National consensus mooted to overcome potential sovereign default

A national consensus backed by a common minimum programme, which should be implemented by an independent team of experts, is mooted for Sri Lanka to overcome a potential sovereign default next year.

CB holds policy rates steady to spur growth despite inflation worries

Capping weeks of expectations for a rate hike by certain quarters, the Central Bank decided to maintain the current monetary policy unchanged this week in a sign of bias towards supporting the recovery of the economy beset by the pandemic and told the current bout of inflation is, “transitory”.

New taxes in Budget 2022 could dent insurers’ near-term profitability: Fitch

Insurance companies could see some near-term pressure on their top lines and thereby their earnings, from the proposed new taxes on the corporates in Budget 2022 but they are unlikely to hurt their capitalisation levels, which strengthened during the pandemic, according to Fitch Ratings.

Ease in unemployment masks Sri Lanka’s shrinking labour force

While Sri Lanka had made progress in bringing its official jobless rate down, the issues facing the workers appear to run deeper as many who lost their employment due to the pandemic-induced economic restrictions appear to have given up looking for work, a segment, which isn’t captured in the official unemployment rate.

Prime lending rate breaches 8%; higher short-term rates likely

The weekly Averaged Weighted Prime Lending Rate (AWPLR) eclipsed the 8.0 percent level last week, signalling that the present upturn in the market lending rates has more room to run its course, on the back of the prolonged shortages in the rupee and dollar market liquidity and persistently higher prices.

Rubber sector not impressed with plan to ban rubber products imports

The proposed ban on importation of rubber-based products and the parallel promotion of investments into local production of rubber related finished goods may not yield the desired results as the country is already scrambling to meet the demand for natural rubber needed to power its existing value addition industries, according to an industrialist.

Export income surges in Oct. as Western markets open

Sri Lanka’s sector recorded an all-time high earning for any October in the country’s export history, with October 2021 fetching a revenue of US $ 1.16 billion.

Budget wants single-digit interest rates to stay as fiscal and monetary policies dovetail

In an apparent attempt taken at dovetailing the fiscal policy for next year with the monetary policy, which is increasingly getting skewed towards more tightening with foreign exchange challenges and inflationary pressures, the budget presented last week aims at supporting the interest rates at single digit levels.

Govt. slammed for failing to build foreign reserve buffers

In the absence of policy guidance, the government has failed miserably to build up its foreign reverses in contrast to other South Asian governments, which have beefed up reserves to meet the external challenges, a senior Opposition lawmaker charged.

Tax experts, biz struggle to come to grips with Social Security Contribution

Experts in tax and businesses on Monday attempted to come into grips with the proposed Social Security Contribution in the budget presented last week as the broad-based application could lead to enormous damage to several crucial sections of businesses and industries such as retail and exports, which are already grappling with low margins and competitiveness.

Trade gap narrows first time in six months in September

Sri Lanka’s trade deficit declined for the first time in six months on a year-on-year (YoY) basis in September to US $ 495 million, from US $ 525 million a year ago, as export income continued to grow in the month while import expenditure remained static.

Surcharge tax sparks debate over tax principles, equity and investor confidence

The one time surcharge tax imposed retrospectively on individuals and companies from the budget 2022 immediately ignited debate to make it the hot button issue among private sector stakeholders due to its violation of basic tax principles such as equity and its application to the past incomes, as the proposal had caught many off guard.

Budget 2022 targets to cut fiscal deficit to 8.8% of GDP

Sri Lanka expects to reduce its fiscal deficit to 8.8 percent of the gross domestic product (GDP) in 2022, down from the estimated 11.1 percent deficit in 2021, as the maiden budget of Finance Minister Basil Rajapaksa looked to cut expenses and introduce measures to increase tax and other revenues.

State borrowings from banking sector at Rs.110bn in September

The Central Bank and the commercial banks gave the government Rs.110 billion in September on a net basis, little lower than what the government borrowed a month ago as the debate is raging if the liquidity injections by the Central Bank to the government should be reined in to tackle the igniting inflation pressures and the current shortage of foreign exchange in the domestic market which contributed to the shortages of key commodities and other

Incentive package for migrant workers to boost forex inflows

The Central Bank yesterday said that plans are afoot to incentivise the Sri Lankan expatriates who ensure their remittances enter the country through formal channels, so that both the migrant workers and national economy can reap the benefits of a win-win situation.

SL mulls fashioning digital economy policies after China

Sri Lanka is confident it can replicate policies of the most advanced digital economy in East Asia, China, in its journey towards digital transformation, but challenges remain in incorporating the learnings into the national policy framework.

