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Sri Lanka awaiting ‘good news’ from global lender within next 24 days

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By Sanath Nanayakkare

Sri Lanka, which is having talks with the People’s Bank of China, Reserve Bank of India and China Development Bank, is likely to receive good news from at least two of the institutions this month, Dr. Chandranath Amarasekara, Director of Economic Research of the Sri Lanka Central Bank says.

Dr. Amarasekara said so at a Q&A session as a guest speaker at a webinar, Economy+Sector Review-Outlook 2021, organised by the Ceylon Chamber of Commerce; the event was hosted by HSBC Premier Sri Lanka.

According to Dr. Amarasekera, Sri Lanka had to meet debt repayments of US$ 4.3 billion in 2021 and its foreign reserve levels stood at US$ 5.7 billion as at December 2020.

“We are confident that we can meet our external debt obligations in 2021”, Dr. Amarasekara said.

Asked how Sri Lanka would meet its near term external debt repayments, Dr. Amarasekara said: “This is not a new development for Sri Lanka. In 2019 and 2020 also we honoured debt repayments amounting to US$ 4.5 billion each year. However, the current speculation on the matter isn’t helpful. What is more conducive to the current conditions is making the right moves to benefit from the prevailing positive domestic market sentiment and to drive domestic production to a higher level and boost inflows.”

Asked about the ‘historic level’ of Treasury bills held by the Central Bank, he said:”The Central Bank buys government securities to support the economy and to boost liquidity in line with the Central Bank’s monetary policy. This has been done in the past too. When we can’t buy in the primary market, we buy in the secondary market.

“With the lower global oil prices and current import restrictions in place, we were able to save foreign currency worth US$ 3.9 billion in 2020. If this can be repeated, it will help ease the deficit in our trade account. Yes, there will be losers in the process, but this is a necessary evil.”



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SJB: Excise, FM officials all out to pocket Rs 1 bn

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By Saman Indrajith

Matara District SJB MP Buddhika Pathirana yesterday told Parliament that the Finance Ministry and Excise Department officials had misled Prime Minister Mahinda Rajapaksa and State Minister Ajith Nivard Cabraal in order to obtain billion rupees, fraudulently.

The officials had got a contract for printing stickers or barcodes to be displayed on bottles of liquor awarded to an Indian company.

“The project would result in one-billion-rupee loss to the government coffers annually,” the MP said, adding that the money being taken from the public purse would end up in the pockets of corrupt officials.

Pathirana said that the Excise Department had commenced a project to paste stickers on bottles of liquor to differentiate them from the fake and counterfeit bottles in the market.

“As per this project’s requirements, 32 million stickers would be needed per month. The stickers are to be purchased from Madras Security Printers company of India. This method was proposed in 2016 but it failed and the officials thereafter decided to introduce a barcode system.

“The cost of a sticker at 25 cents and the new barcode system will cost of two rupees a piece. This is a dubious deal. It seems that the Finance Ministry officials and the Excise Department heads have ganged up to give the contract to the Indian company and get commissions. There are many unanswered questions. First, the contract of printing the barcode too has been given to the MSP company, which could not secure the first contract. I want to know whether the proper procurement process has been followed. The second question is whether the barcodes would be up to the standards listed in the tender. Third question is who had selected the MSP company which is black-listed in India after being found guilty of frauds with Indian liquor companies in providing stickers to them. MSP has been blacklisted in many other countries. The company has been banned in Sudan and Liberia for supplying the stickers to private companies. The last question is whether this fraud is being committed with the knowledge of ministers of this government.”

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Reserves fall to lowest since 2009, rupee strengthening to be short-lived: report

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by Sanath Nanayakkare

Sri Lanka’s Foreign reserves had dropped to USD 4.1bn in March 2021, the lowest since August 2009, on the back of over US$ 4bn outstanding debt payment during April-December 2021 period, a report issued by First Capital Research yesterday said.

According to the report, rupee appreciation is likely to be short-lived considering Sri Lanka’s depleting foreign reserve position, high foreign currency debt repayment requirement and limited funding sources available in the market are expected to further increase depreciation pressure on the currency during 2Q and 3Q.

“We maintain our exchange rate target for 1H2021 at Rs. 196-202 with 2021 year-end target at Rs. 205-215 as mentioned in our ‘Investment Strategy 2021 – January 2021,” the report recalls.

“Sri Lankan rupee appreciated 5% against the US dollar over the last 2 market days reversing the continuous accelerated depreciation witnessed in January-April 2021. On 12th April, Sri Lankan rupee recorded a historical low of Rs. 201:1 US$. Ministry of Finance (MoF) reported on the same day that the government of Sri Lanka entered into a loan agreement with the China Development Bank (CDB) for US$ 500mn and MoF expected the funds to be disbursed during the same week. Following the announcement, the market registered a steep appreciation with mid-rate recording at Rs. 190.9 on April 19,” it says.

The total foreign debt repayment (capital and interest) for 2021 is US$ 6 bn, according to the report.

Meanwhile FC Research believes that the temporary appreciation in USD-LKR, may adversely impact earnings of export companies such as Hayleys, Haycarb, Dipped Products, MGT Knitting Mills, Teejay Lanka, Expolanka Holdings etc. in the short term.

“However, considering the potential future currency pressure, we expect an overall depreciation of approximately 12% for the rupee providing a significant gain for companies with foreign currency revenue”, FC research predicts.

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Govt. asks Opposition not to propagate lies

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By Saman Indrajith

Chief Government Whip and Highways Minister Johnston Fernando yesterday accused the Opposition MPs of abusing parliamentary privileges to mislead the public by propagating lies about the Easter Sunday terror attacks. 

Addressing Parliament, Minister Fernando said: “The Opposition MPs level wild allegations in the House knowing that they have the cover of parliamentary privilege. If they have anything substantial or any knowledge of the perpetrators of the Easter attacks still not in custody they can go to the CID and lodge complaints so that such complaints could be investigated.”  

Fernando said so after SJB Galle District MP Manusha Nanayakkara had told the House that he possessed evidence of those who carried out the Easter Sunday terror attacks.

Nanayakkara also said that the facts that he had were not in the report of the Presidential Commission of Inquiry into the Easter Sunday carnage.

“You are making various statements regarding the Easter Sunday terror attacks in the Chamber without any proof because you know that you have Parliamentary privilege. You even quoted some statements which are not included in the PCoI report. How did you obtain such information? Why didn’t you complain about this to the CID in the first place? Your action is aimed at misleading the public,” the Minister said. 

Minister Fernando said that the Opposition should stop insulting Archbishop of Colombo Malcolm Cardinal Ranjith by misinterpreting the latter’s statements. 

“When you are in the Government you never said that this is a Buddhist country. Now you are insulting the Cardinal too. You should not do that,” the Minister said. 

“The former Government should be responsible for the terror attack. Now we are trying to punish those who are responsible for it. We will take action against everyone who is responsible. You should support us, not try to obstruct the on-going investigations,” Minister Fernando said.

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