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Saturday April 20th, 2024

Sri Lanka’s emergency regulations are to control food mafia: agriculture minister

ECONOMYNEXT – Sri Lanka’s decision to invoke emergency regulations to control essential food prices were not due to a food shortage but to control a “food mafia”, Agriculture Minister Mahindananda Aluthgamage told parliament on Monday (06).

President Gotabaya Rajapaksa promulgated emergency laws last week and seized sugar stocks of key importers saying they were ‘hoarding’ goods they themselves had imported.

The move came after sugar price jumped to 225 rupees a kilogram from an earlier market price of around 130 rupees, while the price of Sri Lanka’s staple food rice rose between 125 to 225 rupees though the government had announced a control price of below 100 rupees.

“There isn’t any food shortage in the country,” Aluthgamage told parliament starting the debate of emergency regulations on essential foods.

“It is not a food shortage but a food mafia. The new emergency regulations are to control this mafia.”

Though the government has declared a controlled price, consumers say they cannot buy rice or any other essential commodity at the fixed prices.

The government has made many commodities available at state-run Sathosa retail outlets at controlled prices, but consumers have to queue up for hours to buy only a limited quanity of essential commodities.

The minister said 800,000 hectares of land have been under paddy cultivation in the last ‘Maha’ and ‘Yala’ cultivation seasons and the country will have around 3.2 metric tons of rice once all paddy is converted.

“There is no shortage of rice. We have no problem of feeding the people of this country. We also get 2.5 to 3 million metric tons of vegetables to economic centers every day. So I can say there is no rice or vegetable shortage.”

Price-takers, CAA-led shortage

However, prices have been high and consumers have no option but to become price-takers and buy at higher prices even from small vendors especially during the lingering lockdown.

Sri Lanka is now undergoing a shortage of milk powder after the Consumer Affairs Authority (CAA), which had previously created shortages in lentils, tinned fish as well as cooking gas, refused to allow a price hike.

Market players have said the government’s price control mechanism will only worsen the supply and will increase prices when people are struggling to make ends meet in the pandemic.

Money printing to artificially keep interest rates at a record low have driven dollar yields above that of rupees and importers have also been denied forward foreign exchange cover, leaving traders who bring down food commodities like sugar on 90 or 180 day bills without a reliable hedge or guide to price their goods.

Minister Aluthgamage said though the government has declared controlled prices for rice varieties Nadu (96 rupees per kg), Samba (96 rupees per kg), and Keeri (99 rupees per kg), and it has also declared a fixed price for paddy to be bought from farmers between 50 and 55 rupees.

Rice prices have also gone up with domestic collectors given oligopoly powers by the government with an import ban on rice.

“We will be happy if farmers get 70 rupees per kilogram. But they don’t. Remember each of these mafia traders earns 50 billion rupees per cultivation period,” Aluthgamage said.

“If they are not selling Nadu at 96 rupees per kilogram and only selling at 125 rupees, then we have to activate the CAA Act. But this act was not effective because it only allows a 2,500 rupees of penalty.”

And now the government has planned to increase the penalty from between 100,000 rupees and two million rupees along with a six-month imprisonment, the minister said.

“We can’t do anything without legislation. We tried our best to bring it without any emergency law, but all the process takes three months. By that time the cultivation season would be over,” Aluthgamage told parliament, justifying the emergency law.

Meanwhile, the opposition National People’s Power (NPP) said it is clear that President Rajapaksa did not invoked emergency regulations through the Public Security Ordinance with the welfare of the country in mind.

“Rather, it is yet another step forward in a relentless desire to amass power.  These new powers place the democratic rights of the people and the rule of law in this country already under assault, at further risk,” the Janatha Vimunthi Peramuna (JVP)-led alliance said in a statement issued on Monday.

The NPP said it is the regime’s “incompetence and disconnect with the needs of people that has led to an alarmingly chaotic situation in” and not any lack of presidential powers.

