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SL raises Rs 98 billion in maiden T-bill auction in 2023 amidst yields slide

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The Treasury bill yields continued their weeks-long descent to usher in the new year at the first weekly bill auction held yesterday for 2023 while the Central Bank also sold the entirety of bills it offered, extending the recent trend of full acceptance.

The Public Debt Department of the Central Bank sold Rs.98.0 billion in bills across the three tenures—Rs.60.0 billion under three-month bills, Rs.20.0 billion under six-month bills and Rs.18.0 billion under 12-month bills, matching the level of acceptance under the three tenures, respectively.

There has been a large tilt towards the acceptances under three-month bills in recent times, due to expectations that the elevated yields would remain only for some time.

While the yields have in fact eased from their recent peaks, such easing has been slow and has happened by extremely little amounts.

At the auction held yesterday, the three-month yield declined 63 basis points to 32.01 percent, the six-month bill shed 18 basis points to 32.02 percent while the benchmark 12-month bill came off 11 basis points to settle at 29.16 percent from their previous week’s levels.

Despite the yields of the government securities have eased somewhat, market interest rates haven’t budged, the data available through November showed.

While the Central Bank had indicated its desire to see some notable decline in the rates since November, it appears that it hasn’t materiali’ed up to now.

The Central Bank this week imposed certain restrictions on the banks of their ability to access the overnight window under the Standing Deposit and Lending facilities.

If the Central Bank still fails to see meaningful easing in the market rates, the next step could be to impose ceiling rates on deposits and select lending products offered by banks.

The elevated yields and market rates also reflect the sentiments of investors and other market participants on the current and future outlook of the economy.

The government is also offering daily by raising taxes in an ad hoc manner outside the budget, which was presented less than two months ago, raising questions if the government has a clear fiscal and an economic policy towards economic recovery.

SL Embassy in Washington DC announces career opportunities for 550 Sri Lankans

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The Embassy of Sri Lanka in Washington DC, United States has announced that the Embassy in cooperation with the Sri Lankan Foreign Employment Agency has secured job opportunities for 550 Sri Lankans.

Issuing a statement Sri Lankan Ambassador to the United States Mahinda Samarasinghe said 250 registered nurses, 100 lab technicians and 200 nursing assistants will be employed in the United States.

The recruitment process is underway, Samarasinghe tweeted.

MIAP

Ex President Rajapaksa returns to SL

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Former President Gotabaya Rajapaksa who was on a holiday with his family in the UAE has returned to Sri Lanka today (05).

Rajapaksa, together with his wife, family members and private secretary left Sri Lanka on December 26, 2022.

MIAP

LITRO slashes LP Gas price, incurs record-breaking profit (VIDEO)

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The LITRO Gas Company has decided to slash the prices of domestic LP gas from midnight today (05).

Calling in a briefing, the state-run gas distributor’s Chairman Muditha Peiris said the company has incurred a record-breaking profit of over Rs. 01 billion as the new year arrived.

Accordingly, the price of a 12.5kg domestic gas cylinder will be slashed by Rs. 201, to be sold for Rs. 4,409.

The price of a 5kg cylinder will be slashed by Rs. 80, to be sold for Rs. 1,770.

The price of a 2.3kg cylinder will be slashed by Rs. 38, to be sold for Rs. 822.

MIAP

Former Health Minister says demonstrations can no longer save country, urges unity of all

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The staging of demonstrations through a divided approach can no longer serve any purpose and all political leaders, therefore, shall unite to engage in politics in the mission of saving the country, said former Health Minister MP (Dr) Rajitha Senaratne, speaking to TNL.

“Statements made by me and politicians like me may have been subject to criticism in the beginning, but in the end, what was said became true. See how billions were spent on creating disunity among nations and wasting the country? This war was created by the politicians. What is the Sinhalese – Tamil crisis? The Sinhalese harboured Sinhalese Nationalism to secure the votes, the Tamil harboured Tamil Nationalism. Later on, even the Muslim leaders harboured Muslim Nationalism. Each move was made on the objective of upping their vote base,” Senaratne said.

