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After fuel price hike, LPG and milk food price increase now in the pipeline

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by Suresh Perera

With the increase in fuel prices triggering an uproar with an Opposition inspired no-confidence motion against Energy Minister, Udaya Gammanpila also on the cards, the government is expected to decide on the price revision sought by Liquid Petroleum Gas (LPG) and milk food importers shortly.

Litro and Laugfs Gas have asked for a price revision of Rs. 750 per 12.5kg domestic cylinder, while companies importing milk food have sought an increase of Rs. 350 per one kilogram pack and Rs. 140 on a 400 gram pack.

Speculation was rife that agreement was reached to push up domestic gas prices by Rs. 400 per 12.5kg cylinder, but the Executive Director of the Consumer Affairs Authority (CAA), Thushan Gunawardena clarified that the regulator has not approved an increase so far.

He said that on milk food also there was still no firm commitment on an increase though discussions were held with importers.

He said that at one such discussion, the representative of one of the companies was asked how much his Managing Director drew as his monthly remuneration and the value of the vehicle he used.

“After checking back, he replied that the MD drew Rs. 700,000 monthly and the luxury vehicle he used was worth Rs. 18 million”, Gunawardena noted.

These companies should be able to prune operational costs in these difficult times without seeking price revisions as a first option, he said.

Trade Minister, Bandula Gunawardena said the government doesn’t import commodities and when private companies which do so seek a price increase on reasonable grounds, it has to be considered to strike a balance.

“If milk food importers are not granted a price revision on the basis of realistic factors, they will stop imports and the products will no longer be available”, the Minister told journalists last week.

He said that global milk food prices have shot up by 32% coupled with enhanced shipping charges and the depreciation of the rupee against the dollar.

Gunawardena noted that 90,000 metric tons of milk food is imported to the country annually.

Asked whether a milk food price increase has been granted, the Minister replied, “that’s a matter for the CAA to decide on”.

The CAA official said that in terms of a gazette notification issued, an action was filed in the Maligakanda Magistrate’s Court to ensure compliance as, in case domestic 12.5kg were not freely available, Litro Gas Lanka as the manufacturer and its respective distributor/trader will be held responsible and liable for prosecution.

He said the CAA has received more than one thousand complaints from consumers about the non-availability of 12.5kg cylinders in the market. This has forced them to buy the new 18-litre hybrid cylinders.



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Pakistan’s ex-president, Pervez Musharraf dies aged 79

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(picture BBC)

BBC reported that Pakistan’s former president General Pervez Musharraf, who seized power in a coup in 1999, has died aged 79.

The former leader – who was president between 2001 and 2008 – died after a long illness, a statement from the country’s army said.

He had survived numerous assassination attempts, and found himself on the front line of the struggle between militant Islamists and the West.

He supported the US “war on terror” after 9/11 despite domestic opposition.

In 2008 he suffered defeat in the polls and left the country six months later.

When he returned in 2013 to try to contest the election, he was arrested and barred from standing. He was charged with high treason and was sentenced to death in absentia only for the decision to be overturned less than a month later.

He left Pakistan for Dubai in 2016 to seek medical treatment and had been living in exile in the country ever since.

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The 75th Anniversary of National Independence celebrated under the patronage of President, PM

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(picture Presidents Media)

The 75th National Independence Day celebration was held under the theme “Namo Namo Mata – A Step towards the Century”, under the patronage of President Ranil Wickremesinghe and Prime Minister Dinesh Gunawardena on Saturday morning (04) at Galle Face Green.

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Lanka sovereign bond holders write to the IMF

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ECONOMYNEXT –Sri Lanka’s bondholders have written to the International Monetary Fund expressing their willingness to engage in debt re-structuring talks but also raising matters related to the domestic debt re-structuring and economic assumptions and forecasts.

The group, styling itself as the “Ad Hoc Group of Sri Lanka Bondholders (the Bondholder Group) has written last week to the IMF Managing Director from New York said inter alia that the Bondholder Group through its Steering Committee stands ready to engage quickly and effectively with the Sri Lankan authorities to design and implement restructuring terms that would help Sri Lanka restore debt sustainability and allow the country to re-gain access to the international capital markets during the IMF Programme period.

The letter concluded with the paragraph: Recognizing the important commitments made by India in the India Letter, the Sri Lankan authorities will apply the principle of comparable treatment in respect of the debt relief requested and obtained from all their remaining official bilateral creditors.

Following is the text of the letter:

NEW YORK, Feb. 3, 2023

Dear Managing Director Georgieva,The Ad Hoc Group of Sri Lanka Bondholders (the “Bondholder Group”) acknowledges the Sri Lankan authorities’ engagement with their official creditors towards a resolution of the current crisis and restoration of debt sustainability.

The Bondholder Group further acknowledges that such engagement has recently resulted in the Government of India (in its letter to the IMF, dated January 16, 2023 (the “India Letter”)) delivering letters of financing assurances, committing to support Sri Lanka and contribute to its efforts to restore debt sustainability by providing debt relief and financing consistent with the IMF Extended Fund Facility Arrangement (the “IMF Programme”) and the IMF Programme targets indicated in the India Letter.

Similarly, the Bondholder Group through its Steering Committee stands ready to engage quickly and effectively with the Sri Lankan authorities to design and implement restructuring terms that would help Sri Lanka restore debt sustainability and allow the country to re-gain access to the international capital markets during the IMF Programme period.

Based on the limited information available to us at this time, including information contained in the India Letter, we understand that the IMF Programme’s debt sustainability targets are identified as

(i) reducing the ratio of public debt to GDP to 95% by 2032,

(ii) limiting the central government’s annual gross financing needs to GDP ratio to 13% in the period between 2027 and 2032, and central government annual foreign currency debt service at 4.5% of GDP in every year between 2027 and 2032 and

(iii) closing of the external financing gap.

The Bondholder Group hereby confirms it is prepared to engage, through its Steering Committee, with the Sri Lankan authorities in restructuring negotiations consistent with the parameters of an IMF Programme and the targets specified therein (the “IMF Programme Targets”), which the Bondholder Group understands to be the targets identified in the India Letter; it being recognized that these negotiations will necessarily be further informed by the receipt of the forthcoming DSA.

We would note that the finalization of an agreement will also be subject to the satisfaction of the following conditions:

The central government’s domestic debt – defined as debt governed by local law – is reorganized in a manner that both ensures debt sustainability and safeguards financial stability.

Assuming that annual gross financing needs should not exceed 13% of GDP in the period between 2027 and 2032, whilst allowing for central government annual foreign currency debt service to reach 4.5% of GDP in every year between 2027 and 2032, domestic gross financing should therefore be limited at 8.5% of GDP for the period 2027-2032.

While we recognize that the determination of the economic assumptions underpinning the IMF Programme Targets is ultimately the responsibility of the IMF and that the overall design of the IMF Programme is one that is negotiated between the IMF and Sri Lanka, it is nevertheless important that the Bondholder Group has the opportunity to express its views on both the economic assumptions underpinning these IMF Programme Targets and the adequacy and feasibility of the adjustment efforts contemplated under the IMF Programme.

When considering any restructuring proposal that is made to the Bondholder Group, it is the Bondholder Group’s intention to take into consideration the extent to which the economic assumptions and the adjustment efforts are consistent with these views.

Recognizing the important commitments made by India in the India Letter, the Sri Lankan authorities will apply the principle of comparable treatment in respect of the debt relief requested and obtained from all their remaining official bilateral creditors.

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