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Sunday February 25th, 2024

Sri Lanka seeks rice bailout from China after fertilizer ban

ECONOMYNEXT – Sri Lanka has sought a million tonnes of rice as a gift from China government ministers says which is expected to make good an expected crop loss from during the main Maha cultivation season from a chemical fertilizer ban.

Sri Lanka had sought the million tonnes of rice as a gift as a way mark a 30 year long barter agreement between the People’s Republic and Ceylon which ran from 1953 to 1982.

Trade Minister Bandula Gunewardena said the donation was sought during an virtual meeting with the Chinese ambassador to Colombo with the 30 years being market on December 18, 2022.

“The response was very positive from China,” Minister Gunewardene told state-run ITN television.

“What we asked was for a gift of one million metric ton of rice as paying respect for the 3 decade agreement that went on without changing under various governments.”

A million tonnes of rice is worth between 350 to 500 million dollars at current market price for Indica rice grades.

Sri Lanka’s main Maha cultivation season that end around March produces about 2.5 million metric tonnes of paddy (rough rice) and up to 3 million tonnes in good years.

About 1.9 million tonnes of milled rice is produced from a good season, which is enough for over 9 months of use at around 195,000 metric tonnes a month. Output can fall to around one 1.5 million tonnes in drought years.

A million tonne gift from China will make good a crop loss of up to 50 percent. Sri Lanka’s cabinet of ministers also relaxed import controls to allow 300,000 metric tonnes of rice from India.

Finance Minister Rajapaksa said in January the government will buy paddy at 75 rupees a kilo to make good a 30 percent crop loss as part of 220 billion rupee ‘relief package’.

Sri Lanka’s farmgate price for rice was around 50 to 60 rupees. But millers said it had risen to around 95 rupees at the beginning of the current harvest season which is just beginning. Farmers are also complaining of steep harvest losses.

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President Rajapaksa said this week that the government will also give 95 rupees for a kilo of rough rice.

Sri Lanka retail rice prices for milled rice now range around 130 to 150 rupees, depending on the grade.

“We need to understand that if we buy one kg per 50 rupees, then the price of it in the market will be 100 rupees,” Minister Gunewardene said.

“If we bought it for 75 rupees the market price will be 150 rupees. By saying we need to strengthen the farmers and get rice at 200 rupees per one kg the price of it in the market will be 400 rupees.

Sri Lanka had earlier banned the import of rice to keep domestic prices high and also give profits to rice millers. Attempts to bring price controls failed and created shortages.

In an improvement of policy the government has ended price controls.

“Rice mills owners said they will bring one kg price to 300 rupees,” Minister Gunewardene said.

“At that moment I told the president and the cabinet that we will not let one kg of Samba to go above 130 rupees, nadu we will try to give below 100 rupees or under 105 rupees.”

Sri Lanka’s consumer prices surged to 12.1 percent in the 12-month ending December 2021, after two years of money printing and exchange rate trouble. The central bank on Tuesday raised interest rates by 50 basis points. (Colombo/Jan21/2021)

Comments (2)

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  1. Kumar says:

    Sri Lankans better get used to Chinese sticky rice. Sticky white rice is a part of the Chinese cuisine. However, we buy good Sri Lankan rice in the US, with no arsenic. I suppose Sri Lankan mill owners get good money by exporting rice.

  2. aswin says:

    The chinese rice has already arrived. All produced from high quality plastics. Next will be a gift of medicine to solve the stomach problems created by eating plastic.

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Comments (2)

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Your email address will not be published. Required fields are marked *

  1. Kumar says:

    Sri Lankans better get used to Chinese sticky rice. Sticky white rice is a part of the Chinese cuisine. However, we buy good Sri Lankan rice in the US, with no arsenic. I suppose Sri Lankan mill owners get good money by exporting rice.

  2. aswin says:

    The chinese rice has already arrived. All produced from high quality plastics. Next will be a gift of medicine to solve the stomach problems created by eating plastic.

Sri Lanka could get US$500mn from ADB in 2024

ECONOMYNEXT – Sri Lanka could receive 500 million US dollars in support from the Asian Development Bank in 2024 based on the progress of policy reforms, Country Director of the Manila-based lender, Takafumi Kadono said.

The ADB expect to go to its Board around March or April with a 100 million US dollar power sector loan subject to the cabinet of ministers of approving a revised electricity reform bill.

A 100 million dollar loan to support SMEs could also be approved in the early part of the year. Sri Lanka is setting up a credit guarantee agency to support credit for small firms.

A 200 million dollar credit for financial sector was also slated for the year. The ADB gave the first tranche of the financial sector policy loan late last year.

A $100mn for the water sector could also be approved later in the year.

Sri Lanka could get around 200 to 300 million US dollars a year at the lowest rate, or concessional ordinary capital resources (COL) rate of 2 percent.

The balance of would come at the ordinary capital resource rate linked to SOFR.

The ADB has also started work on a ‘Country Partnership Strategy’ for Sri Lanka covering the 2024-2028 period, Kadodo said. (Colombo/Feb25/2024)

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Sri Lanka’s multi-aligned foreign policy based on friendship: Min

ECONOMYNEXT – Sri Lanka’s multi-aligned foreign policy is based on friendship to all and enmity to none, its Minister of Foreign Affairs has said.

“Non-alignment means not becoming a bystander. Non-alignment means you are not forced or coerced into a camp to take sovereign decisions… you make your own choices. Whether it is commercial, security, regional or otherwise,” M U M Ali Sabry said on X (twitter).

“I have repeatedly stressed that sovereignty is the right to have your own opinion on what’s right and wrong, and to stand by your principles. Our multi-aligned foreign policy is based on friendship to all and enmity to none,” Sabry was quoting from his speech at the Lakshman Kadirgamar Institute of International Relations and Strategic Studies (LKI) Foreign Policy Forum, on the theme ‘Reassessing Non-Alignment in a Polarised World’.

Sri Lanka is one of the founding members of the Non-Aligned Movement.

The strategically located island has been increasingly walking a fine line between opposing global factions as it seeks to come out of a financial crisis. (Colombo/Feb24/2024)

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Sri Lanka’s Commercial Bank Dec net down on tax provisions

ECONOMYNEXT – Sri Lanka’s Commercial Bank of Ceylon reported profits of 6.9 billion rupees from the December 2023 quarter down 21 percent, despite an improvement in net interest income and lower provisions, amid a change in tax provisions.

Pre-tax profits were 8.89 billion rupees up from 2.4 billion rupees. There was a 6.4 billion tax reversal last year compared to a 1.7 billion rupee tax charge this year.

Commercial Bank reported earnings of 5.26 rupees for the quarter. For the year to December 2023 earnings were 16.07 rupees per share on total profits of 21.1 billion rupees, down 11.3 percent.

Net fee and commission income was down 1.2 percent to 6.1 billion rupees.

Net interest income went up 16.8 percent to 25.5 billion rupees, with interest income rising marginally by 1.3 percent to 73.0 billion rupees and interest expense falling 5.45 percent to 47.5 billion rupees.

Loans and advances to customers grew 4.06 percent to 1.17 billion rupees in the year to December. Debt and other financial instruments fell 10.5 percent to 649 billion rupees.

Financial assets measured and fair value through other comprehensive income was at 287 billion rupees, up from 117 billion rupees.

Impairment charges were 13.1 billion rupees, down from 19.6 billion rupees last year.

Gross assets were up 6.45 percent to 2.36 billion rupees. Net assets were up 5.51 percent to 214 billion rupees. (Colombo/Feb24/2024)

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