Banking

Sajith calls for National effort to save the country’s economy

Sri Lanka opposition leader Sajith Premadasa

Wednesday September 30, 2020 9:25 am

ECONOMYNEXT – Leader of the Opposition Sajith Premadasa is calling on all political parties to shed their differences and come together to pull the country out of its current economic morass.

In a statement released yesterday September 29, Premadasa pointed to the downgrading of Sri Lanka by Moody’s which he said would make debt on the international market more expensive and harder to obtain for Sri Lanka.

“Because of the downgrade interest rates we have to pay for Bonds and loans will go up and it will be very hard for us to raise money for ourselves even to pay our loans,” he said.

“The downgrading is an indication that the level of trust that the international community has in us has fallen,” Premadasa said in the address released on video.

He said the proposal to remove auditors oversight over government institutions and the abolishing of the Procurement Commission contained in the proposed 20th Amendment to the Constitution has caused this loss in investor confidence.

“With this proposal, we are sending a wrong signal to the international community,” he warned.

“If investors have no confidence in the country they will not come here and that will have a direct adverse impact on economic growth,” the leader of the main opposition Samagi Jana Balavegaya said.

We are a country that is facing a debt crisis. Our people need to know that from 2021 until 2025 we have to pay between USD4bn and USD5bn each year as loan repayments.

Because of the downgrade, Premadasa warns we will have to go to “Blackmarket lenders who will give us loans at very high rates.”

This raises the prospect that we as a nation can become bankrupt.

He said that if we have to draw on our foreign reserves then we have to limit imports which will also have an impact on economic growth and even our own exports.

“Our country has fallen into an economic situation which is very serious,”

“What is needed is a democratic solution and a better macroeconomic management policy. This must aim at providing sustainable solutions for the country’s most serious problems” he added.

“In order to do that we as a nation must come together casting aside political and other divisions so that we can escape a deathly economic trap we may fall into,” he proposed. (Colombo September 30, 2020)

Reported by Arjuna Ranawana

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Economy

Sri Lanka to ramp up weekend fuel deliveries after petrol price cut

More deaths reported at Sri Lanka fuel queues

Friday June 2, 2023 5:52 pm

ECONOMYNEXT – Sri Lanka’s state-run Ceylon Petroleum Corporation will be operating on the weekend to complete all fuel deliveries to end vehicle queues forming outside fuel stations after the price revision earlier in the week, Energy Minister Kanchana Wijesekera said.

“Instructions have been given to CPC and Ceylon Petroleum Storage Terminals to continue fuel deliveries on Saturday and Sunday this week to supply sufficient stocks to all fuel stations,” Minister Wijesekera said in a TWITTER.COM MESSAGE

“To reduce expenses on overtime, CPC and CPSTL have not been operating on Sundays and public holidays in the last 4 months,” Wijesekera said.

“Non-placement of orders by fuel stations from last Saturday, anticipating a price reduction, not maintaining minimum stocks, immediate increase in demand by consumers after the price revision, and quota increase have created shortages in the fuel stations.”

The Minister in April 2023 said all fuel stations would be required to maintain a minimum of 50 percent of stock tank capacity.

“I have asked CPC to review and suspend the license of fuel stations that had not maintained minimum stocks.” (Colombo/ June 02/ 2023)

Bonds & Forex

Sri Lanka bonds yield up at close, rupee at 291.75/292.50 against the US dollar

Friday June 2, 2023 5:21 pm

ECONOMYNEXT – Sri Lanka’s bonds closed steady on Friday, dealers said, following the central bank’s decision to cut its main policy rate by 250 basis points.

The Spot US dollar closed at 291.75/292.50 rupees, dealers said.

The rupee opened at 290.25/75 to the US dollar Thursday and closed at 292.50/295.50 to the US dollar.

A bond maturing on 15.09.2027 closed at 24.70/90 percent up from 24.50/90 percent a day earlier, dealers said.

A bond maturing on 15.05.2026 closed at 25.75/26.25 percent up from 25.00/26.00 percent a day earlier.

A bond maturing on 01.05.2025 closed at 27.00/30 percent, up from 26.30/27.00 per cent at last close.

A bond maturing on 01.07.2032 closed at 20.25/21.00 percent, up from 20.00/40 per cent at last close.
(Colombo/ June 02/2023)

Markets

Sri Lanka’s shares edge up on positive macroeconomic sentiments

Friday June 2, 2023 5:18 pm

ECONOMYNEXT – Sri Lanka’s shares closed higher in trade on Friday, over positive macro-sentiments encouraging investors to redeem their interest towards buying, an analyst said.

The main All Share Price Index was up 0.72 percent or 62.19 points to 8,753.80, while the most liquid index S&P SL20 was up 0.68 percent or 16.87 points to 2,487.29.

Sri Lanka’s inflation in the 12-months to May 2023 has eased to 25.2 percent from 35.3 percent a month earlier according to a revised Colombo Consumer Price Index calculated by the state statistics office.

Prior to the Monetary Policy investors were quite optimistic that inflation is to lower and interest rates will decrease and since exp, an analyst said.

Sri Lanka Central Bank is waiting for the government proposal on the domestic debt restructuring (DDR), the central bank governor Nandalal Weerasinghe said amid uncertainty over DDR and speculations over instability in the banking sector.

“On debt restructuring, the borrower is the ministry of finance’s treasury. Certainly we will announce what the strategy will be. We are waiting for a government proposal,” Weerasinghe said.

Sri Lanka’s investors are waiting on assurances to be made on debt restructuring and optimization, Central Bank Governor Nandalal Weerasinghe said, “It is up to the government to clear the uncertainty, because from our side we have done that part.”

The central bank cut the key policy rates by 250 basis points to spur a faltering economic growth as inflation was decelerating faster than it projected.

The speculation of DDR has hit the market and the risk premium has kept the market lending rates well above the central bank’s policy rates. The government has yet to present its plans on DDR.

Weerasinghe said the central bank has done its best to reduce the risk premium through bringing down the market lending rates while keeping the policy rates unchanged.

Sri Lanka’s President Ranil Wickremesinghe has discussed progress of International Monetary Fund program and debt restructuring during a visit of Deputy Managing Director Kenji Okamura, statement said.

“The discussion primarily focused on the progress of the IMF program between Sri Lanka and the IMF,” a statement from President’s office said.

“Attention was also paid to the on-going debt restructuring negotiations.”

However Officials from IMF have said Sri Lanka has to focus on expanding taxes.

“We discussed the importance of fiscal measures, in particular revenue measures, for a return to macroeconomic stability,” Deputy Managing Director Kenji Okamura said in a statement.

The finance ministry this week issued rules requiring everyone above 18 year of age to register to pay income tax.

“I was encouraged by the authorities’ commitment to negotiate a debt strategy in a timely and transparent manner.

The market generated a revenue of 738 million rupees, while the daily average was 1 billion rupees.

Top gainers in trade were Vallibel One, LOLC Finance and Browns Investment. (Colombo/June02/2023)