He went on: “We had our votes without making lies. I remember in 2004, I acted as if I was the brigadier of Mr. Ranil Wickremesinghe to protect his peace treaty. Some days, I argued with everyone burning the midnight oil till 4 – 5 am. Despite them all, the people of my district know of my conduct. They know my ideologies. Some called me ‘Tiger’ back then, I was accused of betraying the country to the Tigers. Even then I surpassed one hundred thousand votes for the first time. The government lost, but I became the first in the district. All the criticism coming from the country is not accepted by our people. Because they know my routine.”

The Minister further emphasised that given the current situation of the country a divided approach cannot save it, saying, “Now those who ruled threw everyone down the bottom of the well. But blaming those who are responsible can no longer save it. Earlier, there was the National Crisis and we fought against each other and solved it. Then there were economic crises – During Chandrika’s regime, the Economy dropped to -1.3%. We came in and rose it up to 5%. Today, there is a Financial Crisis. We have no money. We have been compelled to beg. We have to wait till someone else gives us money. Dollars cannot be conjured. Even if Rupees are printed, Dollars cannot. But the more Rupees you print, the more cost of living we face. The inflation goes up. That being said, we cannot save ourselves alone. We all must unite.”

“Neither can we hold demonstrations, scream out loud, nor vandalise to find solutions. Should they be done, the country will collapse further,” Dr. Senaratne continued. “There was no man like me who craved for struggles. My entire life is a struggle. There are hardly any demonstration in Sri Lanka I did not attend. There are hardly any leftists whom I was friends with. I knew all leftists except Wijeweera. I am a man who held political dialogues with every armed leader in the North except Prabhakaran. One time, I hid comrade Dayapala Theeranagama in my room for three months when he was being man-hunted by the JR’s regime. Nobody visiting our house knew he was there. Having them all done, I am craving for ‘Aragalaya’ very much. But this is not the time for that. The people of our country are vulnerable. No jobs, very desperate. We never even dreamed of facing such a tragedy in our last days of politics. There are no wizards in this country to make this country come out from this crisis. No gods, no robots. Only people who, like us, have good and bad and weaknesses. All people who love the country must unite. The unity shall not take place to clash with one another, but to set the differences aside and sit on a table together – to talk. The united approach is the only form of politics that can save this country now. There is no other.”

MIAP

UN FAO to improve SL fisheries sector reducing post-harvest loss.

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Together with its partners, UN FAO in Sri Lanka is addressing urgent food security needs, while improving the capacity of the fisheries and agriculture sectors to support Sri Lanka’s journey to becoming a food-secure nation.

In this endeavour the Food and Agriculture Organization of the United Nations (FAO) and the Ministry of Fisheries launched a modified multiday fishing vessel in Colombo to improve the quality of fish and reduce post-harvest loss in the Fisheries sector.

The FAO in a statement said that fish products are an important source of animal protein for Sri Lanka and the sector contributes about 1.1 percent to Sri Lanka’s GDP.

However, studies by the National Aquatic Resources Research and Development Agency (NARA) indicate that the fish quality loss in some harbours is at 60 – 70 percent.

Some of the issues contributing to these losses include the lack of an adequate cooling system in multi-day fishing vessels that use weeks-old ice to maintain low temperatures and the captured harvest not being handled or stored properly by fishers, which reduces the quality of the overall harvest and damage the bottom layer of stored fish.

To address this issue FAO, together with the Ministry of Fisheries and NARA, modified the design of a multi-day fishing vessel as a pilot project to introduce new boat designs that provide an economically viable solution to minimize the quality loss of fish harvests.

By reducing the existing post-harvest losses, the investment for the proposed new design can be recovered within 3.5 years.

The modified multi-day vessel features a pilot coolant system in fish holds and storage as well as a modified fish holding facility to minimize the physical damage to fish due to overload.

