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Tuesday May 21st, 2024

SriLankan Airlines lose Rs163bn in 2022, mostly on currency collapse

ECONOMYNEXT – Sri Lanka’s state-run SriLankan Airlines has lost 163.5 billion rupees in 2022, mostly on foreign exchange losses, its accounts shows, as the rupee ‘flexible exchange rate’ collapsed.

SriLankan revenues went up to 134 billion rupees in the year to March 2022, from 50.9 billion a year earlier as passenger traffic revived and the airline also boosted its cargo operations and the rupee also fell from 200 to 360 to the US dollar.

Passenger revenues increased to 77.9 billion rupees from 16.3 billion and cargo revenues went up to 43.9 billion rupees from 27.3 billion rupees.

Air terminal operations in Colombo brought the airline 9.038 billion rupees, up from 4.7 billion rupees a year earlier.

SriLankan posted an operating profit of 1.69 billion rupees before finances costs and exchange losses.

Finance costs including on legacy loans taken to cover past losses were 22.9 billion rupees.

Forex losses of 34.7 billion rupees and 107.8 billion was reported on multiple liabilities, taking the net group loss to 163.5 billion rupees.

Sri Lanka’s central bank operates an ad hoc peg arrangement called a ‘flexible exchange rate’ which is neither a clean float nor a hard peg.

The arrangement leads to forex shortages currency collapses as aggressive open market operations, through various tools, are deployed to suppress market interest rates as domestic credit recovers.

From March the rupee as appreciated following a contraction in domestic credit and deflationary open market operations, which should led to forex profits, if the liabilities are still in the books of SriLankan.

Several state agencies that had dollar liabilities, private companies as well as the central bank itself had lost money due to ‘data driven’ flexible exchange rate/flexible inflation targeting regime.

Related SriLankan Airlines lose Rs163bn in 2022, mostly on currency collapse

Similar regimes are followed in other countries monetary instability, some of which end in default.

SriLankan said costs were contained with leases and other contracts being re-negotiated and yield were boosted and business won especially in cargo.

SriLankan is one of several state agencies listed to be privatized int the next 12 months. (Colombo/May14/2023)

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Sri Lanka declares May 21 as National Mourning day over Iranian President’s death

ECONOMYNEXT – Sri Lanka declared a national mourning day on Tuesday, May 21 in view of expressing its solidarity with Iran after sudden death of Iran President Ebrahim Raisi following a helicopter crash.

President Raisi and eight others including Iranian Foreign Minister Hossein Amir Abdollahian were killed in the crash when the helicopter had a “hard landing” reportedly due to adverse weather conditions with heavy fog. However, President’s two convoy helicopters reached the destination safely.

“The Sri Lankan government has declared a national mourning day on tomorrow (May 21) on behalf of the sudden death of Iranian president Mr. Ebrahim Raisi,” the Department of Government Information said in a statement.

It also urged all the state institutions have to hoist the national flag half mast.

Raisi was in Sri Lanka on April 24 to launch the Uma Oya dam on a one-day official visit amid tight security. His helicopter crashed when he was returning to Iran after launching a dam in the Azerbaijan border.

President Raisi is seen as a hardliner and a potential successor to Supreme Leader Ayatollah Ali Khamenei.

Earlier this month, Sri Lanka’s Foreign Minister Ali Sabry said the island nation will deal with Iran for investments and trade without being caught into the United States-led sanctions.

Sri Lanka was unable to receive $450 million from Iran for a recently opened Uma Oya multipurpose project started before the sanctions.

Sri Lanka now exports tea to Iran for no dollar payment. Instead, Sri Lanka tea producers are paid by the state-owned Ceylon Petroleum Corporation (CPC) in rupees for the pending crude oil import payments for Iran.

President Ranil Wickremesinghe expressed his condolences on the tragic incident.

“Sri Lanka is deeply shocked and saddened by the tragic death of President Ebrahim Raisi, Foreign Minister Amir Abdollahian and other senior Irani official,” he said in his official X-platform.

“I express my deepest sympathies and sincere condolences to the bereaved families, the government and the people of Iran.”

Raisi, a Muslim jurist, served as the eighth president of Iran from 2021 until his death. (Colombo/May 20/2024)

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Sri Lanka helps launch Global Blended Finance Alliance

ECONOMYNEXT – Sri Lanka has joined a group of nations led by Indonesia which aims to mobilise capital to achieve carbon neutrality, Minister of Water Supply and Estate Infrastructure Jeevan Thondaman said.

The Global Blended Finance Alliance mooted by Indonesia in 2018, was formally launched at the World Water Forum in Bali today.

Among the other founding members are Fiji, France, UAE, Kenya, Luxembourg and Canada.

“Through our collective efforts, the Global Blended Finance Alliance aims to mobilise both public and private capital to help nations achieve carbon neutrality and the SDGs,” Thondaman said on social media platform X (twitter).

“The world has a USD 2.5 trillion funding gap to achieve the Sustainable Development Goals (SDGs) by 2030,” he said.

Blended finance is the strategic use of development finance, such as public and/or philanthropic funds, for the mobilisation of additional commercial finance towards sustainable development in developing countries. (Colombo/May20/2024)

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Sri Lanka rupee closes slightly stronger at 299.60/75 to US dollar

ECONOMYNEXT – Sri Lanka’s rupee appreciated slightly to close at 299.60/75 to the US dollar on Friday, from 299.70/80 the previous week, dealers said. Bond yields were up.

A bond maturing on 15.12.2026 closed up at 10.15/35 percent from 10.05/15 percent.

A bond maturing on 15.09.2027 closed up at 10.45/55 percent from 10.25/40 percent.

A bond maturing on 01.07.2028 closed at 10.80/90 percent.

A bond maturing on 15.01.2030 closed at 11.70/80 percent.

A bond maturing on 01.10.2032 closed up at 11.90/12.05 percent from 11.85/12.00 percent. (Colombo/May20/2024)

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