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Tuesday April 16th, 2024

Sri Lanka to part repay re-auctioned bonds with cash deposits: CB Governor

ECONOMYNEXT- Sri Lanka will use cash deposits at state banks to settle part of bond auctions if the government felt that bid yields were too high, Central Bank Governor Nandalal Weerasinghe said.

At the last bond auction the debt office rejected about 60 percent of bonds at a 250 billion rupee bond auction, leading to speculation about the settlement means.

Related Sri Lanka sells only 29-pct of Rs250bn bond auction

“The government has built up this buffer, for them to be able to manage the short-term debt service payment,” Governor Weerasinghe told reporters Friday.

“Without relying on the two state banks overdraft facility, instead they have deposits now. That I think is a good development.”

The central bank is now not expected to print money directly to repay maturing debt and suppress rates as in the past, which triggers forex shortages.

According to the mid-year fiscal report, the end September Treasury cash balance was 183.5 billion rupees, a steep correction from last year.

Until 2023, Sri Lanka has run large overdrafts of around 200 – 300 billion rupees, as well as arrears to suppliers.

Governor Weerasinghe said the general practice was to announce government cash needs transparently to the market through weekly bill auctions and bond auctions, ahead of time.

“The market knows that. The information that the market did not have is that the government has a buffer,” Governor Weerasinghe said.

“There was information that the central bank cannot intervene. I think that had been factored into the pricing without knowing that the government has a buffer.

” Now I would like to say that the government has this mechanism and a buffer. They also should know that there is a buffer. On that basis they can bid. That is why I think that will help stabilize government yield rates going forward, with that flexibility.”

“No one can in advance announce that this amount will be used,” he said, responding to a question whether information could be released about the volume of the cash that could be used, so that market participants would bid lower than they would otherwise have.

The central bank is raising debt for the government as an agency function.

“That depends on the day’s auction rate, what is the cut-off rate, what is the funding requirement, what is the size of the buffer, how long that buffer is going to be used.

“That flexibility is there now for the government to determine at what rate they are willing to borrow and the ability to reject if they think the rates are too high.”

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IMF urged Sri Lanka to preserve “hard earned gains” after economic crisis: State FinMin

ECONOMYNEXT – The International Monetary Fund has urged Sri Lanka to preserve the hard earned gains after an unprecedented economic crisis under the global lender’s programme, State Finance Minister Shehan Semasinghe said.

The Sri Lankan delegation led by Shehan Semasinghe met Kenji Okamura, the Deputy Managjng Director of the IMF on the first day of the IMF and  World Bank Spring meeting.

“Mr. Okamura commended the Sri Lankan authorities on strong programme implementation and excellent reform progress. He emphasised the need to preserve the hard earned gains Sri Lanka has experienced since the beginning of the IMF programme and continue strong ownership,” the State Minister said in his X (Twitter) platform.

He said the Sri Lankan delegation including Central Bank Governor Nandalal Weerasinghe and Secretary to the Treasury Mahinda Siriwardana explained the recent socio-economic developments to Okamura.

He also affirmed the IMF top official on the authorities’ commitment to ensuring continuity and consistency of macroeconomic policies and reforms undertaken under the programme. (Colombo/April 16/2024)

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Sri Lanka State FinMin meets BCIU in US; discusses post-crisis investment prospects 

ECONOMYNEXT – Sri Lanka’s State Finance Minister Shehan Semasinghe met Business Council for International Understanding( BCIU) in Washington on the sideline of the IMF/World Bank Spring Meetings late on Monday and discussed investment prospects in the island nation which is gradually recovering from an unprecedented economic crisis.
“Our discussion centered on the potential that Sri Lanka offers for international investors. Explored various sectors, including education, tourism, renewable energy, agriculture and technology, where strategic investments can drive sustainable economic growth and development,” Semasinghe said in his X (Twitter) platform. 
“We reviewed the current macro-economic landscape of Sri Lanka, including recent reforms that have transformed to results. Glad to concluded the forum by marking constructive dialogue and a shared commitment to support the economic development of Sri Lanka.” 
“We thank participants, stakeholders holders and global partners for the significant interest shown in unlocking the full potential of the Sri Lankan economy and fostering greater international understanding and cooperation.” (Colombo/April 16/2024) 
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India allows Sri Lanka to import 10,000MT of onions

ECONOMYNEXT – India has relaxed an export ban allowing 10,000 metric tonnes of onions to be shipped to Sri Lanka, the Indian High Commission in Colombo said.

“The exemption for Sri Lanka reiterated India’s Neighbourhood First policy, adding to the Sinhala and Tamil New Year festivities here,” the statement said.

Onion prices went up in Sri Lanka after India and Pakistan banned exports.

The Directorate General of Foreign Trade has issued a notice allowing National Co-operative Exports Limited to ship 10,000 MT of onions.

The UAE has also been allowed to import 10,000MT of onions on top of 24,400MT already permitted.

A large Indian and South Asian expat community lives in the UAE. (Colombo/Apr15/2024)

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