IMF reserves could help rebuild emerging debt markets, UN says
A record injection of International Monetary Fund resources this year could fund a facility to lower the costs for developing economies selling sovereign debt abroad, according to the head of the United Nations Economic Commission for Africa.
Uneca’s Vera Songwe said she’s proposed a facility to bolster the liquidity of the secondary market for emerging and frontier-market debt, reducing the premium some issuers are charged by investors that can’t immediately trade their bonds. The liquidity and sustainability facility, which would replicate repo transactions that have helped central banks lower borrowing costs in developed countries, could be bankrolled by the upcoming allocation of $650 billion of IMF reserve assets, known as special drawing rights.
“We are not asking for any special treatment for frontier and emerging market economies. We are actually trying to perfect the market,” Songwe said in an interview at the Qatar Economic Forum. “We can reduce the cost of the bond or give an additional premium if you are going to invest the resources in sustainability or green growth, renewable energy, better infrastructure.”
IMF Managing Director Kristalina Georgieva expects the fund’s board of governors to vote on the proposed new SDRs by mid-August. The more than $33 billion in reserves that has been earmarked for Africa is not enough to shore up the continent’s economy, South African President Cyril Ramaphosa said recently.
Higher liquidity is key to unlocking the financing needed for Africa to speed up its recovery from the pandemic, which resulted in the continent’s worst economic contraction on record last year, Songwe said.
Some African sovereigns have returned to international debt markets this year after staying away most of 2020 when yields surged during the pandemic. Still, a slower economic recovery and dwindling revenue have raised concerns that some countries in the continent may struggle to repay their external loans in coming years. (Bloomberg)
Cabinet approves rationalization of VAT exemptions and abolition of SVAT System
The Cabinet of Ministers granted concurrence to the resolution forwarded by the Minister of Finance, Economic Stabilization and National Policies to remove most of the releases from Value Added Tax (VAT), further retaining releases that ease the pressure on low – income families to secure the fundamental sectors of the economy as well as the releases for sectors such as education, health and agriculture, as well as to revise the provisions applicable for the Value Added Tax (VAT) act so that the Simplified Value Added Tax (SVAT) methodology can be canceled with effect from 01.01.2024 by introducing a more formal methodology for repaying the Value Added Tax (VAT) and to instruct the Legal Draftsman to prepare a draft bill for the purpose.
Venora Lanka Power Panels to set up assembly plant in Australia
By Hiran H.Senewiratne
Sri Lanka- based, export- oriented manufacturer, Venora Lanka Power Panels (Pvt) Ltd, with a state of the art electric panel factory at the Export Processing Zone, Biyagama, will set up an assembly plant in Australia.
“Once we set up the electric panel assembly plant in Australia, we will export all our panels from Sri Lanka and that plant will do 30 percent value addition to the product to supply that market, the company’s chairman/ Managing Director, engineer Sagara Gunawardena told The Island Financial Review.
Gunawardena said that the company is a value- addition assembly plant and he would be investing AUS $ 2 million for the project to be set up in Melbourne and hire 100 engineers and other professionals. He explained that the venture has enormous potential.
Venora Lanka provides power panels to mega projects in Sri Lanka and exports to Bangladesh, Maldives, Kenya, Ethiopia, Seychelles and Myanmar. Panel assembling is strictly in compliance with IEC 61439 standards, it was explained.
Gunawardena added: ‘I firmly believe that, being a truly customer focused organization, every employee and every process in the organization has to be aligned behind delighting customers. Therefore, at a time when the country is facing a major dollar crisis, my company would be aiming at bringing dollars into the country, while providing employment for local professionals, especially engineers.
‘At Venora Lanka we do not try to change customers’ mindsets. Instead, we take time to understand what they really want and focus our brand on delivering that. Venora is values- driven first and cost- driven second – creating a unique brand proposition.
‘Since the US dollar rate has come down, it is our concern that importers and suppliers do not change their prices, which is really affecting the manufacturing sector.
Company sources added: ‘The company has several wings of operation, such as local and overseas projects, switch board assembling, telecommunication infrastructure installations, earthing, lighting and surge protection, incorporating world renowned brands.
‘Venora Lanka Power Panels is the first Sri Lankan company to receive the licence, in accordance with the UK Trade Mark Act 1994, to use the trade mark “Best Enterprise”. It won a global award at the event, ‘Golden Awards for Quality and Business Prestige’, held in Geneva, Switzerland, in 2015.
‘Within a short span of time, with the perfect blend of progressive thinking and expertise, Venora Group has expanded to consist of, Venora International Projects, Venora Telecom, Venora Industrial Solutions and Venora Lanka Power Panels (BOI approved). Further, Venora has established its overseas presence through Venora Engineering Kenya and Venora Engineering Myanmar.’
Share market moves into positive territory; indices up
By Hiran H. Senewiratne
CSE trading got off to a positive note yesterday but during the last session of the day the momentum slowed. However, the market is now moving towards positive territory following the Central Bank announcement of a downward trend in interest rates, market analysts said.
Amid those developments the market witnesses improvements in both indices and in the turnover.
The All- Share Price Index up by 12.8 points and S and P SL 20 rose by 6.97 points. Turnover stood at Rs 710 million with one crossing. The crossing was reported in JKH which crossed 430,000 shares to the tune of Rs 60.2 million; its shares traded at Rs 140.
In the retail market top seven companies that mainly contributed to the turnover were; JKH Rs 212 million (1.5 million shares traded), Access Engineering Rs 44.7 million ( three million shares traded), Lanka IOC Rs 34.5 million (264,000 shares traded), Browns Investments Rs 28.6 million (5.3 million shares traded), LOLC Finance Rs 23.8 million (4.7 million shares traded), Capital Alliance Rs 22.9 million (615,000 shares traded) and First Capital Holdings Rs 19.2 million (574,000 shares traded). During the day the 31.4 million shares volumes changed hands in 9000 transactions.
Yesterday, the Central Bank’s US dollar buying rate was Rs 285.16 and the selling rate Rs 298.85.
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