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Friday January 27th, 2023

Sri Lanka’s Ceylon Tea gain amid low volumes

ECONOMYNEXT – Sri Lanka’s High and Low Grown teas gained at the auction held on January 11 while some Mid Growns fell with lower volumes coming up for auction, brokers said.

Auction offerings barely totalled 5.0 M/Kgs and the sentiment for production remaining low perhaps triggered a buoyant market,” Forbes and Walker brokers said.

“There was good general demand”.

Last year 4.9 million kilos were offered at the second auction in January.

All districts recorded a decline in crop intake except for Nuwara Eliya, Ceylon Tea Brokers said.

In 2022, Sri Lanka’s tea output fell to xxx million from xxx million in a lagged effect from a fertilizer ban imposed by President Gotabaya Rajapaksa.

Heavy showers are to be expected in the Ruhuna and Sabaragamuwa districts and Uva in the coming days, brokers said.

High Growns

High grown BP01 was up about 50 rupees, this week while BOP, BOPF and PF01 were steady, Ceylon Tea Brokers said.

Last week the High Grown sale average was 1438.04 rupees.

“Below Best and plainer types were lower by 50 rupees per kg. Nuwara Eliya’s were mostly unsold. Uda Pussellawa’s gained by 50 rupees per kg. Uva’s remained firm,” Ceylon tea brokers said.

Low Growns

Low Growns OP/OPA was up by 50 rupees and PEK was up by 80 rupees, this week while BOP 1 and OP1 remained steady.

Last week the Low Growns sale average was 1538.61 rupees.

The 2.3 million kilos offered met with good demand, brokers said.

In the Leafy & Semi Leafy catalogues, select Best OP1/BOP1’s together with a range of improved Below Best varieties gained, whilst the others and poorer sorts too were fully firm.” Forbes and Walker brokers said.

“Well-made OP/OPA’s in general were fully firm to selectively dearer, whilst the others and poorer sorts maintained. PEK/PEK1’s, in general, fully firm to dearer.”

BOP1 Select best gained, whilst best and below best were irregularly lower. Poorer types maintained.

OPA Select best maintained, whilst best and below best were firm to dearer. Teas at the lower end gained.

FBOP/FBOP1 Select best and best were dearer, whilst others too had an improved market.

BOP Few well-made invoices were firm, whilst others were slightly easier.

Medium Growns

Medium Grown FBOP and FBOPF1 was down by 100 and 150 rupees respectively this week, while PEK 1 was up about 100 rupees and OP1 was up by 50 rupees, Ceylon Tea Brokers said.

Last week the medium Growns sale average was 1256.26 rupees.

OP/OPA Select best and the poorer sorts were up by 100 rupees per kg whilst the Best and the Below best gained by 50 rupees per kg.

FBOP/FBOPF1 FBOP: Select best lower by 50 rupees per kg whilst the Best down by 100 rupees per kg.

Below best and the poorer sorts declined by 50 rupees per kg.

FBOPF1: Select best, best and the below best teas were down by 100 rupees per kg whilst the lower end teas dropped by 50 rupees per kg. (Colombo/Jan 15/2023)

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Sri Lanka shares fall at market close on profit taking

ECONOMYNEXT – Sri Lanka shares fell on Thursday as profit taking entered the market mainly on financial and diversified sectors, brokers said.

The main All Share Price Index (ASPI) fell 0.13 percent or 11.50 points to close at 8,926.56.

“The market was trading on dull trade mainly due to profit taking,” an analyst said.

“Also we saw investors taking a sideline as quarterly reports started to come”.

The earnings in the first quarter of 2023 are expected to be negative with revised up taxes and an imminent electricity tariff hike.

Earnings in the second quarter are expected to be more positive with the anticipation of IMF loan and possible reduction in the market interest rates as the tax revenue has started to generate funds.

The central bank’s policy decision was expected and investors have been eying on IMF deal with hopes of rapid economic recovery from the current unprecedented economic crisis, however since the market gained in the last sessions profit taking has come about, analysts said.

The market has been on a rising trend on the hopes of a faster IMF deal. However, the central bank government said the IMF deal is likely in the quarter or in the first month of the second quarter.

The most liquid index S&P SL20 fell  0.33 percent or 9.21 points to 2,798.

LOLC had seen some attention by investors as the firm disposed 90,256,750 shares held with Agstar PLC at 15-17.50 rupees a share.

The market witnessed a turnover of 1.2 billion rupees, lower than the month’s daily average of 1.9 billion rupees.

