Go From Asia’s Worst to Best After China Loan
by CHRONICLE™ Yesterday at 7:27 am

» The market changes fast; it is OK to get out when you feel it is right and take the profits that you can. Stock market for beginners
by Asoka Samarakone Sun May 16, 2021 10:04 pm

» Ban of chemical fertilizers is a great news
by dayandacool Sun May 16, 2021 9:50 pm

» Economic Uncertainty Drives Crypto Growth in Sri Lanka
by CHRONICLE™ Sun May 16, 2021 9:23 pm

» DIPPED PRODUCTS PLC (DIPD.N0000)
by ADVENTUS Sun May 16, 2021 4:37 pm

EXPERT CHRONICLE™

ECONOMIC CHRONICLE

GROSS DOMESTIC PRODUCT (GDP)


CHRONICLE™ YouTube

CHRONICLE™ NEWS PRODUCTS

FINANCIAL CHRONICLE™

Views & Reviews, Analysis, Evaluations, Discussions, Gossip and Hot Tips relating to Sri Lankan companies listed on the Colombo Stock Exchange (CSE)
Contribute




DAILY CHRONICLE™

Latest news and articles published in Newspapers, Websites, Blogs and other online news sites relating to business and investments in Sri Lanka
Contribute



ECONOMIC CHRONICLE™

This is a section that provide news, views, analysis, predications relating to Political and Socio-Economic factors and how such activities affect the Stock Market and other economic activity of the Country.

Contribute




EXPERT CHRONICLE™

This is an exclusive section for Expert Articles which will help member to share knowledge through comments and responses of the members. All members are allowed to reply and make comments to these articles.

Contribute


Submit Post


CHRONICLE™ YouTube

Youtube Videos and other visual presentations relating Stock market and other investment advise submitted by members or other contributors.

Contribute


Submit Post


කොළඔ කොටස් වෙළඳපොළේ වංශකථාව
කොළඔ කොටස් වෙළඳපොළේ ලැයිස්තුගත සමාගම් කොටස් ගැන තොරතුරු¸විශ්ලේෂණ¸සාකච්ඡා¸ කටකතා¸රසකතා යන සියල්ල අපේම සිංහලෙන් කතා කළ හැකි ‘කතා මණ්ඩපය’

