Sri Lanka risks stagflation as prices continue to soar

Sri Lanka appears to be entering into an era of extremely high inflation and low growth, stoking serious concerns of stagflation, as the policymakers seem to have lost their grips on the economy, which is now going haywire with endless shortages of commodities and long lines of queues for daily essentials, which now have proved to be deadly for some unfortunate senior citizens.

Central Bank sold nearly US$ 600mn in forex to defend rupee before letting it go

In the two months to February, the Central Bank had sold nearly US$ 600 million in foreign currency to maintain the currency peg with the United States dollar at 198/203 levels before letting it go from March 7, as maintaining peg at that level became untenable.

“We stand ready to discuss all options for Sri Lanka”: IMF

The International Monetary Fund (IMF) made a formal announcement this week stating that it intends to kick off discussions with Sri Lanka to support the national economy.

BoP deficit hits all-time high of US$ 4bn in 2021

Sri Lanka has reported a record balance of payment (BOP) of US$ 3, 961 million for 2021, nearly doubling from US$ 2, 328 million in 2020, as the country’s merchandise import bill surged to a three-year high while it lost key tourism and remittance income due to the pandemic.

President announces decision to work with IMF

Addressing the nation, President Gotabaya Rajapaksa yesterday announced his decision to work with the International Monetary Fund (IMF) to explore a sustainable solution for the country to repay its foreign debt and build back its foreign reserves.

Sri Lanka ends single-digit interest rate era as average lending rate jumps above 10%

The average lending rate of commercial banks jumped above 10 percent in the final week of January, well ahead of the March policy rate hike, indicating that the era of single-digit interest rates is effectively over for Sri Lanka after a short-lived cycle.

Basil not meeting IMF for debt restructuring: Cabraal

Central Bank Governor Ajith Nivard Cabraal refuted claims made by foreign media that Sri Lanka is going to talk to the International Monetary Fund (IMF) for a rescue package and the Fund-led debt restructuring.

Russia-Ukraine conflict seen as biggest short-term impediment for SL tourism

The local tourism should brace itself to face a major impediment in relation to outbound travel and prolonged absence of tourists, especially from Russia and Ukraine, due to the ongoing conflict between the two countries.

COVID moratoria to be unwound from April 1

The payment holidays on loans of the pandemic-affected borrowers and other relief afforded to them during the pandemic, which were extended a few times, will expire effective from April 1 and specific instructions to banks in this regard will be issued shortly.

CB devalues rupee to Rs.230 against dollar

The Central Bank in a late night policy announcement yesterday devalued the rupee to Rs.230 against the US dollar despite Central Bank Governor Ajith Nivard Cabraal three days ago saying that the prevailing exchange rate was appropriate.

CB continues to resist IMF-led debt restructuring to end foreign exchange crisis

The Central Bank is still disinclined to recommend to the government to seek International Monetary Fund (IMF) support for a rescue package and foreign currency debt restructuring even amid the country in a deeper foreign exchange crisis, which has resulted in unending fuel shortages and power cuts.

Central Bank delivers 100bps rate hike to fight forex crisis

The Central Bank of Sri Lanka (CBSL) raised its key policy rates by 100 basis points, delivering its highest rate hike in more than a dozen years and raised selected administrative rates by 200 basis points effective immediately.

IMF spells out reforms required for SL to overcome current economic crisis

The International Monetary Fund (IMF) said Sri Lanka must raise interest rates and taxes, gradually float the exchange rate, market price utilities and reform unproductive State enterprises to reduce debt burden, rebuild reserves to come out of the prevailing economic mess that it has dug itself into.

SL risks running out of life-saving medicines, warn pharma importers

With the pharmaceutical stocks rapidly diminishing, the Sri Lanka Chamber of Pharmaceutical Industry (SLCPI) yesterday warned of a looming shortage of critical life-saving medicines in the market within the next two to six weeks, due to the worsening foreign exchange crisis and in the absence of a fair pricing formula for pharmaceutical products.

