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Tuesday June 18th, 2024

Sri Lanka’s shares edge up at close

ECONOMYNEXT – Sri Lanka’s shares edged up at close on renewed buying interest, an analyst said.

The main All Share Price Index was up 1.96 percent or 218.22 points to 11,374.64, while S&P SL20 was up 2.56 percent or 80.62 points to 3,234.27.

Over the past sessions, favorable performance indications combined with anticipations on lowered rates and better economic outlooks on investment was moving the market towards profit taking and selling interest, an analyst said. 

Gainers during trade were Commercial Bank, John Keells Holdings and Sampath Bank.

Sri Lanka’s central bank said it was holding policy rates, but will direct banks to cut lending rates, as they were too far above the policy rate.

A team from the International Monetary Fund will be in Sri Lanka from September 14 to 27 to conduct the first review of an Extended Fund Facility arrangement, a spokesperson said.

The review will be conducted on June data.

Officials have said Sri Lanka has over-achieved key IMF quantitative performance criteria though tax revenues, which is an indicative target has fallen short.

Sri Lanka will negotiate in parallel with the International Monetary Fund and external creditors with the expectation of completing debt restructuring in the October to November 2023 period, Central Bank Governor Nandalal Weerasinghe said.

An IMF team is due to come to Sri Lanka in September. Review and communications make take place up to October to November.

“First we have to come to an agreement with official creditors on the terms. That will have to happen before the next review,” Governor Weerasinghe said.

Sri Lanka has to complete domestic debt restructuring, which is currently held up over enacting a tax law.

“My understanding is that they have to have an assurance that creditors would have an understanding with the authorities – agreeing to the terms and conditions of the debt restructuring what is expected now.

“Like the DDO implementation that we are doing now. The implementation can even happen next year.”

Sri Lanka also has met several structural benchmarks, some of which are under World Bank and Asian Development Bank prior actions.

Analysts say that, investors are adopting wait and see approaches before investing to see the outlook of the review which indicates economic stability and appearance.

Central bank governor Nandalal Weerasinghe dismissed concerns over Sri Lanka purportedly failing to meet a number of commitments made to the International Monetary Fund (IMF) ahead of a September review, arguing that the authorities have made “good progress” in meeting quantitative targets.

The market generated a turnover of 3.3 billion rupees above the yearly average at 2 billion rupees. Majority of the revenue came from the 1.3 billion rupees from the capital goods sector.

The market generated a net foreign outflow of 1 billion rupees while the yearly average stands at 1.4 billion rupees. (Colombo/Sept04/2023)


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Sri Lanka’s Ceylon Chamber links up with Gujarat Chamber

ECONOMYNEXT – The Ceylon Chamber of Commerce has signed an agreement with the Southern Gujarat Chamber of Commerce and Industry (SGCCI) to increase trade cooperation between India and Sri Lanka.

The MOU was signed by CCC CEO Buwanekabahu Perera, SGCCI President Ramesh Vaghasia, in the presence of Dr Valsan Vethody, Consul General for Sri Lanka in Mumbai, India.

“With the signing of the MoU, … the Ceylon Chamber of Commerce and SGCCI aim to facilitate trade between the two countries via initiatives such as trade fairs and delegations, business networking events, training programmes,” the Ceylon Chamber said in a statement.

“This partnership will open doors for Sri Lankan businesses to explore opportunities in Surat’s dynamic market and enable the sharing of expertise and resources between the two regions.”

Established in 1940, SGCCI engages with over 12,000 members and indirect ties with more than 2,00,000 members via 150 associations. It promotes trade, commerce, and industry in South Gujarat.

The region’s commercial and economic centre Surat has risen to prominence as the global epicenter for diamond cutting and as India’s textile hub, and is ranked the world’s 4th fastest growing city with a GDP growth rate of 11.5%

Surat’s economic landscape is vibrant and diverse. As India’s 8th largest and Gujarat’s 2nd largest city, it boasts the highest average annual household income in the country.

The nearby Hazira Industrial Area hosts major corporations like Reliance, ESSAR, SHELL, and L&T. (Colombo/Jun18/2024)

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Sri Lanka telecommunications bill some clauses ruled unconstitutional by SC: Speaker

ECONOMYNEXT – Sri Lanka’s Supreme Court has found a number of clauses in a proposed amendment to the Telecom Telecommunications Amendment bill unconstitutional, speaker Mahinda Yapa Abeywardana said.

“Clause No 8, proposed section 9A 2 of the bill is inconsistent with Article 12 1 of the constitution, however this inconsistency shall cease if word ‘may’ will be replaced with word ‘shall’ as set out in the determination of the supreme court.”

“Clause No 9 is inconsistent with Article 12 1 of the constitution and only can be passed with special majority required under paragraph 2 of the Article 84. However, the inconsistency shall cease if clause is amended as set out in the determination of the supreme court.

Clause No 12, proposed section 17 10 of the bill is inconsistent with Article 12 1 of the constitution and can only be passed with special parliament majority required under Article 84 paragraph 2. However, the inconsistency shall cease if clause is amended as set out in the determination of the supreme court.”

Sections of clauses 13, 18, 20, 33 and 35 were also in violation of the constitution, and could only be passed by a special majority of parliament. (Colombo/Jun18/2024)

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Sri Lanka to exempt one house from imputed rent wealth tax: President

ECONOMYNEXT – Sri Lanka will exempt one house from a proposed wealth tax outlined in an International Monetary Fund program, President Ranil Wickremesinghe said.

About 90 percent of the people’s houses are likely to be exempt from the proposed tax, he said.

“[O]ne house will be exempt from this,” President Wickremesinghe told parliament Monday.

“It is going to have a very high threshold and I do not think the vast majority of the people in this country should even be worried about their house

“Don’t worry your house will be safe.”

The IMF program document however did not mention an exempt on one house, but did mention a threshold.

Taxing houses and thrift in general could have detrimental effects on people’s well-being housing stock and their willingness to remain in the country without migrating, critics say.

Related Sri Lanka to tax imaginary rents on houses under IMF deal

The mechanism of imputed rents was used because rates on houses was assigned to provincial councils and courts could strike it down.

Opposition legislator Harsha de Silva said the Samagi Jana Balwegaya welcomed President Wickremesinghe’s statement. (Colombo/June18/2024)

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