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CB maintains interest rates at current level with tight monetary policy.

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By: Staff Writer

Colombo (LNW): The Monetary Board of the Central Bank of Sri Lanka decided to maintain the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) of the Central Bank at their current levels of 15.50 per cent and 16.50 per cent, respectively.

Having considered the recent and expected economic developments, and macroeconomic projections on domestic and global fronts, the Board viewed that the maintenance of the prevailing tight monetary policy stance is necessary.

It was of the opinion that that the monetary conditions must remain sufficiently tight to facilitate the continuation of the ongoing disinflation process amidst the improvements in market sentiments following the finalization of the Extended Fund Facility (EFF) from the International Monetary Fund (IMF) and the downward shift in elevated market interest rates reflecting the falling risk premia

Headline inflation (year-on-year) based on the Colombo Consumer Price Index (CCPI) continued to decelerate for the sixth consecutive month in March 2023.

Despite a sizeable impact from the recent hike in electricity tariffs and envisaged second round effects of previous hikes, headline inflation moderated in March 2023, mainly reflecting a larger-than-expected reduction in food inflation.

Meanwhile, core inflation also decelerated for the sixth consecutive month in March 2023, reflecting the continued moderation in underlying demand pressures in the economy.

A faster deceleration of inflation is expected from April 2023 with the reduction in domestic prices of essentials following the greater pass through of the moderation of global commodity prices and the recent appreciation of the Sri Lanka rupee, and the large disinflationary impact arising from the base effect.

A notable moderation in the yields on government securities was also observed driven by the improvements in market sentiments.

As the broader framework of the envisaged domestic debt optimization operation has now been made public, the large risk premia attached to the government securities are expected to dissipate in the near term, paving the way for other market interest rates that are benchmarked to the yields on government securities to moderate further.

The economy is projected to recover gradually towards the latter part of 2023, supported by improvements in domestic supply conditions, enhancement in business and investor sentiments along with the anticipated improvements in foreign exchange inflows, envisaged reduction of market interest rates, and the impact of policy measures being implemented to strengthen the growth outlook.

The recovery of activity is expected to sustain in the medium term underpinned by the implementation of the economic adjustment programme outlined in the IMF-EFF.

All Ceylon Canteen Owners Association Amends Food Prices Following Gas Price Reduction

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In response to the recent reduction in gas prices in Sri Lanka, the All Ceylon Canteen Owners Association has announced a reduction in the prices of certain food items. Chairman of the Association, Asela Sampath, stated that the price of a rice packet, Koththu, and Fried Rice will be reduced by 20% from midnight on April 5th.

Asela Sampath also announced that the price of a cup of plain tea will be reduced by Rs. 10, with the new price being set at Rs. 30. Additionally, a cup of milk tea will now cost Rs. 90.

This decision by the All Ceylon Canteen Owners Association comes as a relief to many customers who have been struggling with rising food costs. With the reduction in gas prices, it is hoped that more canteens and restaurants will follow suit and reduce their prices.

The Association has called on all its members to implement the new prices as soon as possible to benefit customers. This move is expected to boost customer satisfaction and promote more business for canteens and restaurants.

The public is encouraged to check with their local canteen or restaurant for the updated prices of food items. The All Ceylon Canteen Owners Association has assured customers that they will continue to monitor prices and make necessary adjustments to support the public during these challenging times.

Sri Lanka to lose US$10 billion as compensation for the the X-Press Pearl Disaster

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By: Staff Writer

Colombo (LNW): Time is running out for Sri Lanka to take legal action for the X-Press Pearl Disaster claiming environmental damage caused by the fire that broke when the vessel approached the Port of Colombo on May 19, 2021.

The Attorney General’s (AG) Department and the Justice Ministry have directed the Marine Environment Protection Authority (MEPA) to submit the final report compiled by an expert team detailing the environmental damage caused by the X-Press Pearl disaster.

