IMF completes second review, to disburse USD167.2 mln

July 18, 2017 (LBO) – The Executive Board of the International Monetary Fund (IMF) has completed the second review of Sri Lanka’s economic performance under the program supported by a three-year Extended Fund Facility (EFF) arrangement, a statement said.

“Completion of the review enables the disbursement of the equivalent of SDR 119.894 million (about US$ 167.2 million), bringing total disbursements under the arrangement to the equivalent of SDR 359.682 million (about US$ 501.5 million).”

“In completing the review, the Executive Board granted a waiver of nonobservance of the continuous performance criterion on accumulation of external arrears which was missed due to continued difficulties of establishing a payment platform and waivers of applicability of the performance criteria for end-June 2017 on floor of the central government primary balance and the program net official international reserves of the Central Bank of Sri Lanka, given the unavailability of the information necessary to assess observance.”

Sri Lanka’s three-year extended arrangement was approved on June 3, 2016 in the amount of about SDR 1.1 billion (US$1.45 billion, or 185 percent of quota in the IMF at that time of approval of the arrangement.)

The government’s reform program, supported by the IMF, aims to reduce the fiscal deficit, rebuild foreign exchange reserves, and introduce a simpler, more equitable tax system to restore macroeconomic stability and promote inclusive growth.

Following the Executive Board’s discussion of the review, Mitsuhiro Furusawa, Acting Chair and Deputy Managing Director, said: “Sri Lanka’s performance under the Fund-supported program has been broadly satisfactory. Macroeconomic and financial conditions have been stable, despite severe weather events and global market volatility.”

“The authorities launched fundamental income tax reform, undertook meaningful corrective actions to achieve program targets on international reserves, and remain committed to the reform program. Going forward, the reform momentum should strengthen further with greater ownership, building on the progress made so far.

“Fiscal performance has been strong. Targets for the fiscal balance and tax revenue have been met. The new Inland Revenue Act, which has been submitted to parliament, will support fiscal consolidation, make the tax system more efficient and equitable, and generate resources for social and development programs. Nevertheless, Sri Lanka’s high debt burden and gross financing needs require further revenue-based consolidation. Timely progress in structural reforms, including tax administration and energy pricing, will strengthen the platform for durable consolidation.

“Inflation and credit growth remain on the high side. While monetary policy was tightened in March, further tightening is desirable until clear signs emerge that inflation pressures and credit expansion have subsided. While financial soundness indicators remain stable, banks’ capital adequacy ratio has declined due to rapid credit growth. Financial sector supervision should be strengthened, and macro-prudential measures could be deployed to rein in credit growth if needed.

“Continued international reserves accumulation and enhanced exchange rate flexibility, to which the authorities are committed, would reduce Sri Lanka’s external vulnerabilities.”

 

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Sri Lanka stock market records 8-pct gain in 1H

July 18, 2017 (LBO) – The benchmark All Share Price Index of the Colombo Stock Exchange (CSE) recorded an 8.23 percent gain year-to-date, a noteworthy turnaround in the first half of this year, having started the year on the back of a slow-moving 2016.

The S&P SL 20 index, which features the CSE’s 20 largest and most liquid stocks, has also improved consistently, making an 11.03 percent gain year-to-date.

The CSE said the growth of the indices in 2017 reflects a reversal of the declining trend from a 9.66 percent and 5.54 percent decline in the benchmark ASPI in 2016 and 2015 respectively.

Overall trading activity has also improved in 2017, with the daily average turnover recorded for year-to-date marking an improvement to 911 million rupees from 737 million rupees in 2016.

The market in 2017 has also garnered a keen interest among foreign investors, with net foreign inflows for 24 consecutive weeks recorded from the first week of February onwards.

The foreign purchases figure recorded for the first half of 2016 (January – June) amounting to 31.5 billion rupees has doubled during the first half of 2017 to 62.6 billion rupees, an all-time high for foreign purchases in the first half of a calendar year.