Tea exports to Russia and Ukraine come to grinding halt

Amid the on-going conflict between Russia and Ukraine where Western nations have imposed sanctions on Russian banks, Ceylon Tea exports to Russia and Ukraine, which account for 10 percent of the country’s tea exports, have come to a grinding halt.

Tourism sector to face another setback with Ukraine crisis

Sri Lanka’s reviving tourism industry is likely to hit another stumbling block, due to the ongoing invasion of Ukraine by Russia. The conflict will have direct implications on the number of tourist arrivals into the island nation.

Worker remittance bleeding continues despite incentives

The worker remittance income plummeted in January, continuing the months-long bleeding in the largest foreign income earner to the country, reflecting that the incentives offered by the authorities haven’t been effective in wooing migrants to use the official banking channels.

Market-driven price formula urged to pull SL out of darkness

Pulling Sri Lanka out from the darkness it has plunged into requires a market-driven price formula. The mechanism is necessary for the nation to effectively steer away from an energy crisis, an independent economic think tank said.

Basil promises funds for global tourism promotion campaign

The long-delayed global tourism campaign will receive funding assistance from the Treasury with Finance Minister Basil Rajapaksa having agreed to extend US $ 56 million for the effort.

National inflation surges to 16.8% in January

In line with Colombo prices, the national consumer prices too climbed in January reaching its highest levels since officials began compiling data for the index in October 2015 as food prices climbed and the non-food prices continued to gain pace.

Hela Apparel formally begins Egypt operations

Following the conclusion of its successful listing on the Colombo Stock Exchange, Hela Apparel Holdings has expanded its global footprint by formally commencing operations at its latest factory in Egypt recently.

CB confident of braving through forex storm

The national economy is increasingly feeling the brunt from the shortage of foreign currency to fuel economic activities. However, the Central Bank expressed confidence in securing enough funds to bolster reserves in the coming months.

CMTA concerned as crisis looms ahead for vehicle users

The Ceylon Motor Traders Association (CMTA) yesterday raised concerns about the difficulties in establishing letter of credit (LC) facilities with regards to spare parts orders.

Tourist hotels oppose blackouts on large-scale electricity users

Sri Lanka’s hotel sector yesterday asserted that the proposed blackouts for large-scale electricity consumers will be detrimental for the tourism industry, given that it is only beginning to slowly recover from the massive hit experienced in the last two years.

Government to negotiate with China, Japan and ME for imports, export inputs

Amid the ongoing foreign exchange crisis, President Gotabaya Rajapaksa has appointed three Cabinet Sub-Committees chaired by Foreign Relations Affairs Minster Prof. G.L. Peiris to lead negotiations with China, Japan and the Middle East, to secure imports of essential food items and export inputs.

Twenty BOI firms to invest US$ 165mn to expand existing operations

The Board of Investment (BOI) yesterday said twenty BOI enterprises recently entered into supplementary agreements collectively worth US$ 165 million to expand their existing operations.

Ceylon Chamber requests government to reconsider Surcharge Tax Bill

The membership of the Ceylon Chamber of Commerce (CCC) yesterday expressed serious concerns on the provisions of the Surcharge Tax Bill that has been gazetted recently to implement the budget proposal on same.

Sri Lanka’s 2021 remittance record worst in South Asia

A comparison of remittance inflows to selected South Asian nations between 2020 and 2021 showed Sri Lanka has had the worst record with negative growth in inflows last year, reflecting diverging fortunes between nations based on their foreign exchange policy.

Record trade deficit in Dec. as imports top US $ 2bn

Sri Lanka recorded its highest monthly trade deficit in December 2021, as imports surged to their highest ever monthly value amid significantly increased expenditure on oil imports, the trade data released by the Central Bank showed.

DCS survey shows grave impact lockdowns had on employment

The lockdowns and the subsequent restrictions on economic activities had an enormous impact on the employed population in all sectors with at least 7 percent of the paid workers having either lost or quit their employment during the first cycle of lockdowns alone, a survey showed.