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Monday March 4th, 2024

Sri Lanka welcomes 194,000 tourists in 2021 amid rebound hopes

WARM WELCOME: Passengers of the Inaugural Vistara Flight UK182 welcomed by Kandyan Dance performance.

ECONOMYNEXT – Sri Lanka has welcomed 194,495 tourists in 2021 down from around 2.3 million in 2018 before the pandemic with 89,506 tourists arriving in December up from just 393 the previous year, data from the state tourism promotion office showed.

Sri Lanka welcomed 241,663 tourists in December 2019, and 228,000 in January and 207,000 in February 2020 when airports were shut to fight the Coronavirus pandemic.

Sri Lanka’s Finance Minister Basil Rajapaksa told reporters this week that they are targeting 2.5 million tourists in 2022.

Sri Lanka welcomed 507,311 in 2020, who came before airports closed in March due to Coronavirus.

In the first four days of January 2022 11,380 tourists had arrived in the island with 2,032 Russian visitors, Sri Lanka’s Daily Mirror newspaper quoted Tourism Minister Prasanna Ranatunga as saying.

Sri Lanka Tourism data showed from December 1-26 a total of 69,941 tourists arrived in the country, an indication that for the last five days of December 19,565 holidaymakers arrived in the country.

The largest source markets recorded for the month of December were India, Russia,
the United Kingdom, followed by Germany and Ukraine.

Although most tourists came from the European market there are concerns of a setback from the market after the resurgence of COVID-19 infections in those countries as they bring in travel restrictions.

“Even though signs of recovery were evident, the uncertainty for the travel industry is mounting again with countries already practising restrictions and border closures with the emergence of the new Omicron variant,” Sri Lanka Tourism Development Authority report said.

“It is anticipated that, increasing cases in Europe will further dampen consumer confidence which was gradually building after the devastating Delta variant.”

A total of 56,268 Indians had visited the country in 2021 out of 194,495 tourists in 2021.

Russia generated 16,894 visitors in 2021, The UK 16,646 visitors, Germany 12,442 and Ukraine 7,037.

Chinese travellers, the second largest source market for tourists in pre-COVID times remained the lowest with only 2,417 visiting the island for the whole year in 2021.

Although the concerns of the European market looms and as China remains closed for outbound travel, Sri Lanka is confident it will generate 200,000 or 100,000 tourists per month in 2022.

While the SLTDA chief Kimarli Fernando told a forum in December that they are expecting 100,000 tourist arrivals per month in 2022 and are hopeful of Indian travellers.

The island welcomed its highest number of tourists ever in 2018 with 2.3 million arrivals and it dipped to 1.9 million following the Easter Sunday bombings in 2019.

However McKinsey & Company, a business consultancy said the Sri Lanka market may take time to recover as China remains closed and the rise of COVID-19 infections in the European markets.

The consultancy predicted that Sri Lanka will return to 2019 levels by 2024 but to reach the 2018 levels may take five years. (Colombo/Jan07/2021)

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Sri Lanka’s CEB reports Rs61bn profit for 2023 with Dec quarter gains

ECONOMYNEXT – Sri Lanka’s state-run Ceylon Electricity Bord has reported a profit of 61.2 billion rupees for the year to December 2023, turning around from a loss of 298 billion last year, with all the profits coming in the last year amid heavy rain and price hike, interim accounts show.

The CEB reported profits of 77.9 billion rupees for the December quarter, compared to a loss of 182 billion rupees last year.

About 94 billion rupees in losses were forex losses, coming from the central bank, which printed money to suppress rates and triggered a steep currency collapse in a failed float with a surrender rule.

CEB revenues rose 55 percent to 156 billion rupees in the December quarter, cost of sales fell 45 percent to 78 billion rupees amid heavy rains, giving a gross profit of 78.2 billion rupees for the quarter.