Expolanka dragging the market down closed 2.36 percent down at 186.7 rupees a share. Sampath bank fell 1.41 percent to close at 42 rupees a share while Royal Ceramic Lanka closed 2.59 percent dwn at 30.1 rupees a share.


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Sri Lanka bonds yields steady at close

ECONOMYNEXT – Sri Lanka bond yields were steady at close on Thursday, dealers said, while a guidance peg for interbank transactions by the Central Bank remained steady.

A bond maturing on 01.05.2024 closed at 31.00/20 percent unchanged from the last close.

A bond maturing on 15.05.2026 closed at 26.60/90 percent, up from 28.50/70 percent on Wednesday.

A bond maturing on 15.09.2027 closed at 28.60/85 percent, up from 28.50/60 percent at the last close.

The three months bill closed at 29.75/30.25 percent unchanged from the last close.

The Central Bank’s guidance peg for interbank US dollar transactions appreciated by another 2 cents to 362.14 rupees against the US dollar.

Commercial banks offered dollars for telegraphic transfers at 360.49 rupees on Thursday, data showed.  (Colombo/Jan 26/2022)

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Sri Lanka central bank workers protest tax hike as governor defends painful measures

ECONOMYNEXT – Employees of Sri Lanka’s Central Bank have joined a week-long “black protest” campaign organised by state sector unions against a sharp hike in personal income tax, even as Central Bank Governor Nandalal Weerasinghe said painful measures were needed for the country to recover from its worst currency crisis in decades.

President of the Central Bank Executive Association Jayadu Perera told EconomyNext on Friday January 26 that while the protesting CBSL staff were not opposed to paying taxes, they take issue with the unprecedented increase which came into effect in the new year.

Perera claimed that the tax he paid in December had increased six-seven fold.

“This is true for most public servants, and we cannot bear this burden,” he said.

“This is a very unfair tax since it is the professionals of this country that make all the sacrifices,” he added.

Perera complained that Sri Lanka’s ruling class maintain high living standards and enjoy all the luxuries while subjecting workers like him to an “extremely unfair and unjust” tax.

Opposition to Sri Lanka’s newly increased direct taxes has been rising, with a number of unions and professional associations taking to the streets demanding that the decision is reversed.

The government, however, defends the tax hike arguing that it is strapped for cash as Sri Lanka, still far from a complete recovery, is struggling to make even the most basic payments, to say nothing of the billions needed for public sector salaries.

Economists say Sri Lanka’s bloated public service is a burden for taxpayers in the best of times, and under the present circumstances, it is getting harder and harder to pay salaries and benefits.

Defenders of the tax hike say that the road to recovery is a painful one, and Central Bank chief Weerasinghe, meanwhile, told reporters at the monthly monetary policy review on Wednesday January 25 that the country would have to take certain painful measures to come out of the crisis.

Asked about the trade union action organised by his staff – with most employees dressed in black – Weerasinghe joked that he too was in black but said in a more serious vein that at CBSL, anyone was free to exercise their democratic right to protest.

He also stressed that taxation is not under the purview of the Central Bank whose primary obligation is monetary policy.

The CBSL staff, however, continues to protest.

“This tax increase was implemented without any discussion with workers who are the victims of this policy,” claimed Perera.

Acknowledging the country’s dire financial straits, he said: “But why must only the professionals make sacrifices? Why not the politicians?”

Another worker who did not wish to be named claimed that he was left with just 10,000 rupees after tax.

“This an intolerable burden laid upon our heads. We will continue this protest until they give us relief. Today we did it during the lunch break. In the future we will do more,” he said.

Other workers who shared these sentiments told EconomyNext that most of them have debt obligations of their own and once they have settled loans, interest and other bills, a large income tax is the last straw.

“We have our own personal commitments. All we say is that taxation should be fair, transparent and equitable. Show us the rulers that are being taxed the same way,” said one CBSL worker.

Sri Lanka’s new tax regime has both its defenders and detractors. Critics who are opposed to progressive taxation said it serves as a disincentive to industry and capital which can be invested in business. They argue that a flat rate of taxation is implemented where everyone is taxed at the same rate.

Others, however, contend that the new taxes only affect some 10-12 percent of the population and, given the country’s economic situation, is necessary, if not vital.

Critics of the protesting workers argue that most of the workers earn high salaries that most ordinary people can only dream of, and though there may be some cases where breadwinners could be taxed more equitably, overall, Sri Lanka’s tax rates remain low and are not unfair. (Colombo/Jan26/2023)

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