Contribute

Twitter Feeds
POPULAR COMPANIES
A

ABANS ELECTRICALS PLC

ACCESS ENGINEERING PLC Hot

ACL CABLES PLC

ACL PLASTICS PLC

ACME PRINTING & PACKAGING PLC

AGSTAR PLC

AITKEN SPENCE HOTEL HOLDINGS PLC

AITKEN SPENCE PLC

ANILANA HOTELS AND PROPERTIES PLC

ARPICO INSURANCE PLC

ASIA ASSET FINANCE PLC

ASIA CAPITAL PLC

B

BAIRAHA FARMS PLC

BALANGODA PLANTATIONS PLC

BIMPUTH FINANCE PLC

BLUE DIAMONDS JEWELLERY WORLDWIDE PLC

B P P L HOLDINGS PLC

BROWNS BEACH HOTELS PLC

BROWNS INVESTMENTS PLC

C

CARGO BOAT DEVELOPMENT COMPANY PLC

CENTRAL INDUSTRIES PLC

CEYLON COLD STORES PLC

CEYLON GRAIN ELEVATORS PLC Hot

CEYLON TEA BROKERS PLC

CEYLON TOBACCO COMPANY PLC

CHEVRON LUBRICANTS LANKA PLC

COLOMBO FORT LAND & BUILDING PLC

COMMERCIAL BANK OF CEYLON PLC

CITRUS LEISURE PLC Hot

COMMERCIAL CREDIT AND FINANCE PLC

D

DANKOTUWA PORCELAIN PLC

DFCC BANK PLC

DIALOG AXIATA PLC

DIALOG FINANCE PLC

DIPPED PRODUCTS PLC

DISTILLERIES COMPANY OF SRI LANKA PLC

DUNAMIS CAPITAL PLC

E

EAST WEST PROPERTIES PLC Hot

EASTERN MERCHANTS PLC

EXPOLANKA HOLDINGS PLC

E-CHANNELLING PLC

F

FIRST CAPITAL HOLDINGS PLC

G

GALADARI HOTELS (LANKA) PLC

GUARDIAN CAPITAL PARTNERS PLC

H

HATTON NATIONAL BANK PLC

HAYLEYS PLC

HAYLEYS FABRIC PLC

HAYLEYS FIBRE PLC Hot

HEMAS HOLDINGS PLC

HIKKADUWA BEACH RESORT PLC

HNB ASSURANCE PLC

HVA FOODS PLC

J

JANASHAKTHI INSURANCE COMPANY PLC

JOHN KEELLS HOLDINGS PLC Hot

JOHN KEELLS HOTELS PLC

L

LANKA ASHOK LEYLAND PLC

LANKA IOC PLC

LANKEM CEYLON PLC

LANKEM DEVELOPMENTS PLC

LAUGFS GAS PLC

LAUGFS POWER LIMITED

LOLC FINANCE PLC

LOLC HOLDINGS PLC

LUCKY LANKA MILK PROCESSING COMPANY PLC

M

MELSTACORP PLC

N

NATIONAL DEVELOPMENT BANK PLC

NATION LANKA FINANCE PLC

NESTLE LANKA PLC

O

ORIENT FINANCE PLC

OVERSEAS REALTY (CEYLON) PLC

P

PANASIAN POWER PLC

PEOPLE'S LEASING & FINANCE PLC

PIRAMAL GLASS CEYLON PLC

PRIME FINANCE PLC

R

RAIGAM WAYAMBA SALTERNS PLC

RENUKA AGRI FOODS PLC

RENUKA CAPITAL PLC

RENUKA HOLDINGS PLC

RICHARD PIERIS AND COMPANY PLC

RICHARD PIERIS EXPORTS PLC Hot

ROYAL CERAMICS PLC

S

SAMPATH BANK PLC

SEYLAN BANK PLC

SIERRA CABLES PLC

SINGHE HOSPITALS PLC Hot

SMB LEASING PLC

SOFTLOGIC HOLDINGS PLC

SOFTLOGIC LIFE INSURANCE PLC

SRI LANKA TELECOM PLC

SWISSTEK (CEYLON) PLC Hot

T

TEEJAY LANKA PLC

TESS AGRO PLC

THREE ACRE FARMS PLC

TOKYO CEMENT COMPANY (LANKA) PLC Hot

U

UNION BANK OF COLOMBO PLC

V

VALLIBEL FINANCE PLC

VALLIBEL ONE PLC Hot

VALLIBEL POWER ERATHNA PLC

W

WASKADUWA BEACH RESORT PLC


You are not connected. Please login or register

FINANCIAL CHRONICLE™ » DAILY CHRONICLE™ » Sri Lankans suffering due to wrong policy: legislator

Sri Lankans suffering due to wrong policy: legislator

Go down  Message [Page 1 of 1]

Redbulls

Redbulls
Director - Equity Analytics
Director - Equity Analytics
June 17, 2012 (LBO) - Sri Lankans are suffering due to wrong economic policy actions especially those involving state interventions in markets that are backfiring, a legislator who has earlier raised red flags about the balance of payments has said.

Harsha de Silva, an economist who represents Sri Lanka's main opposition United National Party said interventions in forex and interest rates markets had ended with heavy burdens on the people.
Interventions

De Silva said he had warned that when the central bank tried to "dictate to markets with artificial interest rates and exchange rates that was going to end with nothing but a crash landing that would significantly increase the economic burdens on the people."

Sri Lanka is now suffering from a balance of payments crisis which often hit so-called soft pegged exchange rate regimes where a central bank tries and fails to control both exchange rates and interest rates through sterilized foreign exchange sales.

A typically balance of payments crisis involving contradictory monetary and exchange rate policy triggers foreign reserves losses, exchange rate depreciation, high inflation, and high interest rates.

Such incidents can also trigger rating downgrades and capital flight, which makes the problem worse and difficult to manage and can result in a very severe recession.

If contradictory policy is not quickly ended with a clean float of the currency, high interest rates will persist for months on end, causing bad loans in banks, an economic slowdown which may hurt government revenues which in turn can renew pressure on interest rates.

Countries that discourage imports during balance of payment trouble, will further stump economic activity and state revenues, which in turn can put pressure on domestic interest rates and further delay a recovery.
The Great Depression was also prolonged due to import restrictions.

Root Cause
Sri Lanka started to suffer into balance of payments crises and 'foreign exchange shortages' after then finance minister J R Jayewardene, of the United National Party built a soft-pegged central bank with US help to join the failed Bretton Woods system of unstable pegs.

Before that Sri Lanka had a hard peg or currency board. In a currency board, the exchange rate is targeted or fixed but the interest rate is floated, creating complementary exchange and interest rates.

In 1971-73 the Bretton Woods collapsed and countries with greater monetary knowledge floated their currencies while Sri Lanka completely closed its economy.

In a floating regime, exchange and monetary policies are also complementary. The exchange rate floats but the interest rates are targeted or controlled. Both currency boards and floating exchange rates comply with the laws of nature.

Since the creation of the Central Bank the rupee has fallen from about 4.7 to the US dollar to 131 now.

From 1995 however Sri Lanka's monetary policy improved with the underlying law of the Central Bank also being changed.

However deficit spending, state interventions in energy pricing as well as losses in state enterprises, fiscal dominance of monetary policy has since triggered several balance of payments incidents.

In a 1999 balance of payments crisis the big loss makers were energy utilities, a state trading firm and transport utilities. This time it is state energy utilities and airlines.

Recurring Problem
De Silva referred to a recent Central Bank statement said that several measures taken in February 2012 has begun to have an effect.

"What it ought to have said is that “having completely mismanaged the external sector” the policy measures “forced” on the Central Bankby prudent economists, both locally and internationally, have now begun to have an effect," he said.

De Silva in January criticized a monetary policy roadmap saying it did not address a looming balance of payments problem.

"We ended cynically that the three words ‘balance of payments’ which was absolutely the most important issue of the day was not even mentioned in the roadmap presentation and thus it was like staging Hamlet without the Prince of Denmark," de Silva said.

Some analysts have called for the Central Bank to be abolished to give people freedom from exchange rate depreciation, frequent balance of payments crises and high inflation.

Under a currency board economic downturns will be largely limited to crises in the anchor currency. Analysts say even that can be countered with a sovereign wealth fund that accumulates seniorage profits of the currency board.

"The UNP having introduced the market economy to Sri Lanka has continued to appeal for just and equitable economic policies that provide economic freedom to people to work hard and create wealth in an appropriately regulated market economy," de Silva said.

"We have always favoured and continue to push for policies that help markets develop instead of disrupting well-functioning markets."
http://www.lbo.lk/fullstory.php?nid=489578175

Back to top  Message [Page 1 of 1]

Permissions in this forum:
You cannot reply to topics in this forum