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Tuesday January 31st, 2023

After fertilizer policy failure, Sri Lanka leader offers record 95 rupees for paddy

President Gotabaya Rajapaksa

ECONOMYNEXT – Sri Lanka President Gotabaya Rajapaksa has ordered his agriculture minister to buy paddy for 95 rupees per kilogramme, amid a chorus of complaints about the government’s ban on inorganic fertilizer that led to a drop in production in the ‘Maha’ cultivation season.

The Maha season usually sees the largest paddy harvest in Sri Lanka’s farmlands found in the island’s rural areas that are home to 70 percent of its 22 million population.

Some farmers did not cultivate in the season because the government could not provide organic fertilizer on time as promised. Others cultivated with whatever they had, but now complain the yield is lower because no weedicide and pesticides were made available by the government.

President Rajapaksa banned agro-chemicals in April last year although the original plan was to phase them out gradually over a period of 10 as per his election manifesto.

Finance Minister Basil Rajapaksa on January 03 offered 75 rupees per kilogramme of paddy as compensation for paddy farmers due to the government’s fertilizer policy which has widely been called a failure.

However, President Rajapaksa has now ordered to raise it to 95 rupees, which is a record high for paddy in Sri Lanka.

“This morning when I met state minister Siripala Gamlath, I asked him ‘are you buying paddy?’ He said, ‘yes, harvest season in Vavuniya is around the corner’,” Rajapaksa said, referring to a legislator who owns one of the top private rice businesses in the country.

“I asked how much he was offering. He said wet paddy is purchased at 80 rupees a kilo while dried paddy is purchased at 90 rupees a kilo,” he added, speaking at a ceremony that marked the opening part of the central express highway from Mirigama to Kurunagala.

“All of you know farmers could not sell their paddy at 25 rupees in the past. Today they sell at 90 rupees. I told the agriculture minister if outsiders are buying at 90 rupees, the government should buy at 95 rupees. That money will go to the farmer. That’s okay,” the president told the gathering.

President Rajapaksa did not comment on the government’s new fertilzer policy, but said it was his government that gave fertilizer free of charge.

“Unfortunately, the opposition instigated several farmers to protest. But who gave fertilizer free of charge? Who increased the minimum price to 50 rupees? It is this government,” he said.

“I call on the farmers to trust us. Although there were some delays and hiccups in the beginning, we are now going forward, doing this the right way.

“I request farmers not to get carried away. I am a president who came forward on behalf of you. That’s why I gave fertilizer free of charge. We are committed protecting farmers.

“Our parents also cultivated. My father is famous among the public those days for coming to parliament straight from a paddy field after washing the mud on him. We will never ever forget farmers,” said Rajapaksa. (Colombo/Jan16/2022)

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Sri Lanka shares down for 2nd day as tax hike, delay in Chinese debt assurance weigh

ECONOMYNEXT – Sri Lanka’s shares edged down on Tuesday as worries over delay in financial assurances from China which is mandatory for a $2.9 billion dollar IMF loan and rise in protests against tax hike kept investors in check, analysts said.

The main All Share Price Index (ASPI) edged down by 0.28 percent or 24.62 points to 8,865.05. It fell for the second session after hitting more than three-month high.

“The market is looking for more macro cues because of faster Chinese debt assurance was expected. The market is also hit by fall in corporate earnings due to high taxes,” an analyst said.

China has given an initial response on debt re-structuring to Sri Lanka though analysts familiar with the process say it is not a ‘hard assurance’ sufficient for the IMF program to go through.

The International Monetary Fund is working with China on extending maturities of Chinese loans to defaulted countries like Sri Lanka, as there is resistance to hair-cuts, Managing Director Kristalina Georgieva told reporters on January 14.
The earnings for first quarter are expected to be negative for many corporates with higher taxes and rising costs. However, investors had not expected earnings to be low in the December quarter because of year end pick ups on heavy counters, the analyst said.
Earnings in the second quarter of 2023 are expected to be more positive with the anticipation of IMF loan and possible reduction in the market interest rates as the tax revenue has started to generate funds.

