Economic

Sri Lanka’s merchandise exports have fallen by 65% to $ 277.4 million in April, a historical decrease largely caused by the impact of shutting down factories due to the COVID-19 pandemic.

The Colombo stock market showed its resilience within a week of early battering recouping lost ground and emerging stronger thanks to positive investor sentiments brokers and analysts said yesterday.

Sri Lanka Telecom PLC Group yesterday released its financial results for the three months ending on 31 March 2020 with total revenue for the quarter recorded at Rs. 22.1 billion, which is a 3.8% growth compared to the Rs. 21.3 billion during the same period in 2019.

Tourism Minister Prasanna Ranatunga has requested health authorities to provide guidelines to reopen hotels and restaurants, which have been closed due to the COVID-19 pandemic.

Bloomberg: Sri Lanka’s dollar bonds have been the worst-performing sovereign notes in Asia this year. But BNP Paribas Asset Management and Union Investment Privatfonds GmbH say it might now be time to buy.

Reuters: Stocks rose for the third straight session on Friday, boosted by gains in consumer staples and financial stocks.

Taking an optimistic view, the Central Bank yesterday dismissed recent volatilities in sovereign bond yields insisting that the Government was focused on swap arrangements and syndicate financing rather than international financial markets to finance debt for this year and expressed confidence that despite the COVID-19 setback Sri Lanka would grow by 1.5% in 2020.

Releasing a statement yesterday, the monetary authority said the Government was “dismayed” by inferences that Sri Lanka is at risk of falling into a sovereign debt crisis by comparing Sri Lanka with other sovereigns which are said to be in similar situations.

“The Government wishes to categorically deny such baseless claims, and would like to reiterate to all stakeholders that Sri Lanka will duly honour all its debt service obligations in the period ahead.”

The statement argued the recent volatilities in yield levels of Government of Sri Lanka’s International Sovereign Bonds (ISBs) during the COVID-19 pandemic period were no different to what has been observed across a majority of emerging and frontier market economies.

“It is noteworthy that despite such volatility, global institutional investors, fund managers and analysts recommend Sri Lankan debt instruments for investment, while remaining confident of Sri Lanka’s credit quality.”

The Government also stressed the unintended delay in holding the General Elections and the submission of the Government budget should not be considered as leading to any policy uncertainty or procedural standoff, but a result of the health policy response to contain the COVID-19 pandemic.

The statement reiterated the argument that President Gotabaya Rajapaksa is constitutionally empowered to authorise Government operations in the absence of an annual budget for a period up to three months after convening the Parliament following the elections.

This allowed Government operations to function without any hindrance, and any uncertainty surrounding the date of holding the General Elections will be resolved after the ruling by the Supreme Court in the coming days, it added.

In the meantime, the statement claimed the Government has already introduced measures to curtail expenditure, while the delay in presenting the Government budget automatically limits the space for additional expenditure for this year.

“Further, the cost of Government financing from both domestic and external sources has markedly declined so far during 2020. The Government has taken proactive measures in mobilising funds from multiple sources of market based and official sources of financing to effectively improve the terms and conditions of financing.”

“Given volatile market conditions across the globe, the issuance of an international bond by the Government is not anticipated in the near term, thereby rendering the current yields observed in the international bond market irrelevant. The focus of financing will be to further explore bilateral and multilateral sources to benefit both risk and cost considerations of debt management, and these discussions are well underway.”

Further, the country is in the process of exploring swap facilities with regional central banks, while arrangements are being made for syndicate financing with identified foreign sources, the statement added.

The Government has decided to waive off three months of rent of all duty free shops and service providers at Bandaranaike International Airport due to closure on account of the COVID-19 pandemic.

Reuters: Stocks rose for the third straight session on Friday, boosted by gains in consumer staples and financial stocks.

The Colombo Bourse sustained its upward momentum for the fifth consecutive market day yesterday thanks to continued buying on improved investor sentiments. The ASPI increased by 2.04% or 94.18 points to close at 4,701.03 points, while the S&P SL20 Index also increased by 2.11% or 38.94 points to close at 1,886.65.

The global economy could suffer between $5.8 trillion and $8.8 trillion in losses — equivalent to 6.4% to 9.7% of global gross domestic product (GDP) — as a result of the novel coronavirus disease (COVID-19) pandemic, says a new report released by the Asian Development Bank (ADB) last week.

Sri Lanka Tourism is seeing a silver lining as European and high-end Indian travellers have begun to inquire on forward bookings, while the Government is sorting out the COVID-19 protocol to welcome guests from July onwards.

But Financial, Health and Professional Services, Wholesale and Retail Trade, and Transportation sub-sectors hopeful of recovery after virus mitigation measures ease

Business leader Dhammika Perera’s prediction on the number of global COVID-19 last week during the Daily FT-SC Securities webinar has come true.

The Vehicle Importers Association of Sri Lanka (VIASL) wants the blanket ban to be lifted and for the Government to consider introducing other restrictions including higher margin on LCs.

කොරෝනා වෛරසය නිසා අඩපණ වූ දේශීය ක්‍රියාකාරකම් මෙම වසරේ සිව්වැනි කාර්තුවේදී සාමාන්‍ය තත්ත්වයට පත්වනු ඇතැයි ශ්‍රී ලංකා මහ බැංකුව අපේක්ෂා කරයි.

A net outflow of the foreign investment amounting to $ 118 million was recorded from the rupee denominated Government securities market in February, resulting in a cumulative net outflow of $ 99 million during the first two months of 2020.

සෞඛ්‍ය නිර්දේශ හා ජාත්‍යන්තර ගුවන්සේවා බලධාරීන්ගේ මාර්ගෝපදේශයන්ට අනුව කටුනායක ජාත්‍යන්තර ගුවන් තොටුපල සියළු මෙහෙයුම් කඩිනමින් ආරම්භ කිරීමට අපේක්ෂා කරන බව කාර්මික අපනයන, ආයෝජන ප්‍රවර්ධන, සංචාරක හා ගුවන්සේවා අමාත්‍ය ප්‍රසන්න රණතුංග මහතා සදහන් කරයි.