Moratoria extended to COVID-19-hit businesses cross Rs.4000bn mark

The relief measures implemented by the Central Bank of Sri Lanka (CBSL) and extended to the local businesses impacted by the COVID-19 pandemic have crossed the Rs.4,000 billion mark, with the Saubagya loans amounting to over Rs.179 billion.

Foreign reserves dip to US$ 2.3bn by October-end

Foreign exchange reserves were measured at US$ 2,267.5 million by the end of October, down from US$ 2,704.2 million in September as the Central Bank settled US$ 492.9 million worth foreign liabilities during the month. Sri Lanka is scrambling to shore up its reserves amid slowdown in inflows due to the pandemic and rating downgrades.

CLC becomes Sri Lanka’s first Rs.500bn market cap entity

Commercial Leasing and Finance PLC (CLC), a unit of LOLC Group, yesterday became the first listed entity to cross the Rs.500 billion mark in market capitalisation on the Colombo Stock Exchange (CSE), while driving the benchmark All Share Price Index (ASPI) to an all-time high of 10,632.21 points at the market closure.

Sri Lanka should look at dealing with pandemic as endemic: ICRA Lanka

As more countries appear to be ditching the ‘zero-COVID’ strategy and beginning to deal with the virus as an endemic compared to a pandemic, rating agency ICRA Lanka recommends Sri Lanka to follow the same path as the worst of the pandemic appears to be over while the persistent pandemic era restrictions aren’t viable from the standpoint of its fledgling economy.

Wheat flour shortage pushes confectioners, bakers to cut production

The availability of ready-to-eat wheat flour-based food products will take a considerable hit in the coming weeks, as the shortage of key ingredients to feed the supply chains of the confectionary and bakery sectors has pushed the manufacturers to cut down production, despite the high demand for such items.

PBJ says Budget 2022 will go beyond traditional parameters

The government is expected to present a non-traditional and transformational budget targeting a sizeable reduction in the country’s fiscal deficit for 2022 by focusing on further cutting down non-essential and non-prioritised State expenditures while maintaining the stable policy environment including the tax policy.

Signs indicate that monetary stimulus has reached limits: WB

There are signs that the prolonged and unprecedented monetary and fiscal policy support extended to blunt the negative impacts on the pandemic on the broader economy has reached its limits, as the excesses are emerging by way of rising fiscal deficit, public debt and inflation, according to a World Bank economist.

Inflation jumps to 4-year high with lifting of price controls

Inflation in the Colombo district surged in October after the government lifted price controls on many essentials while there were clear effects on prices from the easing of lockdowns as people ventured out for outdoor dining and other recreational activities after months of being hunkered down due to virus fears and related restrictions.

CB tightens exporter proceeds surrender rules

Issuing fresh rules on the repatriation and conversion of export proceeds, the Central Bank yesterday asked the exporters of both goods and services to convert their export proceeds into rupees, upon meeting a number of authorised payments in foreign exchange, on or before the seventh day of the following month, effective from October 28.

Moody’s downgrades SL to Caa2; outlook Stable

Moody’s Investors Service yesterday downgraded Government of Sri Lanka’s long-term foreign currency issuer and senior unsecured debt ratings to Caa2 from Caa1 under review for downgrade, concluding a review for downgrade initiated on July 19, 2021. The outlook is Stable.

WB calls for increased support for services and informal sectors

It is vital to support Sri Lanka’s services and informal sectors, which form the largest share of the economy, to recover from the pandemic-induced hardships, as they remain the hardest-hit from the once-in-a-century health crisis, according to a World Bank economist.

SL to register GI for Ceylon Tea with technical support from French government

Cabinet consent was given to the Sri Lanka Tea Board (SLTB) to enter into necessary agreements to secure technical assistance of France’s inclusive public development bank, Agence Francuise de Developpment (AFD) to facilitate the process of registering the Geographical Indicator (GI) for Ceylon Tea.

ASPI closes above 10,000-point mark creating history

Marking a new milestone, the Colombo Stock Exchange’s (CSE) benchmark index All Share Price Index (ASPI) yesterday closed over the 10,000-point mark for the first time in its history, driven by high participation of local retail investors.

Eight-month BOP deficit tops US$ 2.4bn; but slightly eased from July

Sri Lanka’s Balance of Payment (BOP) deficit, which could hit the highest on record this year, eased slightly in August after the direct investments received through the first six months were counted as an inflow with a long lag.