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Tuesday April 23rd, 2024

Sri Lanka imports rise in Jan as tourism, remittances boost dollar incomes

ECONOMYNEXT – Sri Lanka’s imports rose to 1,512 million US dollars, in January 2023 even as exports faltered, official data shows as people got more dollars to spend from tourism.

Exports fell to 0.8 percent from a year ago to 971 million US dollars in January 2024, but remittances grew to 488 million US dollars from 437 million.

In December remittances were 570 million dollars. Sri Lanka also does not settle fuel imports made new players including Sinopec.

The trade deficit expanded to 541 million US dollars from 445 million as non-Merchandise incomes were spent.

Tourism receipts were estimated to have risen to 342 million US dollars in January from 154 million dollars last year. Outward tourism was estimated at 15 million dollars up from 13 last year.

Computer and IT related incomes were 43 million US dollars down from 62 million last year, sea transport incomes were 54 million dollars and air passenger incomes were 29 million dollars.

There were 5 million dollars of outflows from stocks. Gross inflows to government securities was 51  million US dollars.

Most private citizens are savers who do not spend all their incomes, and dollar earnings turn into imports when investment credit is given by banks to private borrowers or finances the government.

The BOP goes into deficit, if rates are cut with inflationary domestic operations involving outright or term purchases of domestic assets by the central bank.

The balance of payments was a surplus of 178 million US dollars, compared to 211 million dollars last January.

The BOP goes into surplus if monetary policy is deflationary (the central bank does not suppress rates with inflationary open market operations).

Rising imports also boosts tax revenues, helping reduce government borrowings and lower interest rates. Sri Lanka usually controls imports after forex shortages (BOP deficits) emerge from inflationary rate cuts, killing revenues, widening deficits and which requires high corrective interest rates later.

The import controls and widening deficits are a cascading policy error and loss of economic freedom stemming from ‘monetary policy independence’ given to reserve collecting central banks, critics have said.


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Iran President to open Sri Lanka $514mn irrigation, hydro power project

MULTIPURPOSE: Uma Oya multipurpose development project is the largest since the end of the Mahaweli projects.

ECONOMYNEXT – Iran President Seyyed Ebrahim Raisi will inaugurate an irrigation and hydropower project that was designed and built by Iranian engineering firm and was also initially financed before international sanctions hit the project.

The Uma Oya (River) project will irrigate 4,500 acres of new agricultural land, generate 290 Gigawatt hours of electricity and also provide drinking water, a government statement said.

Sri Lanka had awarded an engineering, procurement, construction (EPC) to Iran’s FARAB engineering group to design and construct the 514 million dollar multipurpose project in 2010.

The project was funded until 2013 with a million US dollar credit from the Export Development Bank of Iran but international sanctions prevented the country from continuing financing, a government statement said.

The project continued with funding from Sri Lanka. Sri Lanka had since repaid 19.3 million dollars of the credit and 35.2 million remains outstanding.

The Uma Oya project has a 120MW of hydro power generators, which can generate 290 Giga Watt hours of energy.

Each year 145 million cubic metres of water will be taken from Uma Oya to the Kirindi Oya river valley after generating electricity in an underground power station.

It will irrigate 1,500 hectares of existing agricultural and 4,500 hectares of new land in the Moneragala district, where crops can be cultivated in both the Maha and Yala seasons.

About 39 million cubic meters of water will be used for drinking and industrial purposes.

Two reservoirs built at Dyraaba and Puhulpola in Uma Oya basin is connected by a 3.98 kilometre conveyance tunnel and water is taken through a 15.2 kilomtre headrace tunnel to an underground power station. A tailrace tunnel takes water from the power station to the Kirindi Oya basin.

The project was originally expected to be completed in 2015, but due to financing delays and later water leaking into the headrace tunnel and the Covid pandemic had delayed it. The project completion date was extended to March 31, 2024 and defect liability date to March 31, 2025. (Colombo/April23/2024)

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Sri Lanka state oligopoly allowed to import some black gram

ECONOMYNEXT – Sri Lanka has allowed the import of some black gram, by three state agencies, according to a gazette notice issued under the hand of President Ranil Wickremesinghe.

Import licenses will be given for 2,000 metric tonnes of the seed classified under HS Code 7312.31.22 and 29.

Sri Lanka State Trading Corporation, National Food Promotion Board and Sri Lanka Hadabima Authority is to be given import licenses.

Traders have resorted to smuggling some types of black gram (ulundu) mis classified as chick peas, to get over high taxes and import restrictions.

Tamil legislators have also protested the import controls, which they go into several key ethnic foods they consume. (Colombo/Apr23/2024)

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Sri Lanka Foreign Ministry consular division shifted to Battaramulla

ECONOMYNEXT – Sri Lanka’s Foreign Ministry said it consular division would be shifted to the Suhurupaya building in Subuthipura, Battaramulla from May 02, 2024.

Document authentication services provided by the Consular Affairs Division in Colombo will be suspended on 29 and 30 April 2024 held transfer the Electronic Document Authentication System (e-DAS) to the new premises at Suhurupaya.

Urgent applications for authentication to the Consular Division in Colombo, or any Regional Consular Offices by 4.15 pm on 26 April 2024, the Foreign Ministry said.

Regional Consular Offices in Jaffna, Trincomalee, Kurunegala, Kandy and Matara will remain open to accept applications.

Authenticated documents will be delivered to the applicants only on Thursday, 02 May 2024.

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