2017 so far, has marked a net foreign inflow of 23 billion rupees, an improvement compared to previous years, which recorded an inflow of 383.5 million rupees in 2016 and an outflow of 5.3 billion in 2015.

“Growth in foreign activity is certainly encouraging and goes on to indicate that foreign investors have identified an opportunity in the Sri Lankan stock market,” CSE CEO Rajeeva Bandaranaike said.

“Such interest is an expression of confidence in the future potential and growth of our market and makes a strong case for improved involvement among local institutional and retail investors.”

Foreign investor contribution to total turnover in 2017 stands at 47 percent, an improvement in comparison with 42 percent in 2016 and 34 percent in 2015 and having crossed the 50 percent mark for the first time since 2008 in April this year.

The CSE said an attractive market valuation (P/E) compared to regional peers, growing corporate earnings among listed entities and a strong performance of the ASPI compared to leading indices are defining factors in attracting foreign investments to the Sri Lankan capital market.

January – June Foreign Activity Comparison 2008 – 2017

Jan – Jun	2008	2009	2010	2011	2012	2013	2014	2015	2016	2017
Foreign Purchases	51.9	15.9	42.6	31.2	38.3	53.4	43.3	36.8	31.5	62.6
Foreign Sales	47.1	16.4	59.6	38.6	15.1	38.3	37.6	35.3	37.8	41.1
Net	4.7	-0.5	-16.9	-7.4	23.2	15.1	5.7	1.5	-6.3	21.5

 

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Dumindra Ratnayaka appointed chairman of BOI: Reports

July 18, 2017 (LBO) – Dumindra Ratnayaka has been appointed as the chairman of the Board of Investment (BOI) of Sri Lanka, media reports said.

He is the only member from the previous board that has been reappointed to the new board. Others in the previous board were Upul Jayasuriya, Buddhi Keerthi Athauda, Manoj Cooray and M.A. Neeth Udesh.

Ratnayaka is the current Chairman of Martin & George limited and the former CEO of Etisalat Sri Lanka.

Media reports further said two new Directors have also been appointed to the Board of Investment.

Deputy Chairman of John Keells Group of Companies Ajith Goonawardene and former Secretary General of Ceylon Chamber of Commerce Mangala P.B. Yapa have been appointed as directors.

Last week the Chairman and Board of Directors of the BOI resigned for President Maithripala Sirisena to reconstitute the Board.

 

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CHEVRON LUBRICANTS - DIVIDEND ANNOUNCEMENT

CHEVRON LUBRICANTS LANKA PLC Company ID: - LLUB Date of Announcement: - 18.Jul.2017 Rate of Dividend: - Rs. 2.00 per share / Second Interim Dividend Financial Year: - 2017 Shareholder Approval: - Not Required XD: - 27.Jul.2017 Payment: - 08.Aug.2017

 

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Sri Lanka prepares for 7th session of FTA talks with China

July 17, 2017 (LBO) – Sri Lanka is preparing for a seventh session of talks with China on a Free Trade Agreement, the Ministry of Industry and Commerce said.

Minister Rishad Bathiudeen, speaking at the product exhibition by China’s Guangxi Zuang Autonomous Region at SLECC in Colombo, said FTA talks with China were progressing smoothly.

“The sixth round of talks were successfully concluded this March in Beijing. We are working for the seventh FTA round next.”

The ministry said 42 percent of Sri Lanka’s total imports in 2016 came from China at a value of 4.2 billion dollars, with bilateral trade with China at 4.4 billion dollars.

Sri Lanka’s exports to China last year were in Ceylon Tea, coconut, footwear parts, apparel, and rubber tyres, with growth shown in tea over the last five years.

Though Sri Lankan exports to China declined in 2016 to 199 million dollars from 293 million dollars in 2015, exports have been on an upward trend increasing from 35 million dollars in 2007.

Top imports from China last year were mobile phones, boats & vessels, handmade fabrics, and petroleum, the ministry said.

