An Echelon Media Company
Saturday June 3rd, 2023

Sri Lanka exports soar 12-pct, banks limit overseas credit card transactions

ECONOMYNEXT – Sri Lanka’s exports grew 12.13 percent from a year earlier to 1,083 million dollars in August 2021, also overtaking a pre-pandemic level but forex shortages worsened, and a credit card operator imposed a 100 dollars a day limit on foreign transactions.

The August 2021 revenue of 1,083.56 million dollars is slightly up from the pre-COVID19 pandemic export earnings in August 2019 of 1,033.00 million dollars.

“It is remarkable to see another month of exports over a billion US$ despite the ongoing pandemic,” Suresh de Mel, Export Development Board (EDB) Chairman said in a statement.

“Going forward we need to add more value to our exports and explore niche markets, and diversify our product basket and markets,” he added.

Sri Lanka is in the middle of severe forex shortages after continuous money printing to pay state worker salaries and also keep down gilt yields from the begging of 2020.

This week Nations Trust Bank, which provides America Express credit cards imposed a limit of 100 dollars on an overseas online transaction.

Sri Lanka’s low rupee rates despite a wide budget deficit and liquidity injections had led a balance of payments deficit of 5.082 billion US dollars from the beginning of 2020 to July 2021.

In a country heavily driven by Mercantilist ideology, many genuinely believe that exports will reduce a trade or current account deficit and not more imports as recipients spend the money.

They also believe exchange rates fall due to imports not due to liquidity injections that undermine the anchor of the paper money.

Apparel export has increased 12.13 percent compared to 491.5 million dollars in August 2021.

EDB said apparel has grown 12.84 percent while woven fabrics 312.9 percent also recovering from a drop in exports in July.

Export earnings from Tea in August 2021 increased by 13.41 per cent to 116.78 million dollars and export volume has increased by 16.1 percent in August 2021 compared to August 2020.

Export earnings from rubber and rubber finished products have increased by 27.31 percent to 92.34 million dollars in August 2021 with strong performance in exports of pneumatic and retreated rubber tyres and tubes and industrial & surgical gloves.

The coconut-based products have generated an increase of 13.21 percent or 92.34 million dollars in August 2021.

The exports to Sri Lanka’s largest 10 export destination too has increased in the last eight months, EDB said.

In the Month of August 20201 exports to USA generated 273.66 million dollars, up 10.07 or 248.63 million dollars.

While in the last eight months, exports to USA had increased by 15.3 percent to 1.9 billion dollars compared to the same period of 2020.

This was due to an increase in exports in of apparel sector, rubber based products (pneumatic & retreated rubber tyres & tubes, industrial & surgical gloves of rubber), motor vehicles parts, activated carbon, tea packets and cinnamon.

Whereas exports to United Kingdom, the second largest export market had dropped by 12.75 percent or 79.19 million dollars in August 2021 compared to 2020.

Still the aggreated exports to UK from January to August had recorded an increase of 9.43 percent or 604.54 million dollars compared with the corresponding period of previous year. This is due an increase of exports in apparel sector products and rubber based products.

Exports to Netherlands and Canada increased had increased over 50 percent during the period of January to August 2021 compared with the corresponding period of 2020.

Increased exports to Netherlands was led by better performance in apparel sector and liquid coconut milk.

EDB also noted that increased exports to China from January-August was led by Mineral Sands, Cocopeat and Frozen fish.

“On a region wise comparison exports to all other regions increased except CIS regions during the period of January to August 2021 compared with the corresponding period of the previous year,” EDB said.

Meanwhile the services exports estimated by EDB which includes ICT/BPM, construction, financial services and transport and logistics generated 2.18 billion dollars during the period of January to August 2021 compared to 1.64 billion dollars recorded in the corresponding period of 2020.


Leave a Comment

Your email address will not be published. Required fields are marked *

Leave a Comment

Leave a Comment

Cancel reply

Your email address will not be published. Required fields are marked *

Sri Lanka to ramp up weekend fuel deliveries after petrol price cut

More deaths reported at Sri Lanka fuel queues

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)

Continue Reading

Sri Lanka bonds yield up at close, rupee at 291.75/292.50 against the US dollar

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)

Continue Reading

Sri Lanka’s shares edge up on positive macroeconomic sentiments

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)

Continue Reading