Economic

The Colombo stock market produced a welcome recovery in terms of sentiments yesterday though trading level was below recent average.

The Central Bank (CB) has issued new directives on classification, recognition and measurement of credit facilities in licenced banks effective 1 January 2022.

Port City Colombo, the largest and most ambitious development project ever undertaken in Sri Lanka, proudly marks its seventh anniversary since the initial land reclamation work commenced in 2014.

The Cabinet of Ministers at its meeting on Tuesday has approved a plan to develop the Galle Port with an investment of $ 175 million under a Public-Private Partnership.

State-owned entity suffers Rs. 2.2 b monthly loss due to Govt. failure to allow price hike in LPG
Raises questions over Govt. deal with LAUGFS and recently formed LPG buying firm Siyolit Ltd.
State-owned LPG provider Litro is in crisis due to sabotage, a trade union formed to save it has warned.

Says without sizeable, secure and long-term external financing, foreign exchange reserves to continue declining over next 2 to 3 years
FX reserves data points to rising risk of debt default
Reserves well below annual external debt repayments of $ 4-5 b through at least 2025
Opines recent inflows piecemeal and boost FX reserves only temporarily and marginally given Govt.’s external repayment schedule
Expects net FDI inflows to average $ 1 b in 2021-22 compared to peak of $ 2.2 b pre-pandemic in 2018
Says recent restrictive measures may be effective in short term but could weigh on economic activity and deter investment inflows
Rating agency Moody’s yesterday declared that Sri Lanka’s foreign exchange reserves were still low and credit negative.

Says move due to declining revenue and rising expenditure owing to COVID pandemic
Finance Minister Basil Rajapaksa said in P’ment early this month Govt. revenue loss was Rs. 1.6 t
As per CBSL data, first half revenue up 7% to Rs. 714.5 b; expenditure higher by 7% to Rs. 1.5 t

DHL Express, the world’s leading international express services provider, has announced an upward price adjustment of 4.9% effective 1 January 2022.

Fitch Ratings yesterday warned that finance and leasing companies were facing challenges beyond the COVID-19 pandemic.

The Planters’ Association of Ceylon (PA) has renewed its warning that shortage of suitable fertiliser will force Sri Lanka to miss its export earnings target for 2021 and called for a sustainable solution to the worsening crisis.

Earlier this year, the Export Development Board (EDB) set a target of $ 1.47 billion in export earnings from tea for 2021, but the industry expects there to be a gradually widening shortfall of around 30-40% moving into the end of 2021 and beyond, primarily due to the decline in harvest as a result of fertiliser unavailability, the PA, which represents the Regional Plantation Companies (RPCs), pointed out.

In the first seven months of 2021 (up to end July), Sri Lanka has recorded export earnings of $ 766 million from tea, an increase of 9% compared with the same period of 2020. However, this increase was off a low base, influenced greatly by improved weather conditions in 2021, as compared with a severe drought which impaired production 2020. However, when considering a more valid comparison with the corresponding period of 2019, the 2021 performance shows a 4% reduction.

In addition to the target for 2021, Ceylon Tea will also be unable to meet its target of $ 1.8 billion in export earnings by 2025, unless a solution is provided, the Planters’ Association said.

“It is unfortunate that that the export earnings generated by the tea industry, which has sustained Sri Lanka for more than a century, is unable to contribute to its fullest potential at a time the country is in dire need of it,” PA Media Spokesperson Dr. Roshan Rajadurai said.

The Export Development Board (EDB) Chairman Suresh de Mel recently said the current unprecedented time is an opportunity to formalise the small- and medium-scale entrepreneurs (SMEs), noting that half or more are engaged in the informal sector.

Newly appointed Central Bank Governor Nivard Cabraal yesterday said a 5% growth for 2021 was likely to be a reality with the on-going vaccination drive, and mobility restrictions being relaxed.

Headline inflation as measured by the Year-on-Year change based on the National Consumer Price Index (NCPI) has been compiled as 6.7% marginally down from 6.8% in July. Core inflation, which reflects the underlying inflation by excluding volatile items of food, energy and transport groups in the economy as measured by the Year-on-Year change based on NCPI for the month of August 2021, increased to 4.7% from 4.4% reported in month of July 2021.

Reuters: Sri Lankan shares clocked their second consecutive weekly loss as the island nation further extended its lockdown until 1 October to tackle an upsurge in coronavirus cases.

Heightened risks from the challenging operating environment stemming from the Sri Lanka sovereign’s (CCC) weak credit profile and the ongoing COVID-19 pandemic continue to pressure the ratings of large Sri Lankan banks, says Fitch Ratings in a new report.

Ahead of the winter season and a one-year break from physical engagement at global trade fairs, Sri Lanka Tourism has set out plans to undertake a series of promotional activities at top travel events in France, the United Kingdom and Germany this year.

Tea exports in August have increased by 16% to 25.48 million kilos and cumulative first eight months performance rose by 8% to 187.57 million according to Forbes and Walker Tea Brokers.

The Finance Bill which provides several tax amnesties was certified by Speaker Mahinda Yapa Abeywardena yesterday.