FTA negotiations on the Sri Lankan side were moving ahead with domestic stakeholder consultations, the ministry added.

The Guangxi Zuang Autonomous Region product exhibition in Colombo was attended by the Deputy DG of the Department of Commerce of Guangxi, Xiong Jiajun, a 40-person delegation including event exhibitors, and Charge d’affairs of Chinese Embassy in Sri Lanka Ms Pang Xunshie.

Autonomous Regions in China are administrative divisions with their own local government, more legislative rights, and higher population of a particular minority ethnic group.

China has five autonomous regions: Guangxi, Inner Mongolia, Ningxia, Tibet (Xizang) and Xinjiang.

 

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New revenue Bill should be implemented from April 2018: Ceylon Chamber

July 17, 2017 (LBO) – Ceylon Chamber of Commerce says it is their view that the new Inland Revenue Bill, once enacted, should ideally be implemented from 1st April 2018.

The chamber says it will give a longer transitional period for both the tax payer and the Department of Inland Revenue to become fully conversant with the provisions of the law.

The new Inland Revenue Bill, which was gazetted on 16th June 2017, was tabled in Parliament on 05th July 2017. Once passed by Parliament, this Bill will replace the existing Inland Revenue Act No 10 of 2006.

The objective is to broaden the existing tax base, rationalize the existing tax structure, and simplify the language and to align the tax rules with international best practice.

“It is the view of the Ceylon Chamber that formulation of tax policy is the prerogative of the government with due consideration for different stakeholder views,” the chamber said in a statement.

The Ceylon Chamber was engaged in the drafting stages of the Bill and made several representations to the government on behalf of its members and the general tax paying public without compromising the government’s effort of increasing revenue collection.

Some of the key submissions made by the Chamber were to maintain the current law relating to taxing dividends, interest, and the business of life insurance and sale of shares in the CSE.

It also includes concessionary rate of tax for thrust industries such as agriculture, education and exports, simplify the capital allowances structure proposed in the new Bill and to maintain the same tax structure.

“We are happy to note that most submissions were accepted whilst the Chamber is yet negotiating with government to accept certain provisions to do with the practical implementation of the proposed law.”

To refer all submissions made by the chamber to the Finance Ministry during the preparation of the Bill, visit their website and ‘submissions to government’.

 

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ORIENT FINANCE - DIVIDEND ANNOUNCEMENTS

ORIENT FINANCE PLC
Company ID: - BFN
Date of Announcement: - 17.Jul.2017
Rate of Dividend: - Rs. 0.25 per share / Final Dividend
Financial Year: - 2016/2017
Shareholder Approval: - Required
Dates to be notified.

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Tax reforms would help SL rating outlook back to stable: Moody's

July 14, 2017 (LBO) – Evidence of effective implementation of reforms that leads to significant and lasting improvements in tax collection, and more stable external financing conditions, would support a return of Sri Lanka’s rating outlook to stable, Moody’s said.

Moody’s Investors Service said signs that planned fiscal consolidation measures are less effective than Moody’s currently expects or that the authorities’ commitment towards such steps has diminished would weigh on Sri Lanka’s rating, particularly if foreign-exchange reserves remain low while refinancing of market debt is challenging.

Moody’s, in mid last year changed Sri Lanka’s rating outlook to negative from stable, with an expectation that the government’s debt burden will increase further, from high levels, which could intensify external vulnerabilities and refinancing risks.

Moody’s Investors Service says that the Government of Sri Lanka’s B1 rating is currently supported by the economy’s robust medium-term GDP growth prospects, relatively large economy, and high income levels when compared with similarly rated sovereigns.

“At the same time, despite recent progress in fiscal consolidation, credit challenges include high general government debt, very low debt affordability and large borrowing requirements. Moreover, Sri Lanka’s external payments position also remains fragile,” Moody’s said.

Moody’s conclusions are contained in its just-released annual credit analysis, “Government of Sri Lanka — B1 Negative”.

