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Thursday February 22nd, 2024

Sri Lanka’s Harry Jayawardena calls for milk imports curbs

ECONOMYNEXT – Sri Lanka should restrict imports of milk powder and dairy products as the island was cable of meeting most of its needs domestically, Harry Jayawardena, chairman of Stassen group, who also heads several other firms, has said.

“We spent millions of dollars to import milk powder and dairy products,” he said.

“And ultimately we went to buy cows but all those cows were sick. We are wasting so much money on these things and we should stop this.

“We can produce these products in our country for consumption and also to export,” Jayawardena told a forum held by the National Chamber of Exporters of Sri Lanka.

“We have all the resources we need inside the country. We have everything we want to build our economy. The problem is why we haven’t done anything yet.”

In export markets however there are no governments to restrict freedoms of children and others to drink milk, and big dairy businesses have to compete with similar firms in other countries to win business.

Jayawardena gave the example of Ceylon cinnamon which he said was seen as the world’s best cinnamon.

“ . . . but what we do is we import them and resell. These things happen because decision makers do not take decisions correctly.”

Jayawardena said the main problem in the country is politics.

“It has corrupted everything including me.”

He also criticized lack of consistency in government policies, saying it was bad for business.

“There are no fixed policies, policies change every five years. There is no discipline.”

Jayawardena said the reason neighboring countries are ahead of Sri Lanka is that they have got their act together with their politicians have understood what their countries need.

“So the first thing we must have is proper policies and laws that don’t change from time to time.”

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  1. Lalith says:

    His business tactic is to monopolies. He failed in liquor, banking and the port. Now trying with milk. The ultimate sin stock proprietor.

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  1. Lalith says:

    His business tactic is to monopolies. He failed in liquor, banking and the port. Now trying with milk. The ultimate sin stock proprietor.

ADB country chief hopes Sri Lanka could sustain policy reforms despite elections

ECONOMYNEXT – The Asian Development Bank (ADB) expects Sri Lanka not to reverse its International Monetary Fund-led policy reforms despite elections soon, the ADB Country Director for Sri Lanka Takafumi Kadono said.

The island nation has witnessed repeated reversals of policy reforms in the past due to greedy politicians who misled  the people to vote for them by sowing the seeds of subsidy mentality with unsustainable debts at expensive borrowing costs, economists say.

That led the country into an unprecedented economic crisis in 2022 with a sovereign debt default. Sri Lanka is still struggling to come out of the crisis.

The IMF has strictly placed some reforms including in state sector enterprises, fiscal and monetary sectors.

Sri Lanka has implemented the painful IMF reforms so far including higher personal income taxes, but economists have raised concerns over the sustainability of the current reforms due to possible changes in the policies in the event of a new president or government comes to power after democratic elections.

“If that kind of reversal happens, we also cannot justify our support,” ADB Country Director for Sri Lanka Takafumi Kadono told EconomyNext on late on Wednesday.

“We do expect these policy reforms to be sustained. So that is our expectation. That is the premise which we are providing our budget support. If they reverse, the whole premise will be collapsed. That kind of policy reversal cannot happen.”

The island nation had sought IMF bailout package for 17 times including the ongoing support. However, the authorities have failed to complete most of the past IMF loan disbursements due to politically motivated contradiction with the global lender’s tight fiscal policies.

Sri Lanka has shown some signs of recovery in the third quarter of 2023 with the economic growth turned to positive from contraction for the first time in seven quarters.

However, opposition political parties have promised to revisit the IMF deal if they come to power.

Higher taxes, soaring cost of living, and lack of salary hike have made President Ranil Wickremesinghe’s government unpopulour among the public, analysts say.

Wickremesinghe has said the country will hold both presidential and parliamentary election by 2025.

Some government politicians have told EconomyNext that the higher taxes would be eased from April and the authorities will try their best to meet the IMF conditions for the third disbursement in June this year.

The presidential polls should be held by October this year, but opposition parties have said President Wickremesinghe is in the process to delay the poll.

However, Wickremesinghe’s office last week said Presidential Election will be held “within the mandated period”, without giving an exact time.