The X-Press Pearl, caught fire on May 25 2021 and sank nine nautical miles off Sri Lankan waters on June 2, and was considered as one of the world’s worst marine disasters involving freighting chemical cargo.

The country faces the risk of losing US$ 10 billion in compensation if the Sri Lankan government did not take legal action within 45 days for the X-Press Pearl Disaster, the Centre for Environmental Justice (CEJ) claimed.

CEJ Senior Environmental Scientist Hemantha Withanage said that a new research report finds heavy pollution in the marine environment around the Xpress Pearl Shipwreck.

“The CEJ believes that under Sri Lankan law, the case to apply for compensation should be filed within two years of the incident, that is, before May 29, 2023. Now we have only 45 days remaining,” he said.

A statute of limitations sets the maximum amount of time that parties involved in a dispute have to initiate legal proceedings from the date of an alleged offence, whether civil or criminal. As such, instructions were issued to hand over the report within three weeks.

The Justice Minister also expressed annoyance that MEPA had sent the final report to an Australian firm hired as a legal consultant first without sending it to the Justice Ministry.

“The report should have come to the Justice Ministry first. It is then forwarded to the AG’s Department. That is the process. The move to first send the report to a foreign legal firm and ask for recommendations is highly suspicious and gives rise to claims that this is a deliberate delaying tactic,” the minister claimed.

The marine disaster involving the ill-fated X-Press Pearl,the vessel approached the port of Colombo on May 19, 2021, caught fire on May 25 and sank nine nautical miles off Sri Lankan waters on June 2, and was considered as one of the world’s worst marine disasters involving freighting chemical cargo.

“There were 1,486 containers in the vessel. 81 of them contained extremely hazardous chemicals harmful for the environment, and 349 contained epoxy resin.

Also, there were 6700 metric tons of various plastic pellets and other substances, including nitric acid.

They were burning for several days, causing marine pollution along the sea area in Negombo, around 750 km sea area around Sri Lanka, in other states located in the Indian Ocean, and in the sea and coastal resources as far as Somalia.

Another Stock of Imported Eggs Arrive in Sri Lanka, Awaiting Approval

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Last night, on April 4th, a new stock of eggs was imported from India to Sri Lanka, according to the State Trading Corporation (STC). This brings the total number of imported eggs thus far to 4 million. The first stock of 2 million eggs arrived on March 23rd, while the second shipment carrying 1 million eggs arrived four days ago.

Although the second shipment has arrived, it is still awaiting approval from the Animal Production & Health Department. Samples from the third egg consignment that reached the island last night will also be referred to laboratories for testing later today, according to STC Chairman Asiri Walisundara.

Currently, the imported eggs are only distributed among bakery product manufacturers as they have not yet received approval to be sold for the general public. The long-awaited import of eggs comes after a shortage of eggs in the country, which resulted in a significant price increase in local markets.

It is hoped that the imported eggs will alleviate the shortage and help to stabilise prices. However, the Animal Production & Health Department must first grant approval for the eggs to be sold to the general public. The public is eagerly awaiting the government’s decision, hoping for a solution to the ongoing egg shortage.

Meteorology Department Predicts Direct Sunlight over Sri Lanka from April 5th-15th

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The Department of Meteorology has released a weather report, stating that the sun will be directly over Sri Lanka’s latitudes from today, 5th April until 15th April. The department has provided details on the apparent northward relative motion of the sun and indicated that the sun will be directly over a few areas in Sri Lanka at noon today.

Thalpe, Walipitiya, and Thihagoda are the nearest areas to Sri Lanka where the sun will be overhead today at around 12:13 noon. Along with this information, the department has also predicted showers or thundershowers in several places in the Uva, Central, Southern, Sabaragamuwa, Western, North-Western, and North-Central provinces, as well as the Mannar and Vavuniya districts during the afternoon or night.

The Met Department has warned that some areas may experience fairly heavy showers above 50mm, and a few showers may occur in the Anuradhapura, Vavuniya, and Mannar districts during the morning. It has requested the public to take adequate precautions to prevent damage caused by temporary localised strong winds and lightning during thundershowers.

