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Friday August 19th, 2022

Sri Lanka exports hit October record as money printing drive forex shortages

ECONOMYNEXT – Sri Lanka’s exports in October 2021 rose to a historic high of 1,160 million US dollars up 35 percent from a year earlier, data from the export promotion office showed as forex shortages worsened amid money printing.

Apparel exports grew 42.8 percent to 509 million US dollars, rubber product exports grew 14.5 percent to 91.9 million US dollars, tea fell 2.4 percent to 109.5 million US dollars and coconut-based exports grew 25 percent to 77.7 million US dollars.

“This is the highest-ever merchandise export figure in any October in our history,” Export Development Board Chairman Suresh de Mel said.

“Opening up of Western markets together with the sustained production in Sri Lanka can be attributed to this increase.”

Sri Lanka’s rupee continued to be under pressure as money printing gave more purchasing power to domestic economic agents to drive imports up.

In October the central bank spent 113 million US dollars to defend a non-credible peg at 203 to the US dollar while buying 41 million dollars from surrenders despite the peg being on its weak side.

The central bank has complained that exporters are not converting enough dollars. However if dollars are not converted they cannot hurt the exchange rate, unless exports are financed with printed packing credit.

In Sri Lanka where classical economics is not widely known and Mercantilist beliefs are widespread, external troubles are blamed on lack of exports or the trade deficit, rather than money printing and open market operations.

The top export destination was the US with 291.3 million US dollars, up 47.8 percent, followed by the UK with 88.5 million US dollars, India 77.6 million US dollars up 72 percent and Germany 64.8 million dollars up 72 percent.

Total exports up to October were 10.05 billion dollars, up 21 percent from a year earlier.

Other exports that grew in October

Electrical & Electronics Components export earnings grew 87.3 percent to 38.4 million rupees with strong performance in insulated wires and cables, switches, boards and panels and electronic transformers.

Seafood exports have grown 57 percent to 24.5 million rupees in October 2021 compared to October 2020.

“This increase was mainly due to the increase in earnings from export of frozen fish, shrimps and prawns, fresh or chilled fish and other edible fish.

To boost the prawn industry, Sri Lanka’s cabinet approved a proposal to provide concenssionary loans for prawn farmers.

Another sector the export developers are heavily pushing is boat building. In October 2021 alone Sri Lanka has generated 33.7 million dollars solely from exports to Iraq.

The EDB chairman previously said in a virtual boat show that the island’s marine diversity makes it a potential nautical tourism destination which gives a boost to the development of the boating sector.

Therefore, he said it is equally important to facilitate the development of nautical tourism activities such as recreational boating, sailing, yacht chartering, water sports for the benefit of the boat building sector.

Sri Lanka’s revised export target is 15.72 billion dollars and so far it has earned 12.6 billion dollars. (Colombo/Nov19/2021)

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Sri Lanka schedules 3-hour power cuts for Aug 20, 21: regulator

ECONOMYNEXT – Sri Lanka will impose power cuts of up to three hours on Saturday August 20 and Sunday August 21, Public Utilities Commission (PUCSL) Chairman Janaka Ratnayake said.

All areas (A, B, C, D, E, F, G, H, I, J, K, L, P, Q, R, S, T, U, V and W) will have power cuts of 1 hours and 40 minutes between 10.30 am and 06.00 pm and 1 hour 20 minutes from 06.00pm to 10.00 pm.

Click here for a detailed schedule.

The state-run Ceylon Electricity Board (CEB) said supply interruption time and restoration time will vary within 30 minutes as indicated above.

Sri Lanka’s daily scheduled power cuts that were reduced to one hour in July with power generation from hydro power plants contributing more than 50 percent to the main grid reducing thermal power plant use was extended to three hours last week due to a breakdown at the Norochcholai coal power plant.

According to officials, the breakdown happened in Unit 1 of Norochcholai which will take around two weeks to repair.

The Minister of Power & Energy said Unit 2 is undergoing scheduled maintenance work while Unit 3 will continue to operate. West Coast and other fuel power pPlants will be used to manage the supply, the ministry said. (Colombo/Aug02/2022)

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Sri Lanka guidance peg edges T-bond yield edge down

ECONOMYNEXT – Sri Lanka Central Bank’s guidance peg for interbank transactions edged down on Friday (19), while yields in Treasury bonds picked up slightly and in T-bill remain unquoted in dull trade, a day after the Central Bank announced the policy rates will remain stable, dealers said.

A bond maturing on 01. 06. 2025 closed at 27.95/28.05 percent on Friday, slightly up from 27.90/28.00 percent on Thursday.

No T-bills were quoted on Friday, dealers said.

Meanwhile Sri Lanka’s central bank announced a guidance peg for interbank transactions further weakened by three cents to 361.00 rupees against the US dollar on Friday from 360.97 rupees.

Data showed that commercial banks offered dollars for telegraphic transfers between 368.00 and 370.00 for small transactions.  (Colombo/ Aug 19/2022)

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Sri Lanka records 10 new COVID-19 deaths in 48 hours as case numbers rise

ECONOMYNEXT –  Sri Lanka recorded 10 COVID-19 deaths in the 48 hours from August 17 to 19 taking the country’s pandemic death toll to 16,640, health ministry data showed.

Sri Lanka is experiencing a slight increase in COVID-19 cases with the relaxation of public health restrictions relating to face masks and public gatherings.

Health authorities said the situation will be monitored constantly and have asked the general public to continue to follow basic hygiene measures in order to control the spread of the virus again in the community.

In August alone 2,924 new cases were recorded in Sri Lanka, with 84 deaths attributed to the disease.

So far in 2022, from January onward, health authorities have identified 81,157 patients to date.

Epidemiology unit data showed that 874 patients are currently receiving treatment, out of which 716 are receiving home based care.

The spread of the virus has increased with the use of public transport rising after an easing of a fuel crisis.

Sri Lanka is also facing difficulties in securing essential medicine supplies for the health sector due to a forex shortage.

Health officials said if the number of COVID-19 patients rise to a level the health sector cannot manage,  with the added issues of fuel and medical shortages, the health system might collapse.

“It is the responsibility of us all. There is no use trying to forcibly control people. We all have the responsibility to reduce or stop the spread of the virus before it gets out of control. We have been living with it for the past two years,” Deputy Director General of Health Services Dr Hemantha Herath said. (Colombo/Aug19/2022)

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