It also said the General Election will be held next year, “according to the current timeline”. (Colombo/Feb 22/2024)

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Sri Lanka rupee closes at 310.95/311.05 to the US dollar

ECONOMYNEXT – Sri Lanka’s rupee closed at 310.95/311.05 to the US dollar Thursday, from 311.30/50 on Wednesday, dealers said.

Bond yields were down.

A bond maturing on 01.02.2026 closed at 10.60/80 percent from 10.65/85 percent.

A bond maturing on 15.09.2027 closed at 11.90/12.05 percent from 12.05/15 percent.

A bond maturing on 15.03.2028 closed at 12.10/25 percent from 12.20/35 percent.

A bond maturing on 15.07.2029 closed at 12.20/95 percent from 12.45/95 percent.

A bond maturing on 15.05.2030 closed at 12.40/95 percent from 12.35/95 percent.

A bond maturing on 15.05.2031 closed stable at 12.45/13.00 percent.

A bond maturing on 01.07.2032 closed at 12.50/13.30 percent from 12.50/13.20 percent. (Colombo/Feb22/2024)

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Sri Lanka’s CEB to submit significant power tariff reduction proposal to regulator

ECONOMYNEXT — Sri Lanka’s state-run Ceylon Electricity Board (CEB) is expected to submit to the country’s public utilities regulator on Thursday February 22 a proposal to slash a power tariff hike made in October 2023.

Power & Energy Minister Kanchana Wijesekara said on Wednesday February 22 that the CEB expects to reduce rates by at least the same rates and percentages it was increased in October 2023: by 18 percent for the domestic and religious sectors, 12 percent for the industries and hotel sectors, and 24 percent for the general purpose and government buildings sectors.

CEB management and tariff department officials had briefed the ministry on the revised new tariff proposal, taking into account costs reduced from capital and operating expenses from the original proposal, cash flow requirements for 2024 and suggestions received from public consultation and stakeholder meetings, Wijesekara said.

CEB Senior Engineers’ Association Media Spokesman Nandika Pathirage said on Wednesday that this was the best decision that can be taken at the moment.

“There was no rain at all on Tuesday. We have to use more oil these days. If you take hydro, together with mini hydro it makes up 26 percent. Solar and wind make up about 6 percent. Solar alone is 4 percent. If we can increase solar by 10 percent, it will be like during the rainy season of November and December,” said Pathirage.

“Thermal is 68 percent. CEB needs cash to run. If we can reduce it further, we’re all ready to consider it in the next quarter. This is a good number we can arrive at now,” he said.

CEB Deputy General Manager Noel Priyantha, whose resignation was announced Thursday morning following a PR scandal, told reporters on Wednesday that, while it does carry some risk, maintenance and repairs deemed non-essential have been postponed to 2025 and 2026.

“We plan to greatly reduce our capital costs and maintenance costs, through which we expect to provide a considerable reduction in tariffs. What we did was push maintenance and repairs to 2025, 2026. There is a small risk there,” he said.

The official explained that a recent reduction in tariffs by a relatively low 3 to 3.4 percent was due in part to costs involved in activities including maintenance work at the CEB’s extensive network of power stations.

“Profits from the November, December rains were carried forward to 2024. We proposed this year’s tariff with that taken into account. We also planned to do several things that we had missed. CEB owns a large number of power stations. The pandemic came, and then the country went bankrupt. Because of the dollar crisis we couldn’t carry out essential maintenance work. This year we have assigned maximum maintenance,” said Priyantha.

The previous tariff proposal was thus sent to the regulator, the Public Utilities Commission of Sri Lanka (PUCSL), taking into account such tasks the CEB could not carry out due to various reasons, according to Priyantha.

“This was why we had to reduce the tariff by an amount as low as 3 to 3.4 percent. Then we held public consultations. Everyone said in one voice to reduce the tariff. The PUCSL as regulator gave us some criteria, to discuss with the government and move a few these things around and reduce loading a big cost for 2024 and defer it if possible,” he said.

“Which meant do the essential things in 2024, and whatever that can be postponed be moved around a bit,” he said. (Colombo/Feb22/2024)

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