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SL outperformed international peers on economic performance in 2020, says Central Bank

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by Sanath Nanayakkare

In 2020, the performance of the Sri Lankan economy beat expectations of multilateral agencies, a Central Bank report released to the media stated yesterday.

The IMF projected Sri Lanka’s GDP projection for 2020 at -4.6%, while the World Bank and Asian Development Bank projected it would be -6.7% and -5.5% respectively, but the Central Bank of Sri Lanka made its GDP projection at -3.6% which turned out to be the real figure for the year, the Central Bank said.

The second wave of COVID-19 posed further setbacks in October/November 2020, but the economy is steadily progressing as displayed in latest economic indicators, it said.

Some indicators and details gleaned from the report are as follows.

COVID-19 pandemic has been contained to a large extent with the reported 90,514 Covid-19 infection cases and 551 deaths to date, while the local immunisation drive is continuing in the country allowing space for the economy to progress steadily.

The country is experiencing the third consecutive year of bumper paddy harvest. Tea production has returned to the levels observed in 2019. Rubber production is on an upward trend.Coconut production has recovered to a great extent. Electricity generation has normalised.

Data usage has shown strong growth, highlighting continuity of economic activity through online platforms and work-from-home arrangements. Local cement production has shown strong growth, depicting positive sentiments in the sector.

Industrial production has reached pre-pandemic levels with purchasing managers’indices show positive sentiments across manufacturing and services. Export earnings recovered, while imports remained subdued. narrowing the trade deficit.

Also backed with a notable rebound in workers’ remittances, the external current account deficit improved.

Despite the setback in 2020, a strong pipeline of FDI inflows awaits, particularly with the introduction of the Colombo Port City Commission law.

Recent policy measures have enabled a gradual absorption of forex related to workers’ remittances and exports proceeds, towards building forex reserves.

Debt servicing obligations were duly met, dispelling adverse speculation and uncertainties caused by the unwarranted sovereign rating downgrades.

The Colombo Stock Exchange displayed its potential as business confidence has retuirned.

Given subdued levels of inflation and inflation expectations, the Central Bank conducted monetary policy with a focus on supporting the economic recovery.

Monetary policy easing measures have resulted in historically low interest rates, thereby passing the benefit of low inflation to entrepreneurs.

Credit to the private sector is expanding as expansionary policies have been supported by well managed inflation and inflation expectations.

The novel economic model of the government is focused on strengthening macroeconomic fundamentals to realize economic aspirations for 2021.

Macroeconomic aspirations for 2021:

GDP Growth 6%, Per Capita GDP US$ 4,000, Trade Gap US$ 4 bn, External Current Account Surplus US$ 500 mn, Official Reserves US$ 5.5 bn, Budget Deficit 8.9% of GDP, Foreign Share of Debt to GDP 35% of GDP, Private Sector Credit Growth Rs. 850 billion and inflation 4.6%.



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DFCC Bank facilitates the continued growth of Sri Lankan SMEs amidst the COVID-19 pandemic

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The unprecedented surfacing of the COVID-19 pandemic has left a lasting scar on the global population and economy. With no precise warning on the horizon, businesses everywhere were thrown into the deep end, and survival seemed uncertain during the peak of the pandemic. In Sri Lanka, a nation where SMEs form the integral backbone of the economy, the ill effects have been taking a heavy toll on businesses both fiscally and mentally.

However, we as Sri Lankans are resilient at our core, and with the integral support of frontline workers, officials, and essential services such as our banking partners, we set forth on a journey to assess, adapt and survive. One such story about perseverance through a valuable relationship comes from K.S.K. Menan of Star Food Store (Pvt) Ltd, and his trusted banking partner, DFCC Bank.

Emerging from humble beginnings, Menan’s story is one that inspires patriotism, and reaffirms the importance of giving back to your motherland. As a self-made entrepreneur, Menan was successfully engaged with the departmental store industry in the United Kingdom, when one day, he decided to leave everything there and come back to his home, Sri Lanka. He was on a mission to give back to the country that had given him so much, and that led to the birth of ‘Star Food Store’ in Kokkuvil, a supermarket equipped with all the necessary household essentials. DFCC Bank had been by his side throughout the entire journey until the opening of his outlet, and even more when the COVID-19 pandemic struck.

“When Imoved back to Sri Lanka in 2016, the very first account I opened was with DFCC Bank, and with their support, I was able to open the first‘Star Food Store’ in November 2019. However, when COVID-19 struck, everything came to halt. When restrictions were relaxed, I faced multiple problems with bringing things back to how they were. DFCC Bank stepped in and gave me overdraft facilities, helped clear my cheques, and provided additional funds at a low interest rate”.