However, the central bank said the IMF deal is likely in the first quarter or in the first month of the second quarter.

The most liquid index S&P SL20 dropped by 0.64 percent or 17.74 points to 2,764.51 points.

The central bank has said it could cut interest rates in future when the country sees fall in inflation, which has already started decelerating.

The market saw a turnover of 1.7 billion rupees, slightly lower than the month’s daily average of 1.8 billion rupees and while being significantly lower than 2022’s daily average turnover of 2.9 billion rupees.

The bourse saw a net foreign inflow (NFI) of 93 million rupees extending the net offshore buying to 413 million rupees so far this year.

Top losers were LOLC, Royal Ceramics Limited and Hayleys. (Colombo/Jan31/2023)

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Sri Lanka exports fall in December as global recession weighs

ECONOMYNEXT – Sri Lanka’s merchandise exports earnings fell 9.7 percent in December year-on-year as the island nation saw a drop in buying from its key export destinations which are facing a looming recession after the Russia-Ukraine war.

The earnings from the merchandise exports recorded $1.04 billion  in December 2022 compared to the same month in the previous year as per the data released by the Sri Lanka Customs.

“This was mainly due to the decrease in export earnings from Apparel & Textiles, Tea, Rubber based Products, and Coconut based Products, Food & Beverages, Spices & Essential Oils and Fisheries products,” the Export Development Board (EDB) said in a statement.

“The reason for this decline was due to the ongoing recession in major markets due to rising cost of production, energy etc. Imports declined sharply due to inflation and demand for goods and services are reduced.”

However, Sri Lanka saw a record export earning of $13.1 billion in 2022 due to increased demand in the key exports throughout the year

Earnings from all major product sectors except Electrical & Electronic components as well as Diamonds, Gems & Jewellery fell in December.

Exports of Apparel & Textiles decreased by 9.6 percent to $480.3 million in December 2022.  Export earnings from Tea fell by 3 percent to $107.3 million, Rubber and Rubber Finished products dropped 20.3 percent to $74.5 million,

However, export earnings from the Electrical & Electronics Components increased by 16.18 percent to $42.9 million in December 2022, while Diamond, Gems & Jewelry jumped 35.7 percent to $30.8 million. (Colombo/Jan31/2023)

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Sri Lanka records over 6,000 dengue cases in first three weeks of January

ECONOMYNEXT – Sri Lanka recorded over than 6,000 dengue cases in the first three weeks of January 2023 after a spell of heavy monsoon rain though a drop in cases is likely from February, officials said.

Health officials identified 6,204 dengue patients by January 22, up from 5,793 recorded in the corresponding period last year.

“A rise in cases can be observed in the November-January period with the heavy rain due to the northeast monsoon,” an official from the National Dengue Control Unit told EconomyNext.

Of all reported cases, 46.3 percent were from the Western Province, official reports showed.

Akuressa, Batticaloa, Eravur, Trincomalee, Madampe, Badulla, Eheliyagoda, Kegalle, Kalmunai North and Alayadivembu MOH areas were identified as high-risk areas for dengue during the third week of January by the health officials.

“We are expecting a decline in dengue cases soon. The Western province is always in the top position with the highest number of dengue cases. Apart from that, we are seeing a higher number of cases during this period in areas like Puttalam, Jaffna districts. A certain number of cases have also been recorded in the Kandy district,” the official said.

“Usually the cases peak in December, but they decline by February. This year, too, we are facing this scenario. There is an increase of dengue during the months of November, December and January”.

Due to the economic situation in the country, the Public Health Inspectors (PHIs) in an earlier report said, diesel and pesticides are not being provided by the ministry.

However, rejecting the allegation, the official from the NDCU said the government has provided enough funds for get the necessary pesticides but it is being used according to a scientific method to avoid building a resistance in the dengue mosquito.

“The recommendation is to do the fogging if there is a dengue outbreak or if there are few patients reported from the same locality.

“If you use this pesticide haphazardly, the mosquitos will develop resistance against it,” the official said, adding that there are adequate stocks of the chemical available. (Colombo/ Jan 31/2023)

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