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Tuesday June 25th, 2024

Sri Lanka airline readying to start scheduled flights in June 01

AFRICAN AIRLIFT: Three SriLankan Airlines discharging supplies at O R Tambo International Airport in Johannesburg, South Africa.

ECONOMYNEXT – State-run SriLankan Airlines is getting ready to resume scheduled flights by June if health authorities give the go head, Chairman Ashok Pathirage said as the carrier is battling a to survive a Coronavirus crisis.

“We are working with Airport and Aviation Services to resume our scheduled commercial flights by the first of June,” Pathirage told an online forum organized by Sri Lanka’s National Chamber of Commerce.

“We can be ready, but it is up to the government and health authorities… they will have to evaluate and tell us when this could be possible.”

SriLankan stopped scheduled flights as airports closed and travel restrictions came in.

Pathirage said airports are gradually opening up. India had just given the nod to resume domestic flights.

“We have to learn to live with this pandemic,” Pathirage said. “I do not think we think this is going to go away in three months.

“We have to take all the important measures and walk with this. We have to think about the economy and the government revenues side.”

Lockdown curfews have brought many economic activities to a halt and the fiscal deficit is expected rise in 2020. The government has selectively let many businesses operate.

The airline is now selling tickets on a few flights to Japan, Hong Kong and London, which are operated to bring back SriLankans or take cargo.

SriLankan is also operating to over two dozen airports carrying cargo from Sri Lanka. It is also carrying cargo for third countries. Last week SriLankan airlifted supplies to South Africa.

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Sri Lanka has aggressively contact traced and contained infections though the effort was partially de-railed after infected sailors were given leave and allowed to cross district lines during curfews.

Sailors who were involved in contact tracing and quarantine work were also not tested due to reluctance to test anyone outside of existing clusters linked to symptomatic index cases. The gaps have since been closed.

Though Sri Lanka is ahead of many countries in fighting Coronavirus, the island’s economy has been hit by monetary instability which started shortly before the Coronavirus crises.

Sri Lanka printed money and cut rates from late February and cut rates before the pandemic started triggering a currency panic sending the rupee crashing to 200 to the US dollar from 182 to the US dollar before rate cuts and money printing.

However private consumption and credit has fallen after a lockdown curfews reducing demand. After printing money authorities also slapped import controls. (Colombo/May16/2020)

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Sri Lanka to sign Paris Club debt deals as fresh ISB talks to also start

ECONOMYNEXT – Sri Lanka will sign agreements on restructured debt with Paris Club creditors Wednesday, Cabinet spokesman Minister Bandula Gunawardana said as sources said talks with private creditors are also due to start later in the week.

The relevant senior officials and State Minister Shehan Semasinghe has already left the country to sign the agreements, Minister Gunawardana said.

Sri Lanka has held detailed negotiations with bilateral creditors ever since a sovereign default in 2022 and President Ranil Wickremesinghe has personally met leaders of friendly countries to expedite the restructuring, he said.

The finalizing of the restructure was a ‘great victory’ for Sri Lanka he said.

Details will be revealed to parliament by President Wickremesinghe and an address to the nation on Wednesday he said.

Discussion with private bondholders are also taking place separately, he said.

Face to face talks with bond holders are likely to start Thursday, sources said.

Investors in a steering committee representing key bondholders have halted trading and are in a ‘restricted’ period Bloomberg Newswires reported.

Sri Lanka is attempting to restructure 12.5 billion dollars of sovereign bonds and about 1.7 billion dollars of past due interest following the declaration of an external default in 2022.

Private investors are seeking some so-called macro-linked bonds whose final haircut is linked to dollar GDP as well as some standard or ‘plain vanilla’ bonds with an upfront haircut.

The style of bonds have not been used in sovereign restructurings before. In the latest round of talks more plain vanilla bonds may be discussed, sources aware of the thinking of some bond investors said.

The ISB holders have proposed a 28 percent haircut and a 1.8 percent consent fee. The macro-linked bonds would have principle re-stated up to 92 percent of the original depending on the evolution of gross domestic product.

Sri Lanka is restructuring debt using an IMF debt sustainability model applied to middle income countries with market access as opposed to debt sustainability model used in countries like Ghana applicable to low income countries requiring deeper haircuts on both domestic and foreign debt.

Hair cuts may also depend on the maturity of bonds and the coupon interest.

Ghana has higher levels of commercial debt having started to access capital markets from around 2007.

Ghana also has a bad central bank like Sri Lanka and has gone to the International Monetary Fund 18 times.

The country is also operating flexible inflation targeting (inflation targeting without a clean float), which critics say is the latest spurious monetary regime peddled to hapless unstable countries without a doctrinal foundation in sound money.

Having done broad domestic debt restructuring as well as continued currency volatility both interest rates and inflation remains above 20 percent.

Ghana’s central bank has a worse monetary anchor (8 percent inflation plus 2 percent) compared to 5 percent plus two in Sri Lanka and runs into currency trouble despite being an oil producer like Iran, Venezuela and neighboring Nigeria.

Nigeria has an inflation target of 6-9 percent but ends up with around 20 plus inflation and currency trouble.

Sri Lanka has undershot its inflation target since reaching monetary stability in September 2022 and has appreciated the currency, amid deflationary policy giving a strong foundation for economic activity to resume. (Colombo/June26/2024)

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Sri Lanka to seek investors for 200MW BOOT power plant

EONOMYNEXT – Sri Lanka’s cabinet has given approval to seek investors for a 200 MegaWatt independent power plant on a build-own-operate-and-transfer (BOOT) basis, a government statement said.

The internal combustion power plant will be capable of running on natural gas and is part of the Long-Term Generation Expansion of state-run Ceylon Electricity Board.

The investor will get as 20-year power purchase agreement.

Land next to the ‘Sobhadanavi’ combined cycle plant will be made available for the developer.

According to the generation plan, the 200MW IC plant is expected to come on stream by 2026.

In 2026, a 115 MW gas turbine, a CEB owned diesel plants of 68 MW and 72 MW are due to be retired. (Colombo/June25/2026)

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Sri Lanka rupee closes steady at 305.25/35 to US dollar

ECONOMYNEXT – Sri Lanka’s rupee closed fairly flat at 305.25/35 to the US dollar on Tuesday, down from 305.20/30 to the US dollar on Monday, dealers said, while bond yields up.

A bond maturing on 01.06.2026 closed at 10.75/11.05 percent.

A bond maturing on 15.12.2026 closed at 10.65/11.05 percent, up from 10.45/85 percent.

A bond maturing on 15.10.2027 closed at 10.65/11.10 percent.

A bond maturing on 15.03.2028 closed at 11.20/11.50 percent.

A bond maturing on 15.09.2029 closed at 12.10/15 percent, up from 12.05/17 percent.

A bond maturing on 01.12.2031 closed at 12.10/20 percent, up from 12.08/15 percent.
(Colombo/Jun25/2024)

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