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Wednesday September 27th, 2023

Sri Lanka trade bans boosted sugar SOE profits, turmeric market: President

ECONOMYNEXT – Sri Lanka’s ban on ethanol imports had given profits to state run sugar factories which were making losses earlier, President Gotabaya Rajapaksa had said.

“Our sugar factories are making a profit today because the importation of ethanol has been completely banned,” President Rajapaksa said in a national address.

Imported ethanol which were taxed at high levels, brought revenues to the Treasury.

However when import duties are raised or imports are banned, businesses running ‘import substitution’ schemes collects the taxes, a process which economists call ‘tax arbitrage’.

The people still pay high prices, but the profits go to businesses and the state loses revenue. In 2020, Sri Lanka saw a steep collapse in revenues, amid import bans, deliberate tax cuts and Coronavirus lockdowns.

Sri Lanka is also taxing brown sugar at a higher rate than white sugar to give profits to sugar SOEs.

The sugar SOEs were expropriated from the people in 2011.

President Rajapaksa said a ban on turmeric imports had also expanded a market for domestically made turmeric.

Other key strategies include a ban on tea imports to stop blending in the country and re-export of pepper, he said. (Colombo/June29/2021)

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Sri Lanka to introduce social security system: minister

ECONOMYNEXT – Sri Lanka’s Labour minister has said that they are set to introduce a comprehensive national social security system, covering all workers.

“The system will address the weaknesses of the current system and provide much-needed support to workers and their families,” Manusha Nanayakkara, Minister of Labour and Foreign Employment said on X (formerly known as Twitter).
He did not specify the details.

Nanayakkara also spoke of the need for robust social security when he met with exporters last week to discuss labor law reforms, boosting female workforce participation and attracting FDI.

Sri Lanka plans to reform labour laws for an export-oriented economy.

The pandemic and the economic crisis highlighted the need to improve the coverage of social security.

Studies have shown that Sri Lanka’s women are kept out of formal employment by childcare, elderly care and housework, as day care and elderly homes are either too expensive or too few.

The government imposed a Social Security Contribution Levy to increase its revenue last year. (Colombo/Sep27/2023)

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Sri Lanka’s stocks up in trading on Wednesday morning

ECONOMYNEXT – Sri Lanka shares were picking up in trading on Wednesday morning.

Turnover was at 50 million. Trading in the Capital Goods Industry Group was driving turnover.

The All Share Price Index was up 0.37 percent or 41.78 points to 11,289.94, while the S&P SL20 was also up 0.68 percent or 21.66 points to 3,187.65.

Hatton National Bank, Commercial Bank and LOLC saw gains in morning trade, while Tokyo cement and Lanka Hospitals were trading down during morning trading. (Colombo/Sep27/2023)

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Sri Lanka rupee opens at 323.50/324.10 to the US dollar, bond yields stable

ECONOMYNEXT – Sri Lanka’s rupee opened at 323.50/324.10 to the US dollar on Wednesday, after closing on Tuesday at 323.70/324.20 to the US dollar, dealers said.

A bond maturing on 01.08.2026 was quoted at 15.50/70 percent on Wednesday up from Tuesday’s close at 15.45/65 percent.

A bond maturing on 01.05.2028 was quoted at 14.50/55 percent from closing at Tuesday at 14.30/55 percent. (Colombo/Sep27/2023)

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