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Sunday June 16th, 2024

Sri Lanka rupee opens weaker, bond yields higher

ECONOMYNEXT – Sri Lanka’s rupee opened weaker at 177.15/25 against the US dollar on Thursday, while stocks were 0.02 percent lower and bond yields were higher, dealers and brokers said.

The rupee closed at 176.90/00 against the greenback on Tuesday.
Wednesday was a market holiday. 
The central bank has been injecting liquidity into the overnight money market.
At the Colombo Stock Exchange, the main All Share Price Index was down 0.02 percent or 1.38 points to 5,947.92 in volatile trading.
The more liquid S&P SL20 Index was down 0.83 percent or 24.62 points to 2,929.58.
Market turnover was 179.87 million rupees, with 22 stocks rising and 55 falling.
The largest listed firm John Keells Holdings was trading 2.20 rupees down at 148.10 rupees a share, pushing the ASPI down.
Banking stock also pushed the market down, after many reported lower profits amid rising bad loans.
Commercial Bank, the largest listed lender which is yet to release its financials, was trading 1.60 rupees down at 107.50 rupees a share, while National Development Bank was trading 4.40 rupees down at 107 rupees a share and Sampath Bank was trading 1.70 rupees down at 163.30 rupees a share.
The banking and finance sector index was down 0.48 percent, while the construction and engineering sector was down 3.77 percent.
Distilleries Company of Sri Lanka, which posted strong earnings (up 50 percent in June) was trading 10 cents up at 16.60 rupees a share.
In the government securities market, bond yields were marginally up following Tuesday’s bill auction, where rates edged up for the first time in 24 weeks.
A bond maturing on 15.10.2021 was quoted at 8.65/75 percent on Thursday, up from 8.63/70 percent at Wednesday’s close.
A bond maturing on 15.03.2023 was quoted at 9.40/50 percent, up from 9.35/45 percent.
A bond maturing on 15.06.2024 was quoted at 9.82/83 percent, up from 9.78/80 percent.
A bond maturing on 01.08.2026 was quoted at 9.92/10 percent, up from 9.87/95 percent.
A bond maturing on 15.01.2027 was quoted at 9.97/05 percent, up from 9.95/00 percent.
A bond maturing on 01.05.2028 was quoted at 9.98/08 percent, unchanged.
A 20-year bond maturing on 15.08.2039 was quoted at 10.00/40 percent, wider from 10.05/35 percent.
(COLOMBO, 13 August, 2019)

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Sri Lanka car import relaxing roadmap given to IMF: State Minister

ECONOMYNEXT – Sri Lanka has submitted a roadmap on relaxing vehicle imports to the International Monetary Fund, State Minister of Finance Ranjith Siymabalapitiya said as the country recovers from the worst currency crises in the history of its central bank.

The import relaxation will allow vehicles for public transport, goods transport, then motor cycles and cars use by private individuals and after that, luxury cars, Minister Siyambalapitiya said.

Luxury cars however attract the highest taxes for each dollar spent on imports.

Economic analysts have characterized vehicle import controls as a ‘cascading policy error’ that follows inflationary rate cuts, which then deprive taxes to the state and triggers more money printing and more forex shortages, requiring even higher corrective interest rates and a contraction of economic activities to save the rupee.

According to the latest IMF report car import controls may have led to revenue losses of 0.7 to 0.9 percent of GDP.

Sri Lanka started controlling imports few years after a central bank was set up in 1950 and also tightened exchange controls progressively, so that macroeconomists using post-1920 spurious monetary doctrines taught at Anglophone universities could print money through various mechanisms to suppress rates.

Sri Lanka is working with the IMF as a guide on many issues and the roadmap was submitted to the agency on June 14, Minister Siyambalapitiya said.

The IMF in an economic report released last week the plan was expected to be submitted by June 15.

Whatever the IMF’s faults, which some wags have called ‘progressive Saltwaterism’, the agency does not advocate import controls as solution to balance of payments problems, despite a Mercantilist fixation with the current account deficit in countries with reserve collecting central banks, analysts say.

Import controls have the same effect as import substation on the balance of payments, which is none, classical economists have pointed out and is now mainly a problem associated with macro economists and economic bureaucrats of so-called basket case countries.

Any pressure on the currency or missed reserves targets in the IMF program has come in the past only if the central bank printed money to suppress rates as credit growth picked up from car imports.

Sri Lanka had 3,000 items under import controls when rates were suppressed with printed money from 2020 to 2022 but eventually ended up with the worst currency crisis triggered by macro economists in the history of the country and eventual external default.

A committee made up of the Department of Trade and Fiscal Policy of the Finance Ministry, the Department of Registration of Motor Vehicles, the Central Bank and two associations representing vehicle imports were appointed to come up with the roadmap, he said. (Colombo/June15/2024)

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Chitrasiri Committee presents draft constitution for Sri Lanka Cricket

ECONOMYNEXT – A draft constitution for Sri Lanka Cricket, the governing body for cricket in the island, prepared by a committee headed by retired Supreme Court judge K T Chitrasiri, was presented to President Ranil Wickremesinghe today (15).

The Sri Lanka team were ignominiously knocked out of the Men’s T20 World Cup tournament this week, sparking renewed criticism of the team and the governing body.

Last November, a cabinet sub-committee was appointed to address challenges faced by Sri Lanka Cricket and provide recommendations after consecutive losses became a hot topic in parliament.

After parliament decided to remove the administrators of the sport, the International Cricket Council (ICC) Board suspended Sri Lanka Cricket’s membership.

Based on the sub-committee’s recommendations in its report, the Cabinet then appointed an expert committee to draft a new constitution for Sri Lanka Cricket.

The committee headed by judge K T Chitrasiri includes President’s Counsel Harsha Amarasekara, Attorney-at-Law Dr Aritha Wickramanayake and Chairman of the Sri Lanka Chamber of Commerce Duminda Hulangamuwa.

Deputy Solicitor General Manohara Jayasinghe, and Shamila Krishanthi, Assistant Draftsman representing the Legal Draftsman’s Department, and Loshini Peiris, Additional Secretary to the President were also on the committee. (Colombo/Jun14/2024)

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Sri Lanka’s Cable Solutions in Rs605mn IPO

ECONOMYNEXT – Sri Lanka’s Cable Solutions Limited will make an initial public offering of ordinary voting shares on the Diri Savi Board of the Colombo Stock Exchange (CSE).

The CSE had approved, in-principle, an application submitted by the company, for the listing of its ordinary voting shares by way of an offer for subscription and an offer for sale.

For subscription, 14,666,600 shares would be offered at 7.50 rupees a share.

For sale, 66,120,000 shares would be offered at 7.50 rupees a share.

The opening of subscription list is July 23. Copies of the prospectus would be made available to trading participants on July 9. (Colombo/Jun15/2024)

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