The modified vessel was launched at an event in Colombo under the auspices of the Prime Minister Dinesh Gunawardena, the Minister of Fisheries, Douglas Devananda, State Minister of Fisheries, Piyal Nishantha de Silva, and the FAO Assistant Representative for Sri Lanka, Nalin Munasinghe.

The Prime Minister, Dinesh Gunawardena highlighted the potential of the project stating, “I’m thankful to the Ministry and FAO for the efforts taken to introduce innovative methods to protect the valuable harvests of the fisheries industry. This innovative design will bring multiple benefits for the fisheries community by enabling them to protect the quality of their harvest.”

The Minister of Fisheries, Douglas Devananda stated, “I thank FAO, NARA, NERD, and other fisheries organizations that supported us in this initiative. We’re committed to introducing innovative solutions to address the challenges faced by the Fisheries community today.”

Speaking on the initiative Assistant FAO Representative for Sri Lanka, Nalin Munasinghe stated “This initiative is an important step in introducing new technology to the Fisheries sector that will reduce losses, increase profits and improve the quality of fish available for consumers.

As FAO we are committed to supporting the sustainable integration of technology and innovation to strengthen Sri Lanka’s journey to becoming a food-secure nation.”

CBSL reveals monetary and financial sector policies for 2023 and beyond

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Sri Lanka encountered the most challenging year in 2022 in the post-independence economy. Headwinds due to consecutive economic shocks in recent years, including the Easter Sunday attacks in 2019, the outbreak of COVID-19 in 2020, and its protracted impact on activity in the aftermath in 2021, the socioeconomic and political crisis in 2022 amidst catastrophic balance of payments (BOP) pressures, along with unprecedented policy tradeoffs, have severely affected economic activity, inflicting unimaginable hardships to individuals and businesses. Livelihoods were lost, while real incomes suffered the most. Structural economic impediments that existed across various spheres of the economy over decades were compounded by these economic shocks, along with ill-timed policy choices, thereby loosening the macroeconomic balance and resulting in a sudden and multipronged setback for the nation.

The Government and the Central Bank were compelled to implement painful, but unavoidable policy measures during 2022 aimed at restoring macroeconomic balance. Monetary policy was tightened by an unprecedented adjustment in interest rates to prevent inflationary pressures from worsening while arresting any adverse inflation expectations over the near to medium term. A temporary suspension of selected foreign debt was announced amidst the dire foreign exchange shortage while initiating measures to consolidate public debt with the envisaged support from an extended fund facility (EFF) arrangement from the International Monetary Fund (IMF). Foreign exchange outflows, which were spared due to the suspension of certain debt servicing, helped make the immediately required operational space to contain the burgeoning BOP pressures, along with inflows of foreign exchange from friendly nations and multilateral sources. Foreign exchange outflows were further contained by several other measures, including the prioritisation of imports. These measures ensured the availability of foreign exchange for essential imports, including fuel, coal, cooking gas, medicine, and food items, among others, thereby relieving socioeconomic unrest to a greater extent. Meanwhile, exchange rate stability was restored by a consultation process with market participants, following a significant overshooting in early 2022. Further measures were initiated to improve foreign exchange liquidity in the domestic foreign exchange market with the repatriation and conversion requirements of foreign exchange, thereby disincentivising activity in the grey market. Meanwhile, an array of measures was implemented to preserve stability in the financial system, thereby avoiding any far-reaching consequences on the entire socioeconomic structure. Further, the Government has embarked on long-overdue reforms to rectify structural deficiencies in fiscal operations, as well as other sectors of the economy, that are imperative in ensuring a sustained recovery of the economy.

FULL TEXT: https://www.cbsl.gov.lk/en/monetary-and-financial-sector-policies-2023

CBSL

Central Bank predicts Sri Lanka economic recovery in 2H 2023

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The Central Bank has outlined its short to medium-term policy path and other measures that it intends to implement primarily to restore price stability and to maintain the financial system stability, as Sri Lanka struggles to emerge from the worst economic crisis since its independence.

Sri Lanka’s economy, which is projected to register a real contraction of around 8 percent in 2022, is expected to record a gradual recovery from the second half of 2023 and sustain the growth momentum beyond, the Central Bank says.