This report elaborates on Sri Lanka’s credit profile in terms of Economic Strength, Moderate (+); Institutional Strength, Low (+); Fiscal Strength, Very Low (-); and Susceptibility to Event Risk, Moderate.

These are the four main analytic factors in Moody’s Sovereign Bond Rating Methodology.

In 2017, Moody’s expects real GDP growth of 4.6 percent, which reflects the temporary negative impact of adverse weather-related events during the first half of the year. They also expects GDP growth to average 5.2 percent per year in 2017-21, a robust growth rate.

Sri Lanka has progressed with some reforms under its three-year International Monetary Fund (IMF) Extended Fund Facility (EFF) program.

In particular, revenue measures aimed at increasing taxes, such as last year’s value-added tax (VAT) rate hike and this year’s pending new Inland Revenue Reform act, have the potential to sustainably increase government revenues.

“Sri Lanka’s low tax efficiency and tax collection provide significant scope to broaden the tax base and increase the tax revenue/GDP ratio, which was only 12.4% in 2016,” said William Foster, a Vice President and Senior Credit Officer at Moody’s.

Total government revenues are also very low, with a general government revenue/GDP ratio of 14.3 percent in 2016, one of the lowest among B-rated sovereigns.

Despite ongoing fiscal consolidation, Sri Lanka’s credit profile will remain constrained by its large debt burden and very low debt affordability, combined with contingent liability risks from state-owned enterprises.

Moody’s expects general government debt to decline only gradually to around 78 percent of GDP in 2018, from 79.3 percent in 2016, significantly higher than the median of 53 percent for B-rated sovereigns.

Progress on reducing external vulnerability has been slower. External and foreign currency debt account for about 43 percent of total government debt, giving rise to significant exposure to external financing conditions.

In particular, large volumes of external government debt maturing in 2019-22 will test government liquidity and external vulnerability.

Further measures to build foreign-exchange reserves would help establish buffers against external pressure, in particular ahead of 2019.

 

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EXPOLANKA HOLDINGS - DIVIDEND ANNOUNCEMENT

EXPOLANKA HOLDINGS PLC
Company ID:- EXPO
Date of Announcement:- 13.Jul.2017
Rate of Dividend:- Rs. 0.15 per share / Interim Dividend
Financial Year:- 2017/2018
Shareholder Approval:- Not Required
XD:- 24.Jul.2017
Payment:- 02.Aug.2017

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World Bank doubles assistance to Sri Lanka over next three years

July 13, 2017 (LBO) – Sri Lanka will receive US1,340 million dollars in financial and technical assistance through a transitional support facility of the International Development Association (IDA), a member of the World Bank group, over the next three year period starting from July, the finance ministry said.

Previously Sri Lanka received US 660 million dollars IDA support for the period from year 2014 to 2017.

The facility comes as financial assistance for development projects and technical assistance for analytical and advisory services, the World Bank Country Director for Sri Lanka and Maldives Idah Z Riddihough, who called on the Minister of Finance Mangala Samaraweera, said.

A public sector efficiency project and country readiness for public private partnerships (PPP) are two projects proposed to be implemented by the ministry with this support.

The Country Director also discussed the progress of WB-assisted ongoing and proposed projects in the country.

She appreciated Sri Lanka’s economic performance despite significant challenges and said that it remained broadly satisfactory in 2016 and early 2017.

“The WB recognizes the corrective policy measures taken in 2016 following expansionary fiscal and monetary policies implemented in the previous year as early signs of stabilization,”

“A combination of increase in revenues and rationalization of expenditures helped reducing the fiscal deficit from a reported 7.6 percent in 2015 to a 5.4 percent of GDP in 2016.”

 

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National Export Strategy to be implemented with budget 2018: Advisor

July 13, 2017 (LBO) – Sri Lanka’s proposed National Export Strategy will be implemented with the budget of 2018, a senior official at the International Trade Center said.

The International Trade Ministry and Export Development Board, together with the help of the International Trade Center, is currently conducting the second round of consultations to chart a national export strategy for Sri Lanka.

