An Echelon Media Company
Wednesday February 1st, 2023

Sri Lanka free trade deals drive 600-pct more exports than imports

ECONOMYNEXT – Sri Lanka’s free trade deal have earned the country 600 percent more exports than imports in 2022, a Finance Ministry report said, as the country embarks on a renewed push to free consumers from vested import substitution businesses.

Up to September 2022, exports under four tree trade deals totaled 229.1 billion rupees, up to September 2022., while imports were only 32.29 billion rupees, or exports were 7 times as big as imports.

An Indo-Lanka Free Trade Agreement generated 140.4 billion US dollars of exports and resulted in 5.1 billion rupees in imports. Compare to exports imports were around 600 percent.

A Pakistan Sri Lanka Free Trade Agreement had generated 13.1 billion rupees in exports and 2.9 billion rupees in imports.

An Asia-Pacific Trade Agreement had generated 56.5 billion US dollars of exports, and 2.7 billion rupees of imports.

Sri Lanka has more imports than exports because people in the country get foreign exchange to spend from avenues other than merchandise goods, such workers remittances and service exports.

Meanwhile the government also usually borrows abroad and invests in projects which tend to generate imports (a financial account inflow will generate a current account outflow).

In 2022 Sri Lanka’s imports started to collapse with private credit slowing and banks paying back foreign debt.

There were also import controls. Import controls, however do not result in overall falls in imported goods because credit will be given to areas which are not controlled.

For example, cars may be banned, but credit will still go for people to buy tractors or build apartments.

Currencies collapse when money is printed, driving credit with ‘fictitious capital’, and making overall outflows exceed inflows.

Sri Lanka is trying to strike free trade deals to grow like East Asia, but has been thwarted by monetary instability.

Forex shortages created by the central bank also strengthen the hands of ‘domestic producers’ or ‘import substitutors’ who claim to be saviours of the public by ‘saving foreign exchange’.

Since a Latin America style central bank was set up in 1950 ‘saving foreign exchange’ and robbing economic freedoms of the public with import and exchange controls have been important policy planks of successive administrations in the post ‘independent’ period. (Colombo/Nov20/2022)

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Sri Lanka coconut prices ease at auction

ECONOMYNEXT- Sri Lanka’s coconut auction prices fell in the last auction in January 2023, with average prices going down by 4.1 percent at an auction on January 26, data showed.

The average price for 1,000 nuts fell to 80.811.89 from 84,116.85 a week earlier at the weekly auction conducted by Sri Lanka’s Coconut Development Authority.

The highest price was 87,300 rupees for 1,000 nuts down from the previous week’s 90,200 rupees, while the lowest was 72,500 down from 73,000 rupees.

The auction offered 469,564 coconuts and 300,983 nuts were sold. (Colombo/ Feb 01/2023)

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Sri Lanka shares edge up at close

ECONOMYNEXT- Sri Lanka’s shares edged up on Wednesday pushed as investors bought in to beaten down shares following the previous session’s drop, market analyst said.“

At this price level what we are seeing is a lot of confidence from the investors to collect when the prices drop. So, the market is not falling sharply,” a market analyst said.

Market had also seen buying in Expolanka shares on speculation that the parent company of SG Holdings was buying back into the shares.

All Share Price Index (ASPI) edged up by 0.96 percent or 84.96 points to 8,950.01.

The most liquid index S&P SL20 gained 1.27 percent or 35.02 points to 2,799.53.

Banking and Insurance counters had seen interest on the back of positive sentiments from the IMF.

The central bank has said it could cut interest rates in future when the the country sees fall in inflation, which has already started decelerating.

The market saw a turnover of 1.5 billion rupees today,lower than the month’s daily average of 1.8 billion rupees and nearly half of 2022 average turnover of 2.9 billion rupees.

The bourse saw a flow of net foreign inflow of 45 million rupees extending the net offshore buying to 1.9 billion so far this year.

Top gainers of the day were Commercial Bank, Expolanka, and Ceylinco Insurance. (Colombo/Feb01/2023)






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Sri Lanka bond yields down at close

ECONOMYNEXT – Sri Lanka’s bond yields were down at close following a bond auction on Wednesday, dealers said while a guidance peg for interbank transactions remained unchanged.

“The rates were steady at the auction,” a dealer said.

“This can be a signal to the market saying the rates will go down in the future.”

A bond maturing on 01.07.2025 closed at 32.40/60 percent, down from yesterday’s 32.60/85 percent.

A bond maturing on 01.05.2027 closed at 29.10/35 marginally down from yesterday’s 29.20/75 percent.

The Central Bank’s guidance peg for interbank US dollar transactions remained unchanged at 362.14 rupees against the US dollar.

Commercial banks offered dollars for telegraphic transfers at 371.38 rupees on Friday, data showed. (Colombo/Feb 01/2022)

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