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Friday January 27th, 2023

Sri Lanka hikes petrol to Rs177, diesel Rs121 a litre

ECONOMYNEXT – Sri Lanka’s state-run Ceylon Petroleum Corporation has hiked petrol by 20 rupees to 177 rupees a litre and auto diesel by 10 rupees to 121 rupees, as money printing depreciated the rupee and global commodity prices also went up due to Federal Reserve loose policy.

Petrol 95 Octane was raised up by 23 rupees to 203 rupees a litre.

Super diesel was raised by 15 rupees a litre to 159 rupees.

Kerosene has been raised by 10 rupees to 87 rupees a litre.

Subsidized kerosene is used by some factories to run furnaces and buses also mix them with diesel to keep costs down.

By end 2014 Sri Lanka had closed part of the gaps between the three fuels, but from 2015 under then Finance Minister Ravi Karunayake the gaps worsened again.

The late Finance Minister Mangala Samaraweera brought back formula based pricing, but in 2018 the central bank printed money creating a currency crisis, making the CPC borrow dollars

The central bank had earlier asked the Treasury to raise fuel prices.

Raising fuel prices reduces the disposable incomes of customers both businesses and individual and reduces non-oil imports keeping external and domestic sectors in balance protecting the exchange rate – in the absence of money printing.

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Sri Lanka has faced higher global and domestic and currency pressure amid record money printing from around February 2020.

The money was printed by the then leadership of the central bank and its advisors to ‘create a production’ economy.

At the time the central bank claimed there was ‘no demand driven inflation’ ignoring warnings by the public, media and classical economists.

Global commodity prices have also been going up amid record US money printing. Fed Chief Jerome Powell claimed that inflation was ‘transient’. As money printing fired an aggregate demand bubble creating shortages in some sectors, they were blamed on ‘supply chain.’

Sri Lanka usually blames inflation on imported inflation and raising administered prices. However when administered prices are kept down keeping the index down rates are kept low, and money is printed saying inflation is low and there is no need to hike rates. (Colombo/Dec22/2021)

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Sri Lanka’s Dialog Axiata hopes to hold prices despite rising costs

ECONOMYNEXT – Sri Lanka’s Dialog Axiata hopes to hold prices despite higher taxes, rising costs like energy, officials said as the country goes through the worst currency crisis in the history of its intermediate regime central bank.

High inflation following a collapse of the currency has reduced real incomes of customers.

“There are many factors to consider, especially with the last price increase we did in last year did not resulted in a significant increase in revenue” Pradeep De Almeida · Group Chief Technology Officer at Dialog Axiata said at the launch of its Future zone at Lotus tower.

In September,2022 following an electricity tarrif hike dialog increased its tariffs on Mobile, Fixed Telephone, Broadband Plans and Value Added Services (Prepaid and Postpaid) by 20 percent while tariffs on all Pay Television Services were raised 25 percent.

Value Added Tax (VAT) was also raised by the government from 12 percent to 15 percent on all Telecommunications and Pay TV services.

“Even though we increase the prices we only saw around 8-9 percent increase in revenue,” Almeida said.

“That is because many users cut off their usage to limit the spending”.

Dialog will increase efficiencies and manage costs in an attempt to avoid prices increases for customers, he said.

Over the 24 months to December 2022, Sri Lanka;s central bank has generated inflation of 76 percent, based on the Colombo Consumer Price Index official data shows. Following the currency collapse, more power tariff hikes are planned.

“We are trying to mainly bear the cost from our side. We are getting a massive support from our parent company Telekom Malaysia International,” Navin Peiris, Group Chief Enterprise Officer at Dialog told EconomyNext.

“Therefore as of now, there is no plan to increase prices”. (Colombo/Jan 26/2023)

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Sri Lanka shares fall at market close on profit taking

ECONOMYNEXT – Sri Lanka shares fell on Thursday as profit taking entered the market mainly on financial and diversified sectors, brokers said.

The main All Share Price Index (ASPI) fell 0.13 percent or 11.50 points to close at 8,926.56.

“The market was trading on dull trade mainly due to profit taking,” an analyst said.

“Also we saw investors taking a sideline as quarterly reports started to come”.

The earnings in the first quarter of 2023 are expected to be negative with revised up taxes and an imminent electricity tariff hike.

Earnings in the second quarter are expected to be more positive with the anticipation of IMF loan and possible reduction in the market interest rates as the tax revenue has started to generate funds.

The central bank’s policy decision was expected and investors have been eying on IMF deal with hopes of rapid economic recovery from the current unprecedented economic crisis, however since the market gained in the last sessions profit taking has come about, analysts said.

The market has been on a rising trend on the hopes of a faster IMF deal. However, the central bank government said the IMF deal is likely in the quarter or in the first month of the second quarter.

The most liquid index S&P SL20 fell  0.33 percent or 9.21 points to 2,798.

LOLC had seen some attention by investors as the firm disposed 90,256,750 shares held with Agstar PLC at 15-17.50 rupees a share.

The market witnessed a turnover of 1.2 billion rupees, lower than the month’s daily average of 1.9 billion rupees.

Expolanka dragging the market down closed 2.36 percent down at 186.7 rupees a share. Sampath bank fell 1.41 percent to close at 42 rupees a share while Royal Ceramic Lanka closed 2.59 percent dwn at 30.1 rupees a share.

(Colombo/Jan26/2023)

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Sri Lanka bonds yields steady at close

ECONOMYNEXT – Sri Lanka bond yields were steady at close on Thursday, dealers said, while a guidance peg for interbank transactions by the Central Bank remained steady.

A bond maturing on 01.05.2024 closed at 31.00/20 percent unchanged from the last close.

A bond maturing on 15.05.2026 closed at 26.60/90 percent, up from 28.50/70 percent on Wednesday.

A bond maturing on 15.09.2027 closed at 28.60/85 percent, up from 28.50/60 percent at the last close.

The three months bill closed at 29.75/30.25 percent unchanged from the last close.

The Central Bank’s guidance peg for interbank US dollar transactions appreciated by another 2 cents to 362.14 rupees against the US dollar.

Commercial banks offered dollars for telegraphic transfers at 360.49 rupees on Thursday, data showed.  (Colombo/Jan 26/2022)

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