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Tuesday May 30th, 2023

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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India extends under utilized $1 bln credit facility to Sri Lanka by one year 

ECONOMYNEXT – India has extended a $1 billion credit facility to Sri Lanka by another year after the loan that was given to help the crisis-hit island nation to continue import of essentials was not fully utilized in the 12 month period originally agreed, officials said.

Sri Lanka faced with a looming sovereign default signed the credit facility in March 2022 for one year through March 2024. However, the full $1 billion had not been utilized yet.

The Facility has been used for urgent procurement of fuel, medicines, food items and industrial raw materials, as per the requirements and priorities of Sri Lanka.

“The initial agreement was signed in 2022 March and out of the 1000 million US dollars allocated materials were imported for $576.75 mil,” Shehan Semasinghe, State Finance Minister said in his official twitter platform.

“The agreement is extended for the remaining $423.25 mil. We will prioritize the import of essential medicines till March 2024.”

Indian High Commission in Colombo said the State Bank of India (SBI) has extended the tenure of the $1 billion Credit Facility provided to Sri Lanka in response to a request from the Government of Sri Lanka.  (Colombo/May 30/2023)

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Sri Lanka President cleared to discuss cancelled LRT after soured Japan relations

ECONOMYNEXT – Sri Lanka’s Cabinet of Ministers approved a proposal by President Ranil Wickremesinghe discuss resuming a Japan funded. Light Rail Transit (LRT) project cabinet spokesman said, as the island nation is in the process of mending ties with Tokyo.

However, any such deals are likely to take place after the debt restructuring and Sri Lanka starts to repay its foreign loans to come out of default, analysts say.

Former President Gotabaya Rajapaksa unilaterally cancelled the 1.5 billion US dollar LRT and East Container Terminal (ECT) projects in 2021. Japan agreed to fund the LRT project while it was one of the tripartite members of the ECT project along with India and Sri Lanka.

The abrupt cancellation hit the diplomatic ties between the two countries and Sri Lankan government officials have said Japan had given the project to Sri Lanka at a very lower financing cost.

President Wickremesinghe returned from Japan late last week after having met top officials of the Japanese government including its prime minister.

“In recent history, due to the stopping of several agreements and proposals suddenly, President Wickremesinghe went to Japan after creating the background to clear some of the worries we have,” Cabinet Spokesman Bandula Gunawardena told the weekly media briefing.

“Before he went, he got the approval from the cabinet to resume the discussion on the light railway project. He got the approval from the cabinet to get parliament approval for bilateral agreements signed or any other investments project. Any change or cancellation of a project could be done only with the approval of the parliament.”

Japan has backed Sri Lanka under Wickremesinghe’s presidency after the island nation declared sovereign debt default. (Colombo/May 30/2023)

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Sri Lanka to tighten grip on television with broadcast law

ECONOMYNEXT – Sri Lanka has formulated a broadcast authority law to regulate electronic media which will be made public soon, Cabinet spokesman Minister Bandula Gunawardana said.

“The draft prepared by a cabinet subcommittee under Justice Minister Wijedasa Rajapaksa has discussed with various parties will be given to all media institutions and broadcast media,” Gunawardana said.

“We do not have to hide or force anyone. A legal framework that can be acceptable to all for all sectors.”

“In a week or two Minister Wijedasa will discuss with state and private stakeholders.”

At the moment Sri Lanka has issued frequencies without conforming to an “international procedures”, he said.

In Sri Lanka television frequencies are issued under a state television act.

Successive administrations in Sri Lanka has since around 1980 mis-used state television duopoly which including for conducting elections according to critics.

Private television as well a raio emerged around the 1990s and has since over shadowed state media.

There have been calls by ruling party politicians from time to time to control private media. There is now calls to control social media.

At a Committee on Public Accounts meeting of the Department of Government Information, ruling coalition legislators called for regulation of television content. (Colombo/May30/2023)

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