Trade Strategy and Competitiveness Advisor of the International Trade Center Charles Roberge told reporters in Colombo that their objective is to come up with a prioritized action plan.

“We are following the guidance of EDB, Ministry as well as the private sector to finalize this document by December,” Roberge said.

“We will also ensure that it is ready to be implemented with the new budget for 2018.”

The 5-year strategy implementation period lays emphasis on diversification of exports through strengthening of emerging sectors.

Their focus sectors are ICT, wellness tourism, spice concentrates, boat building, processed food & beverages and electronic & electrical machinery.

In addition, the strategy will ensure that all export sectors including mature sectors will benefit from the strengthening of trade support functions.

National quality infrastructure, innovation, R&D and logistics were shortlisted to achieve the National Export Strategy vision and strategic objectives.

More than 300 public and private sector representatives are expected to attend this month’s consultations in order to chart the next export growth cycle of the country.

 

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LANKA MILK FOODS - DIVIDEND ANNOUNCEMENT

LANKA MILK FOODS (CWE) PLC
Company ID: - LMF
Date of Announcement: - 12.Jul.2017
Rate of Dividend: - Rs. 2.50 per share / First & Final Dividend
Financial Year: - 2016/2017
Shareholder Approval: - Required
AGM: - 24.Aug.2017
XD: - 25.Aug.2017
Payment: - 06.Sep.2017

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Sri Lanka's new Inland Revenue Act will be investor friendly: Finance Minister

July 12, 2017 (LBO) – Sri Lanka’s Finance Minister says the main objective of the new Inland Revenue Bill is to simplify the tax system in order to create an investor friendly environment to attract more foreign investments.

“The new Inland Revenue Bill will broad-base the tax system and incorporate globally accepted new tax principles to deal with international cross border relations,” Finance Minister Mangala Samaraweera said.

He was speaking at a meeting with representatives of the trade unions of the Inland Revenue Department (IRD).

Sri Lanka’s Foreign Direct Investment dropped by 45.6 percent to a very low level of slightly over US 300 million dollars in 2016 from 658 million in 2015, official data shows, with the island experiencing a period of policy instability with inconsistent taxation.

Samaraweera said he was prepared to consider trade union concerns in order to enhance the tax revenue of the government.

The trade union representatives briefed Samaraweera on administrative and technical issues in the department.

The representatives cited the lack of local and foreign training opportunities for officers of the Inland Revenue Department and apprised the minister on issues faced by them with regard to the payment of incentives.

They also stressed the need for a new building for the head office of the department.

The government expects the Inland Revenue Bill will be a key aspect of the fiscal consolidation drive after weak tax collection in recent years, partly due to the complexity of the Act.

In May, the cabinet gave the go ahead to gazette and present in Parliament the new Inland Revenue Bill, as proposed in budget 2016.

 

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Sri Lanka cuts export earnings target to USD18bn by 2020

July 12, 2017 (LBO) – Sri Lanka is currently looking at a target for export earnings of 18 billion US dollars by 2020, State Minister of International Trade Sujeewa Senasinghe said.

In 2015, Sri Lanka originally expected a 50 billion dollar export target by 2020 and later reduced to 20 billion dollars amid sluggish export performance in the country.

“We can speak of large numbers; but we don’t want to talk about impractical things,” Senasinghe told reporters Tuesday.

He was speaking at a media conference ahead of Sri Lanka’s second national symposium to be held this week to develop a national export strategy.

“With the GSP+ concessions, at least 18 billion dollars export earnings by 2020; we think it as a victory.”

Last year, earnings from exports of 10.3 billion dollars reflected a decline of 2.2 percent, from 10.5 billion dollars in 2015, with declines in agricultural and industrial exports.

Sri Lanka’s international trade performance has been lackluster especially during the last decade, regressing to levels that were seen during the pre-liberalization era.

