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Saturday March 2nd, 2024

Sri Lanka could double exports to US$20bn with organic crops after fertilizer ban: Trade Minister

ECONOMYNEXT – Sri Lanka plans to double exports to 20 billion US dollars within two years producing organic foods, Trade Minister Bandula Gunawardena said, amid farmer protests and fears of lower harvests after chemical fertilizer was banned.

“If we make the country organic that is if we produce poison-free Agri products, we can double the current export revenue within the next two years at least,” Minister Gunewardene told reporters on July 21.

“Normally we have an annual export revenue between 10-12 billion dollars. If we make the country organic we can earn 20 billion US dollars in two years.”

Consumers in America, England, Japan, France, Sweden and Switzerland demand poison-free products (wusser wisen tho-rer) and are willing to pay more for such products, he said.

Sri Lanka President Gotabaya Rajapaksa has banned the import of chemical fertilizer from the next cultivation season and is encouraging the production of organic fertilizer, saying it cost 400 million dollars to import amid forex shortages and those agrochemicals also caused a kidney disease of unknown cause.

Farmers have protested shortages of chemical fertilizer in the current season and some agricultural analysts have warned that there may be sharp falls in some crops due to the lack of fertilizer of the right type and the right time.

Authorities have said farmers will be pay compensation for any crop losses from the lack of chemicals, with the funds now used to import subsidized fertilizer.

Sri Lanka has printed over 600 billion rupees in 2020 triggering a 2.3 billion US dollar balance of payments deficit in 2020 and a 900 billion BOP deficit up to April 2021. In addition to fertilizer and agrochemicals, a series of imports have been banned.

Historic Decision

Sri Lanka has made a historic decision in banning fertilizer which could get higher prices including for traditional exports like tea Minister Gunewardene claimed.

“If we could export tea by not using chemical fertilizer or insecticides, then Sri Lanka Tea will get an unusual price,” he claimed.

“The President has taken a historic decision which does merely gloss the surface (palas-ther-rer var-dee no-wer-ner)

“If we could make the country, a poison-free production country, then it is the greatest victory we can achieve in this century.”

Minister Gunewardene said an organic accreditation agency is making changes in Sri Lanka Standards certification to meet international standards within the next two weeks.

State Minister of Development of Minor Crops including Sugarcane, Maize, Cashew, Pepper, Cinnamon, Cloves, Betel Related Industries and Export Promotion Janaka Wakkumbura said that chemical fertilizer is sparingly used in some spices and none at all in others.

Only about 50 per cent of cinnamon crops used fertilizer, while small amounts were used in Betel.

“Ninety-nine per cent of the pepper is grown without using chemical fertilizer,” Wakkumbura said. “So if we are able to get the organic certificate for pepper then we will get a high price for pepper in the world market.

“We don’t get the certificate because there is no recognition in our country as we use chemical fertilizer.” (Colombo/July21/2021)

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Sri Lanka eyes SOE law by May 2024 for better governance

ECONOMYNEXT – Sri Lanka is planning to pass a Public Commercial Business (PCB) Act improve governance of state-owned enterprise by May 2024 as part of an anti-corruption efforts following an International Monetary Fund assessment.

Sri Lanka’s state enterprises have been used by politicians to give ‘jobs of the boys’, appropriate vehicles for personal use, fill board of directors and key positions with henchmen and relatives, according to critics.

Meanwhile macro-economists working for the state also used them to give off-budget subsides or made energy utilities in particular borrow through supplier’s credits and state banks after forex shortages are triggered through inflationary rate cuts.

The government has taken billons of dollars of loans given to Ceylon Petroleum Corporation from state banks.

There have also been high profile procurement scandals connected to SOEs.

An SOE Reform Policy was approved by Sri Lanka’s cabinet of ministers in May 2023.

The Public Commercial Business (PCB) Act has now been drafted.

A holding company to own the SOEs will be incorporated and an Advisory Committee and Board of Directors will be appointed after the PCB law is approved, the statement said. (Colombo/Mar01/2024)

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Sri Lanka rupee closes at 308.80/90 to the US dollar

ECONOMYNEXT – Sri Lanka’s rupee closed at 308.80/90 to the US dollar Friday, from 309.50/70 on Thursday, dealers said.

Bond yields were broadly steady.

A bond maturing on 01.02.2026 closed at 10.65/75 percent up from 10.50/70 percent.

A bond maturing on 15.09.2027 closed at 11.90/12.05 percent from 11.90/12.10 percent.

A bond maturing on 01.07.2028 closed at 12.15/35 percent down from 12.20/25 percent.

A bond maturing on 15.07.2029 closed at 12.25/40 percent up from 12.30/45 percent.

A bond maturing on 15.05.2030 closed at 12.30/45 percent down from 12.35/50 percent.

A bond maturing on 01.07.2032 closed at 12.50/13.00 percent from 12.55/13.00 percent. (Colombo/Mar1/2024)

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Sri Lanka stocks close up 0.37-pct, Expo to de-list

ECONOMYNEXT – The Colombo Stock Exchange closed up 0.37 percent on Friday, and SG Holdings, the parent company of Expolanka Holdings Plc, said it was taking the company private.

Expolanka is the largest listed company on the Colombo Stock Exchange.

“Expolanka Holdings PLC has, at the Board Meeting held on 1st March 2024, considered a request from its principal shareholder and resolved to initiate the de-listing of the Company’s shares from the Official List of the Colombo Stock Exchange subject to obtaining necessary shareholder approval and regulatory approvals,” the company said in a stock exchange filing.

As per arrangements with SG Holdings Global Pte Ltd, the Company’s majority shareholder, it will purchase its shares from shareholders who may wish to divest their shareholding in the Company at a purchase price of Rs 185.00 per share. The share closed up at 150.50.

The broader All Share Index closed up 0.37 percent, or 39.47 points, at 10,691; while the S&P SL20 Index closed down 0.64 percent, or 19.59 points, at 3,037.

Turnover stayed above the 1 billion mark for the sixth consecutive day, registering 1.4 billion.

Crossings in Melstarcorp Plc (135mn) up at 89.50, Hatton National Bank Plc (64mn) up at 158.00, Hemas Holdings Plc (53mn) up at 75.00 and Central Finance Company Plc (26mn) up at 103.50, added significantly to the day’s turnover.

“The upward trend is continuing, with more retail buying also coming in, the number of trades was more than 10,000 today,” a market participant said. “Investors are looking for undervalued stocks and buying in quantities.” (Colombo/Mar1/2024).

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