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Tuesday May 30th, 2023

UK ready to consider financing assurances for Sri Lanka to secure IMF deal

15/09/2021. London, United Kingdom. Secretary of State for International Trade, and President of the Board of Trade, Anne-Marie Trevelyan. 10 Downing Street. Picture by Simon Dawson / No 10 Downing Street

ECONOMYNEXT – The United Kingdom is “ready to consider” financing assurances to Sri Lanka to secure a 2.9 billion US dollar extended fund facility (EFF) with the International Monetary Fund (IMF), a UK official said.

Minister of State (Foreign, Commonwealth and Development Office) Anne-Marie Trevelyan told the British parliament on Tuesday January 24 that the UK is fully supportive of the proposed Coordination Platform between Sri Lanka’s Paris Club and non-Paris Club creditors, which the British government believes represents the most efficient way to restore debt sustainability in Sri Lanka.

“Constructive engagement across creditors is vital to secure a prompt and comprehensive International Monetary Fund programme for Sri Lanka and ensure a sustainable economic recovery. As a member of the Paris Club, the UK stands ready to consider the necessary Financing Assurances to secure an Extended Financing Facility with the IMF in a timely manner,” she said.

Trevelyan was responding to a question posed by Conservative MP Bob Blackman to Secretary of State for Foreign, Commonwealth and Development Affairs James Cleverly on what assessment he has made of the implications for his policies of a statement a previous statement from economists and academics calling on creditors to share the burden of debt restructuring for Sri Lanka.

Sri Lanka is cautiously optimistic that the IMF bailout package will come through in the first quarter, with IMF board approval anticipated some time in March. India has already assured the IMF of its assistance to Sri Lanka’s debt restructuring plans, with a confirmation from China also expected in the coming weeks.

The island nation is going through its worst currency crisis in decades and the IMF loan would help unlock other avenues of financing that’s desperately needed. (Colombo/Jan26/2023)

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Sri Lanka’s stocks end near one-month low on weak macroeconomic sentiments

ECONOMYNEXT – Sri Lanka’s shares lowered on a one month low on Tuesday on selling pressures and a wait and see approach on delays in confirmations of debt restructuring and debt optimization, an analyst said.

The main All Share Price Index (ASPI) was down 0.50 percent or 42.52 points to 8,532.60, this is the lowest the index has been since April 27, while the most liquid index was up 0.14 percent or 3.42 points to 2,418.90.

“Investors are adopting a wait and see approach on the need for more clarity on debt restructuring and debt optimization and decisions taken at the Policy Review Meeting,” an analyst said.

Sri Lanka’s government was to disclose the stance on domestic debt restructuring towards the end of May, which is why investors have adopted a wait and see approach, however officials have stated there will be a delay in the process of revelation. 

A news article circulating says, non-agreement on the percentage of haircut that the external creditors would take in Sri Lanka’s debt restructuring has taken the Central Bank to the drawing board which has led to the delay in announcing the debt restructuring strategy. 

Sri Lanka’s Monetary Policy Review is scheduled for 01 June 2023, investors are quite optimistic that inflation is to lower and interest rates will decrease, an analyst said.

Analysts said the low volumes seen in the market are due to the debt restructuring concerns, and investors are waiting for the monetary policy review for the next month.

“Stocks went down due to selling pressures resulting from relaxed import restrictions, which are expected to reduce the monopolistic powers held by domestic retailers,” an analyst said.

The main reason for the market’s negative sentiment is the loss of monopoly as import restrictions ease, an analyst said.

The market generated revenue of 575 million rupees, while the daily average turnover was 1.2 billion rupees.

Top losers during trade were Vallibel One, Ceylon Tobacco Corporation and Elipitiya Plantations.

The market generated a foreign inflow of 33 million rupee and the net foreign inflow was 112 million rupees. (Colombo/May 29, 2023)

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Sri Lanka rupee closes at 293.50/294.50 to dollar , bond yields steady

ECONOMYNEXT – Sri Lanka’s rupee closed at stronger at 293.50 /294.50 against the US dollar in the spot market on Tuesday, while bond yields were unchanged, dealers said.

The rupee closed at 296.75 /297.25 to the US dollar on Monday after opening around 296.50 /297.50 rupees.

A bond maturing on 01.09.2027 closed at 26.50/65 percent unchanged from Monday’s close.

Sri Lanka’s rupee is appreciating amid negative private credit which has reduced outflows after the central bank hiked rates and stopped printing money. (Colombo/ May 30/2023)

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Sri Lanka food producers on countdown; 6-months to reduce trans fat content

ECONOMYNEXT – Sri Lankan food manufacturers only have another six months to reduce the amount of trans fat in food items as the government plans to ban high trans-fat food from January 2024 onwards, an official said.

“A six-month grace period has been given to existing manufacturers, sellers and distributors whose products contain trans-fat,” an official of the Ministry of Health told EconomyNext requesting anonymity.

According to a Ministry of Health gazette issued on… a person shall not sell, offer for sale, expose or keep for sale or advertise for sale, any packaged food product containing trans-fat unless the total amount of trans-fat of such food product per 100 grams or 100 milliliters of the food product is declared on the label of such packaged food product.

However, these regulations will not be applicable for export oriented food products.

Trans-fat is a type of fat that has certain chemical properties and is usually found in processed foods such as baked goods, snack foods, fried foods, shortening, margarine, and certain vegetable oils.

Eating trans-fat increases blood cholesterol levels and the risk of heart disease.

Meanwhile, the World Health Organization (WHO) has praised Sri Lanka for enacting a legislation on trans-fat to protect health and prevent premature deaths from coronary heart disease, a statement from the WHO said.

“Eliminating trans-fats from food supplies is a cost-effective measure with enormous health benefits,” the statement quoting Poonam Khetrapal Singh, Regional Director, WHO South-East Asia said.

“By enacting legislation on trans-fat, Sri Lanka has once again demonstrated its resolve to protect and promote the health of its people”.

The regulations are coming into effect as Sri Lanka is struggling with food insecurity as the country recovers from its worst economic crisis.

However, an improvement in food security across all provinces has been recorded, according to an assessment by a Crop and Food Security Assessment Mission (CFSAM) of two UN agencies. (Colombo/ May 30/2023)

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