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Sunday September 24th, 2023

Sri Lanka stocks fall to 8-year low amid Coronavirus fears, weak sentiment

ECONOMYNEXT – Sri Lanka stocks plunged 4.14 percent Tuesday with the benchmark all share index falling to an eight year low in one of the biggest one day falls on record amid continued foreign selling and weak domestic sentiment, while global market were also in turmoil, brokers said.

A global epidemic of Coronavirus had hit global trade, with Sri Lanka’s exporters, importers and construction firms also expected to take a hit as supply chains are disrupted.

Oil prices have also fallen, which is generally expected to be good for consumers and energy using companies.

But Sri Lanka’s stocks have taken a beating in recent months with foreign investors steadily cutting positions they have held for years in blue chip companies.

“There is selling pressure but not enough buying interest,” a broker said.

Colombo stocks are down 16 percent over 2020 and 8.4 percent from February.

Domestic investor sentiment was also weak, with some panic selling seen, brokers said, though shares were at bargain prices.

Colombo Stock Exchange was halted for 30-minutes after the S and P 20 Index of liquid shares fell 5-percent at soon after opening.

All Share Price Index finished the day at 5,121.91 points, hitting the lowest since August 29, 2012, when it was at 5,114.15 points.

The S&P SL20 Index of most liquid stocks closed down 4.75 percent or 117.86 points to end at 2,361.75.

The March 10 fall was only a little lower than October 12, 2012 when the Colombo All Share Index, fell 300.59 points or 4.39 percent.

Sri Lanka’s economy has been hit by two currency crises in rapid succession and it was emerging from the 2018 crisis when value added taxes were cut steeply in January, spooking rating agencies.

Market turnover over was 1.34 billion rupees. Lion Brewery drove volumes with 952,649 shares changed hands at 565.00 rupees a share contributing 538 million rupees to turnover.

The index was dragged down with Ceylon Cold Stores stocks falling 103.30 rupees down at 672.60 rupees while John Keells Holdings fell 7.10 rupees to close at 133.00 rupees.

Ceylon Tobacco Company another index heavy stock closed at 1,020.00 rupees a down 28.50 rupees. (Colombo/Mar10/2020)

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Sri Lanka India industrial zone around Trinco, maritime links mooted

ECONOMYNEXT – Sri Lanka’s Ports Minister Nimal Siripala de Silva had highlighted the desire of both the Governments to work closely to develop the industrial zone at Trincomalee, after accepting an invitation to participate in a maritime summit.

The Global Maritime India Summit (GMIS) will be held in India from October 17-19, 2023 at Mumbai where Sri Lanka has been invited at a partner country.

At a curtain raiser event on September 22, India’s High Commissioner in Colombo, Gopal Baglay had said both countries were working on enhancing sea connectivity according to a vision document launched during a recent visit of the President of Sri Lanka to India.

Minister de Silva will lead a delegation from Sri Lanka to the summit.

Secretary to the Ministry of Ports, Shipping and Waterways, Government of India, T K Ramachandran said the Global Maritime India Summit aims strengthen the Indian maritime economy by promoting global and regional partnerships and facilitating investments.

The event will give an opportunity to the Government of Sri Lanka to attracting greater investment from India in development of its maritime infrastructure, Ramachandran said.

It will also facilitate greater business to business interactions. (Colombo/Sept24/2023)

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Sri Lanka brings back import para tariff on milk

ECONOMYNEXT – Sri Lanka has brought back an import para tariff called the Ports and Airports Levy, to several grades of milk powder.

Milk powder has been removed from a list of PAL exemptions, making them liable for a 10 percent tax.

The PAL para tariffs are also a contentious issue in terms of export competitiveness, and the government has previously given undertakings that they will be eliminated.

Trade freedoms of the poor figure in an IMF/World bank reform program with the governments.

Milk is a protein rich food, in a country where children of poor families are facing stunting and malnutrition.

Economic nationalism is seen at high levels in food, with several businessmen are pushing for trade protection, amid an overall autarkist (self-sufficiency) ideology, going directly against policies followed in East Asia, which the same as hold up as examples.

Sri Lanka keeps dairy product prices up ostensibly to bring profits to a domestic dairy company and farmers.

Sri Lanka also keeps maize prices up, ostensibly to give profits to farmers and collectors. (Colombo/Sept22/2023)

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Sri Lanka govt warns liquor manufacturers: pay defaulted tax or lose licence

ECONOMYNEXT – Sri Lanka government which is struggling to raise the state revenue despite   higher taxes, has warned liquor manufacturers to pay defaulted taxes or lose their licence.

The government is now getting tough with past tax defaulters amid concerns over falling short of this year’s revenue target agreed with the International Monetary Fun (IMF).

“Liquor manufacturing firms owe us 660 crore rupees (6.6 billion rupees),” Siyambalapitiya told  reporters on Thursday (21).

“Most of this or around a third is the only excise tax amount to be paid. The rest is penalty. If a liquor manufacturer does not pay on time, we impose a penalty of 3 percent per month This means 36 percent (penalty) per annum,” he said.

“We have given them deadline to repay the basic excise taxes. If they don’t pay, we will cancel their licence.”

President Ranil Wickremesinghe’s government committed an ambitious revenue target among many other reforms to the International Monetary Fund (IMF) in return to a $3 billion loan package.

However, the revenue could face a short fall of 100 billion rupees, State Finance Minister Ranjith Siyambalapitiya has said.

A new Central Bank Act also has legally prevented the government of printing money at its discretion as  in the past.  (Colombo/September 24/2023)

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