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Thursday December 1st, 2022

Sri Lanka’s Rajapaksa, Indian PM Modi meet ahead of USD 1 bln credit line deal

ECONOMYNEXT – Indian Prime Minister Narendra Modi met Sri Lankan Finance Minister Basil Rajapaksa on Wednesday (16) as the island nation is in the process to finalise one billion credit line deal with India amid worsening economic crisis.

Sri Lanka is facing an increasing risk of sovereign debt default as it has to pay over 4 billion US dollars for foreign loans in 2022 where as it only had 2.31 billion US dollars in its reserves by end February.

India has agreed to provide 1.9 billion US dollars including 1 billion for imports of essential commodities, 500 million US dollars for fuel import and another 400 million US dollars as a swap.

Sources close to the government said Finance Minister Basil Rajapaksa briefed the current economic challenges faced by Sri Lanka and steps it has taken.

The one billion US dollar credit line is expected to be signed during Rajapaksa’s visit, which was postponed twice.

Before meeting Modi, Rajapaksa also met Indian Minister of Foreign Affairs, Shri Harsh V. Shringla. 

Before India granted its financial aids, Sri Lanka had to finalise long dragged deals including oil tanks and power projects in Sri Lanka’s eastern district of Trinc0malee where the one of the World’s best natural harbour is located.

India has strategic interests in the Sri Lanka’s eastern Trincomalee since later 1970s.

Diplomats say Sri Lanka is seen getting close to India and the West because it is facing a financial and debt crisis.

The island nation has been an strong ally of China, its largest lender after the end of a 26-year war in 2009.

Government sources have said Indian has asked Sri Lanka to look into longer term solutions for its debt and economic crisis. This includes seeking the International Monetary Fund assistance for debt restructuring. (Colombo/March 16/2022)

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  1. Marty says:

    Basil is the guy who has absolutely no idea of economics! just make SL more dependent of foreign powers like India, or China or the IWF or IMF….
    to deal with the people’s money is always easy, just promote more unnecessary projects for no ones good, as long the rajapaksas are profiting of it and get more rich!

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  1. Marty says:

    Basil is the guy who has absolutely no idea of economics! just make SL more dependent of foreign powers like India, or China or the IWF or IMF….
    to deal with the people’s money is always easy, just promote more unnecessary projects for no ones good, as long the rajapaksas are profiting of it and get more rich!

Sri Lanka China-backed port to welcome second cruise ship

ECONOMYNEXT – Sri Lanka’s China-backed Hambantota Port said it was getting ready to welcome MV Azamara Quest, a cruise ship, as another passenger vessel departed.

Mein Schiff 5, operated by TUI had departed Hambantota International Port for Pulau Penang Island, Malaysia on November.

“As well as being her maiden call at the port, Mein Schiff 5 is the first passenger cruise ship to call at the port since the pandemic began,” said Johnson Liu, CEO of Hambantota International Port Group (HIPG) said in a statement.

“It was undoubtedly a great boost for the tourist economy in the south when the vessel called at the Hambantota International Port.”

Mein Schiff 5’s passengers had also visited the Bundala National Park, Hambantota Botanical Gardens, Galle and Kataragama.

Passengers had explored Hambantota by tuk-tuk, while others had enjoyed the beaches in the Shangri La Hotel, the port said.

MV Azamara Quest will arrive in Hambanota on on December 05. (Colombo/Dec01/2022)

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Sri Lanka’s shares gain in mid market trade

EXONOMYNEXT- Sri Lanka’s shares gained in mid market trade on Thursday (1), pushed up by strong positive sentiments on interest rates easing in line with inflation and speculation on government to hold talks with multilateral creditors ADB and World Bank for a possible loan facility.

Market has continued to gain for the past four sessions.

“Shares were moving on positive strong sentiments flowing in from yesterday (30), we are seeing a rally in the hotels, while the retail favorites such as LIOC and Expolanka,” analysts said.

Positive investor sentiments have been established, from positive comments from the Governor of the Central Bank over market rates eventually seeing an ease despite the fears of a domestic debt restructuring as inflation falls, increased liquidity in dollar markets, and the inter-bank liquidity improves.

Analysts further stated that, Treasury related stocks are also activated due to downward movements in yield.

All Share Price Index (ASPI) gained by 1.4 percent or 123.41 points to 8,774.64, while the most liquid share gained by 1.31% or 35.68 points to 2,765.

The market generated a turnover of 1.6 billion rupees at 1130 hours. (Colombo/Dec1/2022)

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Sri Lanka electricity losses from overpriced fuel, no tariff hike considered: regulator

ECONOMYNEXT – Sri Lanka’s state-run Ceylon Electricity Board’s high operating costs are partly due to excessive prices paid for fuel and no tariff hike is being considered, Chairman of the Public Utilities Commission of Sri Lanka, Janaka Ratnayake said.

The CEB itself does not buy fuel but depends on state-run Ceylon Petroleum Corporation and Lanka Coal, another state firm to buy fuel. Both firms are periodically caught in procurement scandals.

“They are paying about 385 plus rupees per litre for furnace oil,” Ratnayaka told EconomyNext.

“That is too much. From the global market we can buy it to much lower price. It can be imported below 200 rupees,”

“I ask the government to take the necessary steps to create a system to import furnace oil, like they did for fuel, to be imported at the lower price levels. If that happens, we can go without going for a price hike.”

Sri Lanka’s CEB generally gets furnace oil and residual oil from the domestic refinery and usually do not import furnace oil.

The refinery however is not regularly operating due to inability to get crude amidst the worst currency crisis in the history of the island’s intermediate regime central bank.

Ratnayake had earlier brought to light import costs of the CPC.

Pushing for operations efficiency of the CEB is a role of the regulator. Regulating costs based on global benchmark prices to push for procurement efficiencies is a standard practice. However the PUCSL is not the official regulator of the petroleum sector.

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Sri Lanka power tariff revisions sought in Jan and July: Minister

Power and Energy Minister Kanchana Wijesekera told parliament that cabinet approval was sought to twice yearly tariff hikes in January and July of each year.

No Electricity tariff hikes are being considered yet, Ratnayake said.

Wijesekera blamed the regulator as well as successive administrations for not regularly revising power prices and pushing the sector into crisis.

In Sri Lanka activists had also blocked cheap coal power. (Colombo/Dec01/2022)

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