“In our view, invoking the Public Security Ordinance at this point to unleash emergency powers, is a sign of a failing regime desperately trying to cling to power at all costs.  The chaos that has been created by the mismanagement of the COVID epidemic is being used by this government to weaken democracy in our country.   Therefore, we will do our utmost to force the government to reverse its decision and we call upon the public to join us to protect our democratic rights and the future of our country,” the NPP said. (Colombo/Sep06/2021)

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Sri Lanka discussing giving extra land, water for Chinese oil refinery

ECONOMYNEXT – Sri Lanka is in discussions with China’s Sinopec to give extra land and assure water supplies after the company decided to expand the capacity of a planned oil refinery in Hambantota, Energy Minister Kanchana Wijesekera said.

“There are concerns on how the water supply is going to be provided for the refinery,” Minister Wijesekera told reporters Friday.

The refinery will need more land and also revise conditions in a Board of Investment agreement, he said.

Read more
Sinopec to double capacity of new refinery in Sri Lanka’s Hambantota

Recommendations and decisions from Sri Lanka’s side had already been sent and Sinopec is expected to revert back in May.

“We are hoping to sign the agreement once everyone has agreed,” Wijesekara said.

The principle agreements are expected to be signed by June, he said.

The refinery could sell up to 10 percent of its output in the domestic market.

“There is no commitment by the government to purchase anything,” Minister Wijesekera said. (Colombo/Apr19/2024)

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Sri Lanka rupee closes weaker at 302.00/50 to the US dollar

ECONOMYNEXT – Sri Lanka’s rupee closed at 302.00/50 to the US dollar in the spot forex market on Friday, down from 301.50/302.00 a day earlier, dealers said.

There was increased demand for dollars after the central bank bought 715 million dollars from forex markets. In the previous two months it was buying on average about 200 million US dollars, leaving market participants and bank in a ‘oversold’ position.

There were some official dollars sales Friday dealers said.

READ Sri Lanka rupee quoted wide to US dollar as peg inconsistencies flare up

Bond yields were broadly steady.

A bond maturing on 15.12.2026 closed at 11.30/40 percent down from 11.35/40 percent.

A bond maturing on 15.09.2027 closed at 11.95/12.05 percent up from 11.90/12.05 percent.

A bond maturing on 15.12.2028 closed stable at 12.15/25 percent.

A bond maturing on 15.09.2029 closed stable at 12.30/40 percent.

A bond maturing on 01.10.2032 closed stable at 12.40/50 percent. (Colombo/Apr19/2024)

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Sri Lanka stocks close down, banks trade down

ECONOMYNEXT – The Colombo Stock Exchange closed down on Friday, data on its site showed.

The broader All Share Index closed down 0.38 percent, or 44.80 points, at 11,753; while the S&P SL20 Index closed down 0.53 percent, or 18.46 points, at 3,456.

Turnover was at 1.4 billion. The diversified financials (Rs366mn) and banks (Rs266mn) sectors continued to see selling pressure.

“This was possibly due to uncertainty around the bond discussions,” market participants said.

With the exception of Sampath Bank Plc (up at 77.50) all other banks traded down in the day. Commercial Bank of Ceylon Plc was down at 104.50, Hatton National Bank Plc was down at 188.50, and DFCC Bank Plc was down at 77.00.

LOLC Finance Plc saw the most trades and closed up at 6.40. Another LOLC company, Browns Investments Plc, also saw high traded volumes and closed up at 5.60.

Softlogic Capital Plc was up at 7.00, and Softlogic Holdings Plc was up at 11.20. A trading suspension imposed on SHL.N0000 was lifted effective today as the company submitted the annual report for the year ended 31st March 2023.

However, shares of the Company will remain in the Watch List “due to Qualified Audit Opinion and Emphasis of matter on going concern in the Independent Auditor’s Report in the Audited Financial Statements for the year ended 31st March 2022.”

Dialog Axiata Plc, which announced its merger with Bharti Airtel Thursday, saw its share price close up at 11.90.

“There was some traction on index heavyweights,” market participants pointed out.

Top contributors to the APSI included Aitken Spence Plc (up at 134.50), Ceylon Tobacco Company Plc (up at 1,245.25, and Lion Brewery (Ceylon) Plc (up at 1,048.50).

There was a net foreign inflow of 5 million. (Colombo/Apr19/2024)

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