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Thursday February 22nd, 2024

Sri Lanka slaps 100-pct LC margin to discourage consumer imports amid money printing

ECONOMYNEXT – Sri Lanka has imposed a 100 percent cash margin when opening letters of credit on over 600 items ranging from chocolates and wine to raincoats and carpets to discourage imports as the country faced foreign exchange shortages as large volumes of money were printed.

Banks have also been barred from giving credit for importers to meet the margins.

Licensed Commercial Banks “shall not grant any advances to their customers for the purpose of enabling such customers to meet the minimum cash margin deposit,” the direction said.

A direction issued to licensed commercial banks by the Central Bank said the margin requirement was effective from September 08.

Sri Lanka has place price controls on government bond auctions discouraging bids and the central bank has taken them to its balance sheet giving new money which then lead to a foreign reserve loss when

The direction described 693 items through customs codes including, chocolates, spaghetti, apple juice, wine, oats, soya milk, dairy goods, lipsticks, carpets, coats anoraks and electronic goods.

Download Order LC-Margin-Sep09

Sri Lanka has a habit of blocking what bureaucrats claim to be ‘non-essential’ or ‘luxury’ goods whenever money printing hits the island’s non-credible peg.

The curbs on chocolates and lipsticks came after 39 billion rupees was printed last Friday to control the 12-month Treasury bill yield.

Sri Lanka’s rupee has fallen from 4.70 to below 200 due to frequent liquidity injections.

Analysts have urged authorities to lift price controls rupee bond auction to channel savings of the public to the deficit, reduce consumption and imports and the erosion of foreign reserves and possible default on foreign debt.

(Colombo/Sept09/2021 – Correction letter issued on September 08)

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Sri Lanka to get update on GSP+ cycle at EU joint commission meeting

ECONOMYNEXT – Sri Lanka will get an update on the GSP+ trade concessions at a Joint Commission meeting with the European Union, the Foreign Ministry said.

Three working groups on Governance, Rule of Law and Human Rights, Trade and Economic Cooperation, Development Cooperation will report to the Joint Commission.

“The European Union will also brief on the current developments in the EU including an update on new GSP Regulation and the new cycle of the EU GSP+ concessions,” the statement said.

The full statement is reproduced below:

The 26th session of the Joint Commission between Sri Lanka and the European Union will be convened on 22 February 2024 in Brussels. The meeting will be co-chaired by Secretary of the Ministry of Foreign Affairs of Sri Lanka Aruni Wijewardane and EU European External Action Service Deputy Managing Director for Asia Pacific Paola Pampaloni.

Sri Lanka delegation to the Joint Commission will comprise senior officials of the Ministry of Foreign Affairs, Attorney General’s Department and Ministry of Finance.

The EU- Sri Lanka Joint Commission serves as a platform for dialogue and cooperation between Sri Lanka and the European Union, covering a broad range of bilateral and multilateral issues of mutual interest inter alia trade and investments, development assistance, fisheries, education, counterterrorism, governance and human rights, Indo-pacific & maritime security and environment.

The outcome of the three Working Groups which reports to the Joint Commission, Governance, Rule of Law and Human Rights, Trade and Economic Cooperation, Development Cooperation will be presented to the Joint Commission.

The European Union will also brief on the current developments in the EU including an update on new GSP Regulation and the new cycle of the EU GSP+ concessions.

The previous session of the Joint Commission meeting was held in May 2023 in Colombo.

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India’s BAL Investment interested in land around aragalaya site

ECONOMYNEXT – India’s BAL Investment has expressed interest in a land in Colombo which was used as a popular people’s protest site in 2022.

“An acre of land at Baladaksha Mawatha was requested for a joint development project by Bal Investments,” Prasanna Ranatunga, Minister of Urban Development and Housing said in parliament on Thursday.

“They have deposited a fee of 10,000 dollars and signed a memorandum of understanding on 16 February 2024. We are waiting for the government’s assessment report. The project has not been approved, we are still considering it in keeping with all rules and regulations,” Ranatunga said in reply to a statement by National People’s Power MP Vijitha Herath. (Colombo/Feb22/2024)

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CEB spokesman resigns after insensitive comments

ECONOMYNEXT – The official spokesman of the Ceylon Electricity Board, Sri Lanka’s state-owned electricity supplier, has resigned from the post after controversial comments he made on a talk show sparked anger.

CEB spokesman engineer Noel Priyantha told a talk show on the TV station Ada Derana on Tuesday that children don’t need electricity, or lights, to study and can do so with a kerosene lamp. “People have got used to free electricity… Why do children need electricity to study? If there is no electricity they can use a bottle lamp (ku-ppi lam-pu-wa).. That’s how I studied. People should know to use what they have and come up in life.”

“The Management of CEB has also informed me that the spokesperson has tendered his resignation from the post and issued a public apology for his statement. The management will also take appropriate steps regarding the statement made,” Minister of Power and Energy Kanchana Wijesekera said on X (twitter) Thursday.

Wijesekera said he agreed with the sentiments of everyone who “had raised the lack of empathy and professionalism in the statement made by the CEB spokesperson.”

The comments were widely circulated on social media, including by Minister of Water Supply and Estate Infrastructure Jeevan Thondaman, after the comments criticized estate sector people as being drunk after 2 pm and blamed parents for not providing for children. “The ‘entire’ statement made by the CEB spokesperson, lacks empathy and is unacceptable,” Thondaman said.

Wijesekera then hastened to point out that “The statement does not reflect the views of the Govt or the CEB. and would like to extend my apology on behalf of the Ministry & CEB.”

Sri Lanka’s estate workers are some of the most impoverished people in the island, trapped in a poverty cycle with no resources necessary to escape poverty. They have no land rights or adequate education facilities. (Colombo/Feb22/2024)

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