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Saturday April 20th, 2024

Sri Lanka president’s close ally admits blunders on IMF, rupee, debt restructuring 

ECONOMYNEXT – An ally of Sri Lankan President Gotabaya Rajapaksa on Thursday admitted that the government should have sought International Monetary Fund (IMF) help to face economic crisis, float the rupee systematically, and  started debt restructuring.

The economic crisis due to shortage of US dollars, cooking gas, fuel, and milk powder amid extended power cuts has now turned into a fully blown political crisis with intensifying street protests by people mainly the youth demanding for the resignation of Rajapaksa.

President Rajapaksa attended the parliament in line with the constitutional requirement amid tight security with roads leading to the parliament closed while protests by the public continued across the country.

“I was within and outside the cabinet telling that we should have gone to the IMF a year ago,” Ali Sabry, former justice minister told the parliament.

“The rupee should have been floated in systematic manner and not like this. We should have started a debt restructuring. You all told the same thing and we also have told the same thing.”

Sabry did not reveal the Sri Lanka Podujana Peramuna (SLPP) members who opposed seeking IMF assistance, floating rupee, and debt restructuring.

“But now we must see how we can overcome the issue with the resources at hand and if we don’t there will be serious turbulence within the parliament and out of the parliament, on the road and not against only the government politicians but for all 225,” Sabry said.

Frustrated with economic mismanagementa and wrong police decisions, people have been protesting with a theme “Go Home Gota”, across the country demanding the president to resign,

The central bank allowed flexibility in the exchange rate on March 7 and the rupee has fallen around 60 percent since then. That has led to steep price increase in essential price and people have complained about high cost of living.

Protesters have been demanding all Rajapaksa’s to resign from the office and investigate them for looted money. Sri Lanka’s cabinet before the resignation on Sunday (03) included five Rajapaksas.

Ali Sabry said the protesters have been demanding to do something outside the constitution.

“It will be even more drastic. The constitution will be broken. We saw in Syria, in Libya, in Afghanistan, in Yemen and now seeing in Iraq,” Sabry said.

“Iraq in the last month, from oil alone got $12.1 billion in income for one month in February and still they can’t run, because structures have collapsed. So we need to understand and it’s a heavy bound issue.” (Colombo/April/2022)

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Sri Lanka discussing giving extra land, water for Chinese oil refinery

ECONOMYNEXT – Sri Lanka is in discussions with China’s Sinopec to give extra land and assure water supplies after the company decided to expand the capacity of a planned oil refinery in Hambantota, Energy Minister Kanchana Wijesekera said.

“There are concerns on how the water supply is going to be provided for the refinery,” Minister Wijesekera told reporters Friday.

The refinery will need more land and also revise conditions in a Board of Investment agreement, he said.

Read more
Sinopec to double capacity of new refinery in Sri Lanka’s Hambantota

Recommendations and decisions from Sri Lanka’s side had already been sent and Sinopec is expected to revert back in May.

“We are hoping to sign the agreement once everyone has agreed,” Wijesekara said.

The principle agreements are expected to be signed by June, he said.

The refinery could sell up to 10 percent of its output in the domestic market.

“There is no commitment by the government to purchase anything,” Minister Wijesekera said. (Colombo/Apr19/2024)

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Sri Lanka rupee closes weaker at 302.00/50 to the US dollar

ECONOMYNEXT – Sri Lanka’s rupee closed at 302.00/50 to the US dollar in the spot forex market on Friday, down from 301.50/302.00 a day earlier, dealers said.

There was increased demand for dollars after the central bank bought 715 million dollars from forex markets. In the previous two months it was buying on average about 200 million US dollars, leaving market participants and bank in a ‘oversold’ position.

There were some official dollars sales Friday dealers said.

READ Sri Lanka rupee quoted wide to US dollar as peg inconsistencies flare up

Bond yields were broadly steady.

A bond maturing on 15.12.2026 closed at 11.30/40 percent down from 11.35/40 percent.

A bond maturing on 15.09.2027 closed at 11.95/12.05 percent up from 11.90/12.05 percent.

A bond maturing on 15.12.2028 closed stable at 12.15/25 percent.

A bond maturing on 15.09.2029 closed stable at 12.30/40 percent.

A bond maturing on 01.10.2032 closed stable at 12.40/50 percent. (Colombo/Apr19/2024)

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Sri Lanka stocks close down, banks trade down

ECONOMYNEXT – The Colombo Stock Exchange closed down on Friday, data on its site showed.

The broader All Share Index closed down 0.38 percent, or 44.80 points, at 11,753; while the S&P SL20 Index closed down 0.53 percent, or 18.46 points, at 3,456.

Turnover was at 1.4 billion. The diversified financials (Rs366mn) and banks (Rs266mn) sectors continued to see selling pressure.

“This was possibly due to uncertainty around the bond discussions,” market participants said.

With the exception of Sampath Bank Plc (up at 77.50) all other banks traded down in the day. Commercial Bank of Ceylon Plc was down at 104.50, Hatton National Bank Plc was down at 188.50, and DFCC Bank Plc was down at 77.00.

LOLC Finance Plc saw the most trades and closed up at 6.40. Another LOLC company, Browns Investments Plc, also saw high traded volumes and closed up at 5.60.

Softlogic Capital Plc was up at 7.00, and Softlogic Holdings Plc was up at 11.20. A trading suspension imposed on SHL.N0000 was lifted effective today as the company submitted the annual report for the year ended 31st March 2023.

However, shares of the Company will remain in the Watch List “due to Qualified Audit Opinion and Emphasis of matter on going concern in the Independent Auditor’s Report in the Audited Financial Statements for the year ended 31st March 2022.”

Dialog Axiata Plc, which announced its merger with Bharti Airtel Thursday, saw its share price close up at 11.90.

“There was some traction on index heavyweights,” market participants pointed out.

Top contributors to the APSI included Aitken Spence Plc (up at 134.50), Ceylon Tobacco Company Plc (up at 1,245.25, and Lion Brewery (Ceylon) Plc (up at 1,048.50).

There was a net foreign inflow of 5 million. (Colombo/Apr19/2024)

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