In 2016, Sri Lanka’s trade openness was 36.5 percent, while exports relative to GDP reduced to a level of 12.7 percent.

Malaysia had an export to GDP ratio of 67.5 percent in 2015, while Thailand was 54.2 percent and Vietnam 83.7 percent.

 

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CSE records second highest yearly foreign inflow

July 12, 2017 (LBO) – Sri Lanka’s Colombo Stock Exchange has recorded the second highest-ever yearly net foreign inflow of 22.8 billion rupees, the exchange said.

The highest net foreign inflow of 38.6 billion rupees was recorded in 2012.

On Monday, foreign investors bought 127.4 million rupees worth of shares while selling 26.3 million rupees worth shares.

Total net foreign inflow for both the primary and secondary market by Monday was 32.42 billion rupees.

All Share Price Index is up by 8.35 percent while S&P SL 20 Index is up by 11.67 percent in terms of year to date figures.

Last year, net foreign inflow to the Colombo bourse was 383.5 million rupees while in 2015 the market recorded a net outflow of 5.37 billion rupees.

 

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ACL PLASTICS PLC - DIVIDEND ANNOUNCEMENTS

ACL PLASTICS PLC
Company ID:- APLA
Date of Announcement:- 11.Jul.2017
Rate of Dividend:- Rs. 6.00 per share / Interim Dividend
Financial Year:- 2016/2017
Shareholder Approval:- Not Required
XD:- 20.Jul.2017
Payment:- 31.Jul.2017

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KELANI CABLES PLC - DIVIDEND ANNOUNCEMENTS

KELANI CABLES PLC
Company ID:- KCAB
Date of Announcement:- 11.Jul.2017
Rate of Dividend:- Rs. 3.50 per share / Interim Dividend
Financial Year:- 2016/2017
Shareholder Approval:- Not Required
XD:- 20.Jul.2017
Payment:- 31.Jul.2017

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KELANI TYRES PLC - DIVIDEND ANNOUNCEMENTS

KELANI TYRES PLC
Company ID:- TYRE
Date of Announcement:- 11.Jul.2017
Rate of Dividend:- Rs. 2.50 per share / Interim Dividend
Financial Year:- 2017/2018
Shareholder Approval:- Not Required
XD:- 20.Jul.2017
Payment:- 31.Jul.2017

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SriLankan Airlines, CEB, CPC record Rs30bn loss in first 4 months

July 10, 2017 (LBO) – State-owned carrier Sri Lankan Airline, main power supplier Ceylon Electricity Board and Ceylon Petroleum Corporation together have recorded a loss of 30 billion rupees in the first four months of this year, a treasury report showed.
Sri Lankan Airlines
The total loss of Sri Lankan Airlines increased by 55 percent to 9.52 billion in first four months compared to loss of 6.12 billion recorded in the same period last year.
The accumulated losses and the negative net worth of the airline as at the end of April 2017 reached 170 billion rupees and 116 billion rupees respectively.
Treasury has provided guarantees and letters of comfort in order support the Sri Lankan Airlines to secure the loan facilities until the restructuring process is concluded.
The accumulated commitments up to April 2017 stood at 29.92 billion and 210 million US dollars.
The report said 168 employees of Mihin Lanka (Pvt) Ltd have resigned under the VRS scheme offered while 124 employees were absorbed to SLA.
The government seeks to restructure Sri Lankan Airlines and expects to offer an equity stake and management control of the company with a view to turnaround the airline as a commercially viable entity.
Due to delays in selecting a suitable business partner, the cabinet committee on economic management has appointed a high level committee to study all options available for the restructuring.
Ceylon Electricity Board
The state-owned power utility Ceylon Electricity Board has recorded an operating loss of 16.59 billion in the first four months of 2017 compared to the loss of 5.78 billion recorded in the same period of 2016.
The total outstanding obligations to the banks of CEB in the first quarter stood at 31.74 billion rupees compared to 39.05 billion rupees at the end of April 2016.
The Treasury has provided 6.0 billion through a supplementary allocation to CEB to compensate for the additional cost incurred in utilizing high cost thermal power generation in order to provide an uninterrupted supply of power to the country.
CEB faced challenges due to dry weather condition prevailed in the country from the latter part of 2016.
Ceylon Petroleum Corporation
Increased cost of imports had a negative impact on the financial performance of Ceylon Petroleum Corporation, with the entity incurring a loss of 3.8 billion during the first 4 months of 2017.
It reported an operational profit of 37.6 billion during the same period in 2016.
Government has issued Treasury guarantees worth of 1,600 million US dollars as collateral to the Bank of Ceylon and Peoples Bank against the borrowings of CPC.
The depreciation of the rupee against the US dollar has resulted in the CPC incurring an overall exchange loss of 5.7 billion rupees during the first 4 months of 2017.