In the year to December, CEB revenues were 606.6 billion rupees, up 96 percent from 308 billion rupees, while cost of sales rose from 444 billion rupees to 506 billion rupees. Gross profits were 99.6 billion rupees.

At group level, which includes LTL Holdings, profits were 75 billion rupees for the year, with income taxes of 6.3 billion rupees, provided.

CEB consolidated profits were 68.4 billion rupees, with other shareholders of subsidiaries accounting for 7.2 billion rupees.

Equity was 498 billion rupees at company level by December 31, with 126 billion rupee capital contribution as well as profits earned in the last quarter. (Colombo/Mar05/2024)

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Sri Lanka rupee opens at 308.20/50 to the US dollar

Sri Lanka stocks reversed its falling trend and gained for the first time in six sessions on Tuesday closed stronger on Tuesday (21).

ECONOMYNEXT – Sri Lanka’s rupee opened at 308.20/50 to the US dollar Monday, from 308.80/90 on Friday, dealers said.

Bond yields were broadly steady.

A bond maturing on 01.08.2026 was quoted stable at 10.90/11.00 percent.

A bond maturing on 15.09.2027 was quoted at 11.90/12.00 percent from 11.90/12.05 percent.

A bond maturing on 01.07.2028 was quoted at 12.20/30 percent from 12.15/35 percent.

The Colombo Stock Exchange opened up; The All Share was up 0.60 percent at 10,755, and the S&P SL20 was up 1.24 percent at 3,077. (Colombo/Mar4/2024)

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Sri Lanka central bank swaps top $3.2bn by December

ECONOMYNEXT – Sri Lanka’s central bank borrowed US dollars from various counterparties through swap transactions, which had topped 3.2 billion US dollars by December 2024, official data show.

The net short position, including swaps disclosed by the central bank, grew by over almost 1.28 billion US dollars from December 2022 to 3,280 million dollars.

The gross position grew from 2,263 million dollars to 3,280 million US dollars over the year.

The central bank supported some state banks with dollars to cover their dollar exposures, which had since been paid back.

By December reported gross reserves of the central bank was 4,491 million US dollars, against swaps of 3,280 billion US dollars.

Swaps of around 1500 related to the People Bank of China.

Swaps allow a central bank to increase gross reserves, without raising domestic interest rates.

Swaps with domestic counterparties lead to liquidity being injected into money markets, which can be mopped if domestic credit growth is moderate.

At the moment many private banks have large dollar positions invested outside the country, which cannot be used for transactions domestically because of a money monopoly given to macro-economists. (Sri Lanka repays debt or collects reserves of U$5bn via banking system since rate correction)

However unwinding swaps after private credit has picked, or engaging in swaps after private credit has picked up, may lead to money being injected to maintain the policy rate, leading to excess credit by banks and balance of payments deficits and or currency collapses, analysts say.

Central bank swaps in the third quarter of 2018 led to a collapse of the currency under the ‘exchange rate as the first line of defence’ policy peddled to Sri Lanka, critics have said earlier.

Domestic currency proceeds of swaps were the primary ammunition to bust East Asian currencies in 1997-98.

Any depreciation after the swap proceeds have been used for imports (effectively mis-targeting rates) a central bank will run a forex loss.

The PBOC however had put a rule, preventing the use of the swap after gross reserves fell below 3 – months of imports, preventing Sri Lanka from getting into further trouble through the use of official reserves for private imports.

Sri Lanka’s central bank also used borrowings from the Reserve Bank of India, via the Asian Clearing Union to run BOP deficits.

Losses from exposed dollar positions of central banks which have gained ‘independence’ from fiscal rules and parliaments and engaged in macro-economic policy, including the Fed, have led to taxpayers bearing the losses in the end.

Swaps were invented by the Fed in the early 1960s, as it deployed macro-economic policy (printed money for growth) threatening its gold reserves and the Bretton Woods system.

Sri Lanka has other borrowings also, including from the IMF, which has made net foreign assets of the central bank negative. (Colombo/Mar05/2024)

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