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Tuesday April 23rd, 2024

Sri Lanka central bank buys $484mn from markets to Feb 2024

ECONOMYNEXT – Sri Lanka’s central bank has bought 484.8 million US dollars from forex markets in the first two months of the year, official data show as the monetary authority continued to operate deflationary policy.

The central bank bought 245.3 million US dollars from banks in January 2024 and 248.5 million in February with only 9 million dollars in sales, data show.

The central bank is operating deflationary monetary policy, mopping up inflows from dollar purchases at an appropriate market interest rate that reduces domestic credit and investments and allows dollars to be collected for external payments.

Despite the 484.8 million dollars being bought over two months, gross official reserves only went up 29 million US dollars from 4,491 million dollars in December to 4,520 million dollars in February.

Gross official reserves also include fiscal balances of the Treasury, which may rise when IMF or other budget support loans are given and fall when loans are repaid.

“There are certain debt service payments,” Governor Weerasinghe explained to reporters earlier this month.

“The government is continuously servicing ADB, World Bank loans as well as the central bank servicing its ACU liabilities.”

Any debt service payments outside an identified perimeter are also going through, which led to a small increase in gross reserves, he said.

Some emergency loans taken after a default was declared are expected to be serviced.

Though the central bank repaying its loans to India and the International Monetary Fund does not increase gross reserves, the payment improves the agency’s net reserve position as dollar liabilities are paid down.

The central bank’s net foreign assets position which was about 4.4 billion US dollars negative in August 2022 was reduced to about a 2.2 billion dollars by February 2024.

Central bank data shows that it had repaid 179 million US dollars to the International Monetary Fund on loans taken during an earlier bailout over 2023, and 350 million dollars in swaps.

Related Sri Lanka repays debt or collects reserves of U$5bn via banking system since rate correction

Commercial Banks have also repaid credit lines or collected dollars over the past year. Central Bank data shows that banks have settled about 1,808 million dollars over the past year. (Colombo/Apr02/2024)

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Iran President to open Sri Lanka $514mn irrigation, hydro power project

MULTIPURPOSE: Uma Oya multipurpose development project is the largest since the end of the Mahaweli projects.

ECONOMYNEXT – Iran President Seyyed Ebrahim Raisi will inaugurate an irrigation and hydropower project that was designed and built by Iranian engineering firm and was also initially financed before international sanctions hit the project.

The Uma Oya (River) project will irrigate 4,500 acres of new agricultural land, generate 290 Gigawatt hours of electricity and also provide drinking water, a government statement said.

Sri Lanka had awarded an engineering, procurement, construction (EPC) to Iran’s FARAB engineering group to design and construct the 514 million dollar multipurpose project in 2010.

The project was funded until 2013 with a million US dollar credit from the Export Development Bank of Iran but international sanctions prevented the country from continuing financing, a government statement said.

The project continued with funding from Sri Lanka. Sri Lanka had since repaid 19.3 million dollars of the credit and 35.2 million remains outstanding.

The Uma Oya project has a 120MW of hydro power generators, which can generate 290 Giga Watt hours of energy.

Each year 145 million cubic metres of water will be taken from Uma Oya to the Kirindi Oya river valley after generating electricity in an underground power station.

It will irrigate 1,500 hectares of existing agricultural and 4,500 hectares of new land in the Moneragala district, where crops can be cultivated in both the Maha and Yala seasons.

About 39 million cubic meters of water will be used for drinking and industrial purposes.

Two reservoirs built at Dyraaba and Puhulpola in Uma Oya basin is connected by a 3.98 kilometre conveyance tunnel and water is taken through a 15.2 kilomtre headrace tunnel to an underground power station. A tailrace tunnel takes water from the power station to the Kirindi Oya basin.

The project was originally expected to be completed in 2015, but due to financing delays and later water leaking into the headrace tunnel and the Covid pandemic had delayed it. The project completion date was extended to March 31, 2024 and defect liability date to March 31, 2025.

(Colombo/April23/2024 – CORRECTED Iran President Seyyed Ebrahim Raisi will inaugurate an irrigation and hydropower project that was designed and built by Iranian engineering firm.)

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Sri Lanka state oligopoly allowed to import some black gram

ECONOMYNEXT – Sri Lanka has allowed the import of some black gram, by three state agencies, according to a gazette notice issued under the hand of President Ranil Wickremesinghe.

Import licenses will be given for 2,000 metric tonnes of the seed classified under HS Code 7312.31.22 and 29.

Sri Lanka State Trading Corporation, National Food Promotion Board and Sri Lanka Hadabima Authority is to be given import licenses.

Traders have resorted to smuggling some types of black gram (ulundu) mis classified as chick peas, to get over high taxes and import restrictions.

Tamil legislators have also protested the import controls, which they go into several key ethnic foods they consume. (Colombo/Apr23/2024)

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Sri Lanka Foreign Ministry consular division shifted to Battaramulla

ECONOMYNEXT – Sri Lanka’s Foreign Ministry said it consular division would be shifted to the Suhurupaya building in Subuthipura, Battaramulla from May 02, 2024.

Document authentication services provided by the Consular Affairs Division in Colombo will be suspended on 29 and 30 April 2024 held transfer the Electronic Document Authentication System (e-DAS) to the new premises at Suhurupaya.

Urgent applications for authentication to the Consular Division in Colombo, or any Regional Consular Offices by 4.15 pm on 26 April 2024, the Foreign Ministry said.

Regional Consular Offices in Jaffna, Trincomalee, Kurunegala, Kandy and Matara will remain open to accept applications.

Authenticated documents will be delivered to the applicants only on Thursday, 02 May 2024.

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