An Echelon Media Company
Monday March 4th, 2024

India visit doesn’t mean change of stance on Sri Lanka Telecom, Amul: AKD

ECONOMYNEXT — The National People’s Power (NPP) cannot be bought by any foreign power or corporation and their recent visit to India does not mean the leftist alliance now supports an investment by India’s Amul or the divestment of Sri Lanka Telecom, according to NPP leader Anura Kumara Dissanayake.

Speaking at a women’s rally held in Anuradhapura on Sunday February 11, Dissanayake was emphatic that the NPP’s policies have not changed following his widely publicised visit to India on the invitation of the Indian government.

News of Dissanayake meeting India’s Foreign Minister S Jaishankar and representatives of Tata and the Gujarat Cooperative Milk Marketing Federation of India (Amul) made headlines in Colombo.

The NPP, an alliance led and controlled by the Marxist-Leninist Janatha Vimukthi Peramuna (JVP) that Dissanayake also leads, had been vocal in its opposition to proposed plans to divest shares of Sri Lanka Telecom (SLT), which at least one Indian firm has expressed interest in, and purported plans to sell Milco, Highland and 31 dairy farms owned by the National Livestock Development Board (NLDB) to Amul.

Historically, the JVP has also been critical of what it once called “Indian expansionism”, particularly at the height of the second violent insurrection the party led in Sri Lanka’s south in the late 1980s, which led to thousands of deaths as the then United National Party (UNP) government sought to quell it by any means necessary.

“We have a strong foreign policy,” said Dissanayake speaking at Sunday’s event.

“We’re small people, but no powerful nation or corporation can buy us. Just because Mahinda was bought, we can’t be bought.

“We said in India that the world has changed and we have changed along with it. India’s foreign minister said yes, India has also changed with the world.”

The JVP leader scoffed at comments on social media that the party is about to change its tune on Indian investments in the country.

“Some are saying after we went to India that we will support the sale of Telecom or support Amul. No, that will not happen, remember that.

“We will under nocircumstances mix up our dealing with foreign countries and meeting their leaders with a national economic policy,” he said.

Dissanayake said the party’s approach to foreign relations is to first formulate a national economic policy and then formulate a foreign policy to secure the international support needed to fortify that economic policy.

“That is our objective,” he said.

Dissanayake also accused President Ranil Wickremesinghe of alleged attempts to cancel the presidential election that’s due to be held this year.

“He’s trying various tactics to not have the election. There is definitely going to be a presidential election before October 17 this year.

“They’re forming all sorts of alliances under various names. [Former president] Chandrika Bandaranaike Kumaratunge has become a party leader once again in 2024. Why? They’re panicking.

“This is the Maha season. By the time of the Yala harvest, there will be a new government,” he said. (Colombo/Feb12/2024)

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Sri Lanka’s CEB reports Rs61bn profit for 2023 with Dec quarter gains

ECONOMYNEXT – Sri Lanka’s state-run Ceylon Electricity Bord has reported a profit of 61.2 billion rupees for the year to December 2023, turning around from a loss of 298 billion last year, with all the profits coming in the last year amid heavy rain and price hike, interim accounts show.

The CEB reported profits of 77.9 billion rupees for the December quarter, compared to a loss of 182 billion rupees last year.

About 94 billion rupees in losses were forex losses, coming from the central bank, which printed money to suppress rates and triggered a steep currency collapse in a failed float with a surrender rule.

CEB revenues rose 55 percent to 156 billion rupees in the December quarter, cost of sales fell 45 percent to 78 billion rupees amid heavy rains, giving a gross profit of 78.2 billion rupees for the quarter.

In the year to December, CEB revenues were 606.6 billion rupees, up 96 percent from 308 billion rupees, while cost of sales rose from 444 billion rupees to 506 billion rupees. Gross profits were 99.6 billion rupees.

At group level, which includes LTL Holdings, profits were 75 billion rupees for the year, with income taxes of 6.3 billion rupees, provided.

CEB consolidated profits were 68.4 billion rupees, with other shareholders of subsidiaries accounting for 7.2 billion rupees.

Equity was 498 billion rupees at company level by December 31, with 126 billion rupee capital contribution as well as profits earned in the last quarter. (Colombo/Mar05/2024)

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Sri Lanka rupee opens at 308.20/50 to the US dollar

Sri Lanka stocks reversed its falling trend and gained for the first time in six sessions on Tuesday closed stronger on Tuesday (21).

ECONOMYNEXT – Sri Lanka’s rupee opened at 308.20/50 to the US dollar Monday, from 308.80/90 on Friday, dealers said.

Bond yields were broadly steady.

A bond maturing on 01.08.2026 was quoted stable at 10.90/11.00 percent.

A bond maturing on 15.09.2027 was quoted at 11.90/12.00 percent from 11.90/12.05 percent.

A bond maturing on 01.07.2028 was quoted at 12.20/30 percent from 12.15/35 percent.

The Colombo Stock Exchange opened up; The All Share was up 0.60 percent at 10,755, and the S&P SL20 was up 1.24 percent at 3,077. (Colombo/Mar4/2024)

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Sri Lanka central bank swaps top $3.2bn by December

ECONOMYNEXT – Sri Lanka’s central bank borrowed US dollars from various counterparties through swap transactions, which had topped 3.2 billion US dollars by December 2024, official data show.

The net short position, including swaps disclosed by the central bank, grew by over almost 1.28 billion US dollars from December 2022 to 3,280 million dollars.

The gross position grew from 2,263 million dollars to 3,280 million US dollars over the year.

The central bank supported some state banks with dollars to cover their dollar exposures, which had since been paid back.

By December reported gross reserves of the central bank was 4,491 million US dollars, against swaps of 3,280 billion US dollars.

Swaps of around 1500 related to the People Bank of China.

Swaps allow a central bank to increase gross reserves, without raising domestic interest rates.

Swaps with domestic counterparties lead to liquidity being injected into money markets, which can be mopped if domestic credit growth is moderate.

At the moment many private banks have large dollar positions invested outside the country, which cannot be used for transactions domestically because of a money monopoly given to macro-economists. (Sri Lanka repays debt or collects reserves of U$5bn via banking system since rate correction)

However unwinding swaps after private credit has picked, or engaging in swaps after private credit has picked up, may lead to money being injected to maintain the policy rate, leading to excess credit by banks and balance of payments deficits and or currency collapses, analysts say.

Central bank swaps in the third quarter of 2018 led to a collapse of the currency under the ‘exchange rate as the first line of defence’ policy peddled to Sri Lanka, critics have said earlier.

Domestic currency proceeds of swaps were the primary ammunition to bust East Asian currencies in 1997-98.

Any depreciation after the swap proceeds have been used for imports (effectively mis-targeting rates) a central bank will run a forex loss.

The PBOC however had put a rule, preventing the use of the swap after gross reserves fell below 3 – months of imports, preventing Sri Lanka from getting into further trouble through the use of official reserves for private imports.

Sri Lanka’s central bank also used borrowings from the Reserve Bank of India, via the Asian Clearing Union to run BOP deficits.

Losses from exposed dollar positions of central banks which have gained ‘independence’ from fiscal rules and parliaments and engaged in macro-economic policy, including the Fed, have led to taxpayers bearing the losses in the end.

Swaps were invented by the Fed in the early 1960s, as it deployed macro-economic policy (printed money for growth) threatening its gold reserves and the Bretton Woods system.

Sri Lanka has other borrowings also, including from the IMF, which has made net foreign assets of the central bank negative. (Colombo/Mar05/2024)

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