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Sri Lanka's foreign debt USD25.6bn by April: Mid Year Fiscal Report

July 10, 2017 (LBO) – Sri Lanka’s total outstanding external debt was 25.61 billion US dollars (Rs3,886bn) by the end of April 2017, up from 23.1 billion dollars during the same period last year, the Mid-year Fiscal Report revealed.
Government’s total debt service payments for the first four months of this year amounted to 713.4 million dollars, of which, 332.9 million has been paid for principal repayments and the balance 313.3 million has been paid for interest payment.
Last year, total debt service payments amounted to 546.8 million dollars, of which 309.7 million dollars was principal payments and the balance 237.1 million was for interest payments, during the January to April period.
Total estimated debt service payment for 2017 is 2,183 million dollars, of which 30 percent has been reached by 30th April 2017.
The report said debt service payments of state owned enterprises are not included in these figures.
Meanwhile, the government has entered into ten financing commitment agreements with foreign development partners and lending agencies during the four months.
Out of the total commitments, 174.3 million dollars and 69.8 million dollars have been made in the forms of loans and grants respectively.
As of 30th April 2017, the total undisbursed balance of foreign financing available from already committed loans to be utilized during the next 3-5 years is 8,022.2 million dollars.

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Sri Lanka foreign reserves up 3-pct in June

July 07, 2017 (LBO) – Sri Lanka’s official foreign reserves climbed three percent (USD193.9mn) to 6.9 billion dollars in June, official Central Bank data showed.

Foreign currency reserves were 5.99 billion dollars and reserves in gold were 0.89 billion dollars.

Central Bank’s Treasury bill holdings were down from 214.35 billion rupees in May to 144.38 billion rupees in June.

During the year, up to Friday, the Sri Lanka rupee has depreciated against the US dollar by 2.5 percent.

Given the cross currency exchange rate movements, the Sri Lanka rupee has depreciated against the sterling pound by 7.7 percent and euro by 10.0 percent.

Sri Lanka rupee has depreciated against the Japanese yen by 4.7 percent and Indian rupee by 7.1 percent during this period.

 

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India will move on ETCA at a pace set by Lanka: envoy