Furthermore, the department has predicted that showers or thundershowers will occur in several places in the sea areas off the coast extending from Mannar to Hambantota via Puttalam, Colombo, Galle, and Matara during the evening or night. Wind speed is expected to be (20-30) kmph, and winds will be south-easterly to south-westerly. The sea areas around the island will be slight. However, the department has warned that temporarily strong gusty winds and very rough seas may occur during thundershowers.

The Department of Meteorology is urging the public to remain vigilant and take necessary precautions during this period of direct sunlight and anticipated rain.

Ballot Papers used in the secret ballot to elect an MP to the office of President has been destroyed – Speaker

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Hon. Speaker announced that the Ballot Papers used in the secret ballot to elect a Member of Parliament to the office of President has been destroyed


Hon. Mahinda Yapa Abeywardana, Speaker of Parliament stated that the Ballot Papers used in the secret ballot to elect a Member of Parliament to the office of President on the 20.07.2022 has been destroyed.
The Speaker announced that the Ballots were destroyed by the Secretary-General of Parliament following the procedure in terms of the provisions of Section 18 of the said Act and with the approval of the Committee on Parliamentary Business held on 24.03.2023.

Sri Lanka Original Narrative Summary: 05/04

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  1. Apparel industry insiders say buyers’ orders have dropped by a massive 20-25%: also say the industry is facing tough times as it’s biggest players operate at half-capacity while some factories have closed.
  2. Catholic Bishops’ Conference urge the Govt to uphold the Constitution and ensure democracy: asks to desist from interfering with the independence of the Judiciary: says to preserve freedom of speech & expression of all citizens.
  3. CPC says the existing fuel quota has been increased for the New Year festive season as follows: 3-wheeler quota from 5L to 8L, Motorcycles from 4L to 7L, Buses from 40L to 60L, Cars from 20L to 30L, Land Vehicles from 15L to 25L, Lorries from 50L to 75L, Quadric Cycles from 4L to 6L, Special Purpose Vehicles from 20L to 30L and Vans from 20L to 30L.
  4. Supreme Court declares many clauses of the proposed Central Bank Bill as being inconsistent with the Constitution: directs Parliament to amend 39 clauses: one of the Petitioners against the proposed Bill Ms Jehan Hameed says the SC Order has ensured continued Parliamentary control of the nation’s finances.
  5. Central Bank says it’s gross official reserve including the SWAP facility from PBOC of USD 1.4bn, has risen to USD 2.7bn at end-Mar’23: IMF says Sri Lanka’s external debt due but not paid as at end-Dec’22 was USD 3.0bn: Monetary Board maintains policy interest rates at current levels of 15.5% and 16.5%.
  6. LMD-Nielsen Business Confidence Index regains some lost ground to register 72 points: however, it’s still 60 points lower than the level prevailing an year ago of 132 and 52 points below the all-time average of 124 points.
  7. Centre for Environmental Justice Senior Scientist Hemantha Withanage says Sri Lanka may lose compensation of around USD 10bn for the MV X- Press Pearl disaster, if the Govt does not take legal action within the next 45 days: also says a new report has found heavy pollution in the marine environment around the shipwreck.
  8. State Ministry of Primary Health Care, Epidemics and Covid Disease Control Secretary Dr. Amal Harsha de Silva says former President Gotabaya Rajapaksa’s involvement in Covid-control made it difficult for those engaged in it to function to their fullest capacity.
  9. Opposition Leader Sajith Premadasa says it is laughable that the Govt is trying to “buy over” SJB MPs by giving them Rs.20 mn each: asserts SJB MPs will never betray the masses: a few days ago, some media reports claimed that former Ministers Harsha de Silva, Kabir Hashim and Eran Wickremaratne were planning to cross over to the Govt.
  10. Indian Premier League (IPL) side “Gujarat Titans” acquires Sri Lanka’s ODI and T20I Captain Dasun Shanaka in place of New Zealand’s Kane Williamson, who was injured a few days ago.

