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Thursday June 20th, 2024

Heavy rains likely to cut crisis-hit Sri Lanka’s tea production, exports

ECONOMYNEXT – Sri Lanka tea industry is expecting a 30 percent production dip this year due to heavy rains in October the country’s tea production area and the export earnings also are likely to reduce, tea brokers said.

The island nation’s tea production is already down in the first nine months of 2022 to 192.37 million kilograms, the lowest in 26 years in the corresponding period, according to the Ceylon Tea Board. The production in the Jan-Sept period is is 18 percent lower than last year.

Industry experts predict that tea production to have dropped by 30% as bad weather aggravated the already existing issues.

“Right now the tea production is down because the fresh leaves don’t flush out when there’s too much rain. So, naturally right now until the rain subsides there will be fewer leaves available for plucking,” Niraj De Mel, Chairman of Sri Lanka Tea told Economy Next last week.

“However the drop of output for the first nine months is a result of so many factors that took place in the last three years.”

Tea is Sri Lanka’s top exports crop which earned $937.1 million foreign exchange revenue in the first nine months of this year and that was 5 percent less than last year.

The export revenue did not fall as much as the production due to better prices for local tea in the global markets. However, analysts say there could be a drop in tea exports if the heavy rains continue throughout this year in the tea production area.

Some tea brokers see the tea production to fall as much as 30 percent by end October this year compared to the same period in 2021.

“By October, we expect a 30% drop in crop. It’s not only because of the weather, but also fertilizer as well,” Zameel Mohammed, the Executive Director at Ceylon Tea Brokers PLC.

But the Tea Board is hopeful the local tea production to flush out “like thunder”, when the rain subsides. However, the North-East Monsoonal rains, which yields the largest amount of rains to the country, are expected later this month.

Heavy rains retards crop growth, limits the movement of leaf collecting trucks, results in poor worker turnout, restricting productivity in factories that have been already hindered by continual power outages..

De Mel said last year’s tea production was helped by optimum rains despite a fertilizer ban.

“In the grand scheme of things I don’t think we can catch up on loss so far and this year will go down as one of the low-cropping years,” De Mel said.

“Hopefully 2023 should look up because of the rain and the fertilizer that is finally getting into plants.” (Colombo/Nov09/2022)

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Sri Lanka shares debt management experience at global forum

ECONOMYNEXT – Sri Lanka has shared its experiences at a forum on debt management to “provide lessons for others”, State Minister of Finance Shehan Semasinghe has said.

Semasinghe spoke on “The Role of Debt Management in Navigating Crises” at the 14th Debt Management Facility (DMF) Stakeholders’ Forum, in Livingstone, Zambia.

“I shared the experiences of Sri Lanka which can provide valuable lessons for others and explored the critical elements of capacity building and sound institutional practices in managing debt, particularly in the context of economic challenges,” Semasinghe said on X (twitter).

“Sri Lanka’s experience demonstrates that effective debt management is not just about managing numbers but also about building robust institutions and capacities.”

The journey underscores the importance of transparent, accountable governance and the need for international support and cooperation in times of crisis, he said.

“Sri Lanka prioritized addressing gaps in public debt management by drafting a consolidated Public Debt Management Act, ensuring clarity and legal robustness and establishing a centralized Public Debt Management Office with operational autonomy.

“The role of debt management in navigating crises is multifaceted and critical. Further, by investing in capacity building, adhering to sound institutional practices, and strategically managing debt restructuring and liability operations, countries can better withstand economic shocks and pave the way for sustainable recovery.”

Developing countries face severe debt distress as they are more vulnerable to external shocks, Semasinghe said, and “managing global debt requires coordinated international efforts on debt restructuring where necessary, timely fiscal policy adaptation and help sustainable economic growth.”

The state minister also pointed out the financial impact of climate change was an emerging challenge, as countries need investment to mitigate and adapt to climate impacts, “especially through non-debt creating inflows, which would require private capital mobilization.” (Colombo/Jun20/2024)

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Sri Lanka rupee closes stronger at 305.10/30 to US dollar

ECONOMYNEXT – Sri Lanka’s rupee closed stronger ahead of the long weekend at 305.10/30 to the US dollar on Thursday, up from 305.40/55 to the US dollar Wednesday, dealers said, while some bond yields edged up.

A bond maturing on 15.12.2026 closed at 10.45/80 percent, up from 10.35/75 percent.

A bond maturing on 01.07.2028 closed at 11.20/45 percent.

A bond maturing on 15.09.2029 closed at 12.00/15 percent, up from 11.95/12.35 percent.

A bond maturing on 01.12.2031 closed at 12.05/25 percent.

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Sri Lanka stocks close up, JKH trade pushes turnover

ECONOMYNEXT – The Colombo Stock Exchange closed up on Thursday, data on its site showed.

The broader All Share Index closed up 0.19 percent, or 23.11 points, at 12,249; while the more liquid S&P SL20 Index closed up 0.15 percent, or 5.33 points, at 3,610.

Turnover was 2 billion. Nearly half of this (Rs980mn) came from a crossing on John Keells Holdings Plc. The share closed down at 202.00.

“There were several crossings today which pushed turnover,” market participants said.

“Institutions and high net-worth activity drove the market, while the retail investors we feel are still about uncertain and adopting a wait-and-see approach.”

Melstacorp Plc was among the companies that saw active volumes (Rs194mn) in the day. The share closed up at 87.10.

Top contributors to the index included TeeJay Lanka Plc (up at 41.70), Sampath Bank Plc (up at 79.50), Hatton National Bank Plc (down at 201.00). Hayleys Plc (up at 105.00) and its subsidiary Hayleys Fabric Plc (up at 46.60) were also positive contributors. (Colombo/Jun20/2024)

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