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Friday June 14th, 2024

Sri Lanka mulls import taxes or looser licenses for wheat flour: Minister

ECONOMYNEXT – Sri Lanka is mulling looser import licenses or an import duty on wheat flour State Minister of Finance Ranjith Siyambalapitiya told parliament after a brewing controversy over import controls that recreated a duopoly.

“We are discussing whether there is an alternative to the restrictive import license policy that is now followed within the Finance Ministry, Trade Ministry and Agriculture Ministry,” Minister Siyambalapitiya told parliament.

“In the future we expect to widen the permits to bring the required volume of wheat. Or we can revise the import tax, since the existing stocks are now lower.”

Minister Siyambalapitiya claimed imports were restricted, giving a controversial duopoly to two wheat millers because there were 163,000 tonnes of wheat flour in the country.

He claimed that the holders would make profits if a tax was raised. to protect rice farmers. Global market prices were falling, he said.

Opposition legislators had slammed the import license which reduced the food freedoms of the people and recreated a duopoly among two millers at a time when global prices were easing, giving large profits to the companies.

About 1.35 kilograms of wheat grain is required to produce 1 kilogram of wheat flour, Minister Siyambalapitiya said.

Based on calculations by the Consumer Affairs Authority and Customs data, flour from milled grain imported in June can be sold at 192.39 rupees a kilogram with a 9.63 percent profit, Minister Siyambalapitiya said.

In July the cost went up to 203.62 rupees a kilo, he said.

Milling generates by products which can be sold or exported as animal feed. It is not clear whether the revenue was used in the calculations.

Imported flour could be sold at 197.62 with a 5 percent margin, he said.

Opposition legislators had protested that wheat flour was taxed at 35 rupees a kilogram while grain was only taxed at 3 rupees.

Therefore, the state was losing tax revenues and consumers were paying higher prices, they said.

Meanwhile Minister Siyabalapitiya said after restricting imports it was gazetted as a listed item by the Consumer Affairs Authority to impose price controls in another state intervention.

The CAA frequently creates shortages by artificially price controls. The latest debacle involved price controls on eggs, while import duties and licenses restricted the import of maize, the main ingredient in chicken feed.

In another state interference, the CAA has also banned the use of paddy in chicken feed.

In yet another state intervention, Minister Siyambapalapitiya said wheat prices were kept high to keep rice prices high and give profits to farmers.

Sri Lanka is expected to have a good rice harvest this year and low wheat prices could reduce the demand and farmers will start protesting, he said.

Due to long term protection Sri Lanka farmers do not produce exportable grades of rice, unlike their counterparts in Pakistan and India.

Wheat flour imports cost foreign exchange, he said.

Sri Lanka’s macro-economists usually print money to cut rates triggering foreign exchange shortages leading to entire economic plans being made to ‘save foreign exchange’ at the cost of economic inefficiency and free trade.

As a result of running ‘macro-economic policy despite having a pegged exchange rate, Sri Lanka has long run various protectionist tax arbitrage schemes, driving potential state revenues to profiteering producers on the claim that it saved ‘foreign exchange.’

Sri Lanka has controls on rice, maize and other cereals to give profits to various ‘domestic producers’ at the expense of the less affluent sections of the public.

Essential goods like food and building materials involving hunger and homelessness are ideal products for profiteers, critics say. (Colombo/Aug30/2023)

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Sri Lanka opposition leader proposes Grama Rajya system in addition to 13A

Opposition leader Sajith Premadasa (r) – File photo

ECONOMYNEXT — Sri Lanka opposition leader Sajith Premadasa has proposed devolving power to the village level through a Grama Rajya system in addition to implementing the 13th amendment to the constitution.

Speaking at an event in Jaffna on on Wednesday June 12, Premadasa said all provinces will benefit from the 13th amendment.

“Whatever one’s ethnicity, religion, status or region, this country has citizens of equal level. They’re all Sri Lankan citizens.

“There is no division or grouping.  As we give you and every other province what you should be given through the 13th amendment, we must implement a Grama Rajya system,” Premadasa said, addressing a crowd of school children and other attendees.

Premadasa’s assurance of implementing the 13th amendment has already drawn some protest in the south.

A collective of civil society organisations held a protest outside the office of the leader of the opposition in Colombo on Thursday June 12.

Calling itself the ‘Coalition Against Partition of Sri Lanka’, the group carrying national flags marched up to the opposition leader’s office Thursday June 13 morning and demonstrated against the full implementation of the 13th amendment.

“We arrived here today to hand over a missive against devolving police powers, land powers and judicial powers. If Mr Premadasa is inside, come outside,” Jamuni Kamantha Thushara, Chairman of the Citizen’s Movement Against Fraud, Corruption, and Waste, was seen declaring at the site.

“First of all, tell us what we stand to achieve by dividing and giving away the north and east,” said another protestor, warning against bringing the 13th amendment “anywhere here (paththa palaathe)”.

A police officer at the scene the protestors that a secretary to the opposition leader was ready to accept their letter.

“In Kilonochchi, he says the 13th amendment will be implemented. The votes in the north are going to be decisive this election. To win those votes, President Ranil Wickremesinghe, Sajith and Anura Kumara Dissanayake all say they will implement the 13th. We will not allow this country to be divided into nine pieces,” said Thushara.

Ven Balangoda Kassapa Thero, who was arrested on June 06 during a protest against the new Electricity Act, was also seen at Thursday’s protest. The Buddhist monk requested for a debate with Premadasa on the matter of the 13th amendment. (Colombo/Jun12/2024)

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Sri Lanka rupee closes flat at 303.85/95 to US dollar

ECONOMYNEXT – Sri Lanka’s rupee closed broadly flat at 303.85/95 to the US dollar on Thursday, from 303.80/304.00 to the dollar the previous day, dealers said. Bond yields were down.

A bond maturing on 15.12.2026 closed at 10.00/30 percent, down from 10.20/40 percent.

A bond maturing on 15.10.2027 closed at 10.60/75 percent.

A bond maturing on 01.07.2028 closed at 11.00/15 percent, down from 11.15/40 percent.

A bond maturing on 15.09.2029 closed at 11.80/85 percent.

A bond maturing on 15.05.2030 closed at 11.85/12.05 percent, down from 11.90/12.05 percent.

A bond maturing on 01.10.2032 closed stable at 11.95/12.15 percent. (Colombo/Jun13/2024)

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Sri Lanka sells Rs295bn in 2027 to 2031 bonds

ECONOMYNEXT – Sri Lanka has sold 295 billion rupees in 2027, 2029 and 2031 bonds, data from the state debt office showed.

The debt office sold an offered 60 billion rupees of 15 October 2027 at an average yield of 10.30 percent.

All offered 125 billion rupees of 15 September 2029 bonds were sold at 11.00 percent.

All 110 billion rupees offered of 01 December 2031 bonds were sold at 12.00 percent. (Colombo/May13/2024)

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