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Monday September 25th, 2023

UN wants Sri Lanka banks to contribute to agriculture credit line

ECONOMYNEXT – The International Fund for Agricultural Development (IFAD) of the United Nations is looking for further funding from banks and cooperative societies to expand credit lines to poor Sri Lankan farmers.

"We are asking banks to contribute 30 percent of the funds in a line of credit," IFAD project consultant Rauno Zander, a rural finance expert, told a business forum in Colombo on January 10.

He said currently the project fund covers the entire credit line, which provides loans to farmers at a concessional 6.5 percent.

Under the Smallholder Agribusiness Partnership Programme (SAPP), IFAD has provided 11.5 million dollars as a direct line of credit, while a further 18.5 million dollars has been provided by the Sri Lankan government, loaned through a revolving fund at the central bank.

A central bank official said the interest rate would have to be higher if banks are to contribute 30 percent of funds to each loan, since they borrow from money markets at rates much higher than 6.5 percent, to which Zander agreed.

IFAD is also expecting banks to fully finance short-term working capital loans of farmers in the programme, leaving credit lines for other loans.

The programme, which is running from July 2017 until June 2023, provides long-term capital loans, short-term working capital loans, and youth loans.

"These working capital loans are safer, and these are the type of loans banks do anyway," Zander said.

"The repayment period is short, around 6 to 12 months, and so the risk profile is low," he said.

Zander also wants more flexibility in loan repayments for farmers, which the central bank said it would consider after talks with the nine banks in the programme.

Zander said cooperative societies such as Sanasa are more active in agricultural areas compared to banks, and they should be brought into the programme as lenders.

However, the central bank representative said such an option is not possible under the Monetary Law Act, since the central bank cannot deal with such societies.

Currently, only around 10 percent of the funds available under the fund have been loaned to farmers.

Zander said the need to follow regulations had slowed down the process at the start, but it is working smoothly now. (Colombo/Jan10/2019)

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Sri Lanka sells 2028 bonds at 14.52-pct

ECONOMYNEXT – Sri Lanka sold all offered bonds in 2026 and 2028 maturities raising 220 billion rupees from an auction Monday, data from the state debt office showed.

The debt office sold 135 billion rupees of 1 June 2026 bonds to yield 15.64 percent.

Another 85 billion rupees in 01 July 2028 bonds were sold to yield 14.52 percent.

The 2028 bond is offered on tap at the weighted average yield. (Colombo/Sept25/2023)

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Sri Lanka’s stocks end down on Monday after slow day of trading

ECONOMYNEXT – Sri Lanka shares were down at close of trading on Monday.

Turnover was 550 million rupees.

The main All Share Price Index was down 0.36 percent or 40.02 points to 11,216.50, while the S&P SL20 was down 0.44 percent or 14.07 points to 3,164.52.

Trading in the Capital Goods Industry (174,037,134) drove turnover.

Commercial Bank, Expolanka Holdings, and Aitken Spence plc saw losses, while National Development Bank, John Keells Holdings and Melstacorp saw gains in the day’s trading.

The market saw a net foreign inflow of 13 million rupees, while the yearly net foreign inflow was 429 million rupees. (Colombo/Sep25/2023)

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Sri Lanka rupee closes at 324.75/324.90 to the US dollar

ECONOMYNEXT – Sri Lanka’s rupee closed at 324.75/90 to the US dollar on Monday, from Friday’s close at 324.70/325.00 dealers said.

Bond yields were up.

A bond maturing on 01.07.2025 closed up at 15.55/15.70 percent on Monday, after closing at 14.95/15.30 percent on Friday.

A bond maturing on 01.08.2026 closed up at 15.50/15.65 percent up from 14.95/15.10 percent.

A bond maturing on 15.09.2027 closed up at 14.75/15.50 percent from 14.55/15.00 percent.

A bond maturing on 01.05.2028 closed up at 14.25/14.60 from 14.00/14.30 percent.

A bond maturing on 15.05.2030 closed stable at 13.00/13.50.

A bond maturing on 01.07.2032 closed at 12.95/13.45 percent from 13.00/13.45 percent. (Colombo/Sept25/2023)

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