Today, Menan has been able to open a second Star Food Store outlet at Achchuveli in August 2020, and a third at Idaikkadu in February 2021. He states that expansion is the last thing most businesses consider during this turbulent time, however, the X factor that has allowed him to do this is his banking partner.

“The confidence an entrepreneur gains with the right banking partner is immeasurable, and I have been able to find that with DFCC Bank. They have always gone out of the way to ensure my venture’s continuity, from sending someone from the branch immediately if there is an issue with the card machine during business hours, or even understanding that loose change is important for a supermarket and sending bags of coins from the Colombo branch for business use. I now have plans of constructing a state-of-the-art shopping complex in Jaffna, and look forward to working with DFCC on this project”.

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Covid-19 third wave fears dampen stock market

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By Hiran H.Senewiratne 

The CSE witnessed a steep decline following worries over the possible outbreak of a  Covid 19 third wave in the country and the continuation of selling pressure for certain stocks in the market, stock market analysts said.

CSE investors worried over 52 new cases being detected in two retail stores at Pamunuwa and at a state bank in Colombo at the end of the April holidays. Sri Lanka’s Health Ministry warned of a possible surge in COVID-19 cases in the coming weeks, market analysts said.

  Consequently, the All Share Price Index declined by 2.9 percent and S and P SL20 dropped by three percent. Major companies sought after by investors negatively contributed to both indices during the day. According to  market analysts,  these companies  were:  LOLC (27 negative points),  Expolanka (19 negative points), Vallibel One (12 negative points), Hayleys (11 negative points) and JKH (10 negative points).

All Share Price Index went down by 198.39 points and S and P SL20 down by 93.89 points. Turnover stood at Rs. 3.7 billion with a single crossing. The crossing was reported in Ceylon Cold Stores (CIS), which crossed 60000 shares to the tune of Rs. 35.4 million, its shares traded at Rs. 594. 

In the retail market, five companies that mainly contributed to the turnover were: Browns Investments Rs. 717.6 million (114 million shares traded), Expolanka Rs. 480 million (9.8 million shares traded), Hayleys Rs. 392 million (five million shares traded), Dipped Products Rs. 389 million (6.9 million shares traded) and LOLC Rs. 193 million (587,000 shares traded). During the day 197 million share volumes changed hands in 31305 transactions.  

Sri Lanka rupee quoted firmer around 192/194 levels to the US dollar in the spot market on Tuesday, while bond yields slightly eased, dealers said. Sri Lanka rupee last closed at 194/198 levels to the US dollar in the spot market on Monday. The Central Banks Telegraph Transfer rates stand at 187.93/191.97 levels below the spot rates on Monday.

Sri Lanka’s rupee has come under pressure amid money printing and low-interest rates, despite the worst import controls since the 1970s, observers said.

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SAT launches F5 portfolio to deliver secure digital experiences

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(At left) : Edgar Dias, Regional Vice President of Channels and Partnerships, Asia Pacific, F5. (At right) : Sanjaya Padmaperuma, CEO of SAT.

South Asian Technologies (Pvt) Ltd, announces its appointment to be a distributor for F5 within Sri Lanka and Maldives to deliver secure digital experience to enterprises.

The cutting-edge technology is a portal for delivering applications and data with greater agility, security, availability, performance, and scalability.

F5’s portfolio of automation, security, performance, and insight capabilities empowers customers to create, secure, and operate adaptive applications that reduce costs, improve operations, and better protect users.

“With the increasing necessity for digitalisation in the workspace, now more than ever, organisations need proven solutions to help secure their businesses. Adding F5 to our existing portfolio gives South Asian Technologies, a more omniscient opportunity to equip our partners and customers with best-in-class application security and delivery solutions. As F5 enables adaptive applications, the SAT team is ecstatic at the prospect of securing our clientele with robust security offerings that have a proven history with Fortune 500 companies across the globe,” said Sanjaya Padmaperuma, CEO of SAT.

Every company today is in the digital experience business. In the wake of COVID-19, customer expectations are higher than ever, as the experiences garnered are the primary way that people interact and transact with just about every organisation at present.

F5 helps organisations deliver and secure the premium digital facilities that customers demand by enabling adaptive applications which, like living organisms, will naturally adapt based on their environment – growing, shrinking, defending, and healing themselves.

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