Assuaging fears that India is set to “impose” an Economic and Technical Cooperation Agreement (ETCA) on Sri Lanka, the Indian High Commissioner in Sri Lanka, Taranjit Singh Sandhu, has said that India is ready to move on the ETCA at a pace Sri Lanka is comfortable with.
“The proposed Economic and Technical Cooperation Agreement is in mutual interest. However, I would like to reiterate that we are ready to move at a pace Sri Lanka is comfortable with,” Sandhu said in his address at the Ninth Annual General Meeting of the Indo-Lanka Chamber of Commerce and Industry (ILCCI) on July 6.
Addressing concerns in Sri Lanka that projects outlined in an MoU signed on April 25 could lead to Indian domination of the Sri Lankan economy, Sandhu said: “Certain sections, who may not be very well informed, unfortunately have been trying to portray that Sri Lankan interests would be harmed when some of these projects take off. Nothing could be further from the truth. These are joint projects.”
“These projects bring huge investments and valuable foreign exchange for Sri Lanka. They create several thousands of direct and indirect jobs. These projects only bring benefits to Sri Lanka. You are practical and pragmatic. We would like you to project the right message in your interactions.”
Export Growth
Delineating Sri Lanka’s gains through economic links with India, the envoy said that Sri Lanka’s share of exports under the 2000 India-Lanka Free Trade Agreement increased from 16% in 2000 to more than 65% in recent years. And the majority of Sri Lanka’s exports to India are through FTA.
On the other hand, the share of FTA items in India’s exports to Sri Lanka increased from 9% in 2000 to just 13% in recent years. The majority of India’s exports to Sri Lanka are outside the FTA. The facts and figures show FTA has indeed been beneficial to Sri Lanka, he pointed out.
The High Commissioner noted with happiness that the Sri Lankan Airlines is currently the largest foreign carrier to India. India also contributes significantly towards Sri Lankan tourism, with an estimated 400,000 Indians visiting Sri Lanka annually.
Sri Lanka has been providing Maintenance Repair and Operations (MRO) services to Indian airline companies.
Similarly, Colombo Dockyard has been supplying vessels to India and has also been actively engaged in ship repair business with India. More than 70% of Colombo Port trans-shipment is India-related, an important lifeline for Colombo Port, Sandhu noted, to show that India-Sri Lanka economic relationship is not a one-way street.
Chamber’s Role, Perception Matters
Highlighting business chambers’ role in creating perceptions, Sandhu said: “Perceptions matter in everyday life. It matters the most in business. Your perceptions about the economy can have a powerful impact on the economy itself. Your paintbrush can color others’ vision. This also means that you have a huge responsibility.”
The chamber could play a key role by disseminating information on investment and trading opportunities, highlighting the positives and also bringing to the High Commission’s notice the negatives so that these could be attended to.
“You are not just a collection of Indian and Sri Lankan companies. You are one among those few groups who know India and Sri Lanka equally well. You have seen and experienced both yourselves. I consider your ground knowledge as an important tool to bridge the asymmetry of information,” the envoy said.
“If there are positive stories, let the world know. If there are not-so-positive stories and you are in difficulty, let us know. We will be happy to provide all support to resolve it,” he added.
Stressing the need to look head imaginatively, the envoy said: “As a government, our aim is to create tangible and sustainable opportunities for the benefit of the people in both countries. We need to look ahead. We need to dream high. What we can achieve together is limited only by our collective imagination.”
Conventional, Non-conventional Energy
Sandhu pointed out that India-Sri Lanka development partnership stands at US $2.6 billion as on date.
“We are ready to strengthen our development partnership further based on Sri Lanka’s needs,” the envoy assured and recalled the MoU signed in April on specific projects in sectors, such as energy, power, roads, ports, and railways.”
Sandhu said that India intends to make substantial investments in Sri Lanka in conventional and non-conventional energy in the days ahead.
“Considering that LNG is a cheaper and cleaner fuel, we are sharing our expertise and skill set with Sri Lanka to facilitate the process of gasification, of the Sri Lankan economy. We also see huge potential in Sri Lanka for wind and solar energy as well. India has made rapid advance in solar technology and we are ready to share it with Sri Lanka.”
Reforms in India
Delineating some of the landmark changes taking place in India, Sandhu referred to the all-India Goods and Services Tax (GST) and said: “Reforms are sweeping across India. The impact of the reforms has made India, a land of limitless possibilities and endless opportunities.
The launch of Goods and Services Tax from 1 July is a milestone in the economic history of India. The creation of ‘One Nation; One Market; One Tax’ is expected to generate several positive externalities. Economists are predicting an addition of 2% growth in India’s GDP from the roll out of GST.”
India’s growth is not in the interest of India alone, the envoy said.
“As my Prime Minister has said, our friends and partners, especially our neighbors, have the first claim on the fruits of India’s growth. Together we progress. India would like to make Sri Lanka’s onward journey faster and easier.”

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