Consumer Affairs

Sri Lanka delays tax and debt collections, state to intervene in financial markets

COOPERATION – President Gotabaya Rajapaksa wants Sri Lankans to come together

Tuesday March 24, 2020 3:59 am

ECONOMYNEXT- Sri Lankan President Gotabaya Rajapaksa in a statement said host of new relief measures to combat the COVID-19 coronavirus pandemic have been implemented, including delays to tax collection, a new debt moratorium and interventions in money markets.

On Monday evening, President Rajapaksa directed the central bank, ministry secretaries, provincial councils and financial institutions to carry out the relief measures with immediate effect, amid the number of positively tested coronavirus patients rising to 97.

The deadline for collection of income tax, value added tax, driving license fees, water bills and assessment tax of less than 15,000 rupees has been extended till April 30, an official statement said.

Collection of credit card bills under 50,000 rupees have also be delayed till end-April. Sri Lanka is currently under island wide curfew.

Meanwhile, state-owned Bank of Ceylon, People’s Bank and National Savings Bank, the Sri Lanka Insurance Corporation, and the superannuating Employees’ Provident Fund and the Employees’ Trust Fund, will intervene in the government securities market.

The state institutions and public funds will be used to invest in Treasury Bonds and Bills and stabilise the money market rate at 7 percent.

In addition, a six month debt moratorium has been be granted to the tourism, apparel and SME (small and medium-sized enterprise) businesses, with the moratorium costs borne by the central bank.

The tourism industry is at a standstill amid the government stopping all arrivals to contain the spread of the virus, while the apparel sector, Sri Lanka’s largest exporter, is hit by disruptions to global value chains.

The new suspension in loan collections comes amid the President halting the collection of working capital loans and asking banks to provide new working capital loans at 4 percent.

Further, a 12-month SME sector moratorium which was planned at end-2019 to help stimulate the economy was about to launch at end-March.

Meanwhile, President Rajapaksa on Monday also suspended the collection of lease payments for three wheelers for six months.

Recovery of loans from salaries of government and private sector employees has been suspended till May 30.

The president directed banks and finance companies to suspend collection of personal loans below one million rupees for three months.

The full list of new relief measures follows:

1. A grace period for the payment of income tax and VAT, driving licence renewal fee, water bills and assessment tax less than Rs. 15,000, monthly credit card bills less than Rs. 50,000, be extended until April 30th.

2. Suspend the leasing loan repayment of three wheeler owners for a period of six months.

3. Suspend the recovery of loans from the salaries of government employees, private sector employees until May 30th.

4. Suspension of loan repayments for personal loans less than one million borrowed from banks and finance companies for three months.

5. The Rs. 20,000 allowance for the graduates chosen to follow the training programme will be credited to their bank accounts.

6.The Agrahara insurance benefits for health workers engaged in Corona prevention activities, Police, Civil Security personnel and other government employees to be doubled.

7. A six month debt moratorium will be granted to the tourism, apparel and SME for which the Central Bank will bear the cost of the moratorium.

8. When the Bank of Ceylon, People’s Bank, National Savings Bank, Sri Lanka Insurance Corporation, Employees Provident Fund and Employees Trust Fund jointly invest in Treasury Bonds and Bills, thereby stabilizing the money market at 7% interest rate.

9. A maximum of 15% interest rate has been stipulated for credit card domestic transactions up to Rs. 50,000 and a 50% reduction in minimum monthly charges.

10. All bank branches to remain open during non-curfew hours providing maximum service to customers.

11. Sri Lanka Ports, Customs and other regulatory bodies must continually issue essential food, fertilizer, pharmaceuticals and fuel to the relevant individuals continuously.

12. Samurdhi beneficiaries and Samurdhi card holders to be offered an interest free advance of Rs. 10,000 through all Samurdhi Banks.

13. Exempting Lanka Sathosa and Cooperative stores from VAT and other taxes.

14. Samurdhi Authority should issue title certificates to Samurdhi and low income families immediately for issuing nutritious food items to low income persons. They should be provided with rice, dhal and salt on a weekly basis with their food cards.

15. In the face of the current Covid-19 threat, the Bank of Ceylon has opened a special account at the Presidential Fund to provide relief to health and social care. 100 million [rupees] has been allocated from the Presidential Fund for this purpose. Tax and foreign exchange control restrictions have been lifted for all local and foreign donors who contribute. Sri Lankan Government donated $ 05 million to the SAARC Corona Fund.The President has instructed his Secretary to immediately implement these directives. (Colombo/Mar24/2020)

FILED UNDER: Sri Lanka,Sri Lanka Coronavirus,Sri Lanka COVID19

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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)