K. B. K. Hirimburegama sworn in as the new Ombudsman before the President

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 K.B.K. Hirimburegama, a retired High Court Judge, was sworn in as the Parliamentary Commissioner for Administration (Ombudsman) in the presence of President Ranil Wickremesinghe at the Presidential Secretariat this afternoon (04).

The appointment was made with immediate effect by the President under Article 156(2) of the Constitution of the Democratic Socialist Republic of Sri Lanka and Section 3(1) of the Parliamentary Commissioner for Administration Act No. 17 of 1981.

Secretary to the President Saman Ekanayake was also present on this occasion.

Fuel quota increased for Festive Season

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By: Isuru Parakrama

Colombo (LNW): The existing fuel quota will be increased with effect from midnight today (04), revealed Power and Energy Minister Kanchana Wijesekara.

The move comes in for the Sinhala and Tamil New Year season.

As previously planned, the Ceylon Petroleum Corporation (CEYPETCO) has ordered and procured the necessary stocks of fuel for the increased quota, the Minister noted.

He added that the Three Wheel (Special) category – registered taxis, have been allocated extra fuel allocations.

Local apparel sector demand declines amid liquidity and interest rate risks

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By: Staff Writer

Colombo (LNW): Sri Lanka’s exports of clothing totaled US $ 778.4 million in January–February 2023, a decline of 16.8 percent from the US $ 935.6 million in exports during the same period of the previous year. Due to the global economic recession in February 2023, its exports of clothing fell by 14.7 per cent.

The island nation’s textile exports for the first two months of 2023 climbed by 9.1 per cent year-over-year to US $ 60.5 million.

The central bank’s ‘External Sector Performance’ report states that over the same time period, exports of other made-up textile items totaled US $ 16.8 million, a decrease of 21.6 per cent.

Apparel and textile exports dropped by 2.32 % YoY to $ 483.35 million in February 2023. Though earnings from exports of apparel decreased by 14.75%, earnings from export of textiles increased by 146.67% in February 2023 compared to the same period in 2022.

Earnings from the exports of industrial goods declined in February 2023, compared to February 2022, with a substantial share of the decline being contributed by garments.

Reduced demand from major markets for garments due to unfavourable economic conditions globally mainly contributed for this outcome.

The slowdown in demand in major apparel markets and the rising borrowing costs have begun to take toll on the local apparel makers’ financial profiles as they are facing tight liquidity, weak interest coverage and leverage in their balance sheets.

Fitch Ratings last week downgraded Hela Apparel Holdings PLC, the only listed apparel maker in Sri Lanka, which has diversified its operations well into the African continent.

Fitch cut the company’s rating by a notch to ‘AA-‘ from ‘AA’ with the revising outlook to Negative, considering the risks of prolonged weakness in demand for apparel in key markets such as the United States and Europe and potential supply chain issues, which it said could delay improvement in profitability.

In the three months to December 2022, Hela Apparel reported revenue of Rs.21.8 billion, up by a solid 44.8 percent from the same period in 2021, but posted a net loss of Rs.1.68 billion from a profit of Rs.452.2 million a year ago as borrowing costs surged.

The finance cost more than tripled to Rs.1.09 billion between the two quarters reflecting the sharp rise in borrowing costs both at home and abroad.

“The business requires high working capital for growth, while profitability is challenged by weakening global demand. The high interest-rate environment is also pressuring liquidity with high borrowing costs,” Fitch Ratings said.

Hela has access to diversified funding as it recently raised US$ 14 million from Norway-based Norfund to fund its African operations.

“This supports Hela’s funding access compared with that of many other Sri Lankan corporates amid the country’s risk,” Fitch added.

Hela’s well diversified operations also reduces its operational risk as it has 10 manufacturing facilities spread in Sri Lanka, Kenya, Ethiopia, and its latest in Egypt.