In a media release titled “Monetary and Financial Sector Policies for 2023 and Beyond”, the Central Bank laid out the major aspirations of its Monetary Board for regaining the macroeconomic stability in the country.

Speaking on the steps taken by the government to ride out the crisis situation, the Central Bank stated that in parallel with the implementation of near-term economic stabilisation measures, negotiations with the International Monetary Fund (IMF) for an EFF arrangement were initiated by the government and a staff-level agreement was reached in September 2022.

Meanwhile, measures are underway to secure financing assurances from official creditors for the debt restructuring process aimed at ensuring medium term public debt sustainability, the Central Bank said.

It has further added that, with significant progress being made at present in relation to the interaction with the Sri Lankan creditors, the envisaged IMF facility is expected to materialize in early 2023.

According to the Central Bank, Sri Lanka’s headline inflation is expected to move along a disinflationary path with a deceleration in the first half of 2023 and reaching the desired levels of inflation towards the end of 2023.

With regard to the monetary policy and interest rates, the Central Bank stated that the monetary policy would remain focused on ensuring stability over the medium term.

In the meantime the forthcoming Central Banking Act, of which the draft has already been green-lighted by the Cabinet of Ministers, will further strengthen the independence and accountability of the Central Bank, thus reinforcing its core objective of ensuring price stability within the flexible inflation targeting (FIT) framework.

The Central Bank went on to note that it would begin publishing a forward-looking monetary policy report to better inform the members of the public on the outlook of the economy, thereby further improving the transparency of monetary policy actions.

Meanwhile, the excessively high interest rates observed at present are expected to moderate in the period ahead as money market liquidity conditions improve and the risk premia attached to debt restructuring concern assuage.

With regard to the financial sector policies for 2023 and beyond, the Central Bank emphasized that ensuring system stability also remains at the forefront of its reform and stabilization plan.

It stated that the proposed Banking (Special Provisions) Act is expected to provide the required legal framework to ensure that the banks are adequately capitalized, and upgrade their resolution framework, safeguard the interests of depositors, and strengthen the regulatory powers of the Central Bank.

Change of prevailing dry weather expected: Met Dept

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A change in prevailing dry weather condition is expected, leading to showers at times in Eastern and Uva provinces and in Polonnaruwa and Matale districts, said the Department of Meteorology in a statement today (05).

Fairly heavy showers about 50mm can be expected at some places in these areas.  

Several spells of showers will occur in the Northern Province and in Anuradhapura district.

Showers or thundershowers will occur at a few places in Western, Sabaragamuwa and North-Western provinces and in Galle, Matara, Kandy and Nuwara-Eliya districts during the afternoon or night.

General public is kindly requested to take adequate precautions to minimise damages caused by temporary localised strong winds and lightning during thundershowers.

Marine Weather:

Condition of Rain:
Showers or thundershowers will occur at times in the sea areas off the coast extending from Kankasanthurai to Pottuvil via Trincomalee and Batticaloa.
Winds:
Winds will be north-easterly and wind speed will be (25-35) kmph. It may increase up to (45-50) kmph at times over the sea areas off the coast extending from Kankasanthurai to Colombo via Mannar and Puttalam and from Hambantota to Pottuvil.
State of Sea:
Sea areas off the coast extending from Kankasanthurai to Colombo via Mannar and Puttalam and from Hambantota to Pottuvil will fairly rough at times. The other sea areas around the island will be slight to moderate. Temporarily strong gusty winds and very rough seas can be expected during thundershowers.

MIAP

First Parliament sitting in 2023 today

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The first Parliament sitting in the year 2023 is set to convene today (05) at 9.30 am under the patronage of Speaker Mahinda Yapa Abeywardena.

Today’s sitting is expected to proceed with the second reading of the Bureau of Rehabilitation Bill and the Premises Repossession Bill.

The Parliament Committee on Public Enterprises (CoPA), the Parliament Committee on Public Finances (CoPF) and the Committee on High Posts are also set to convene today.

Meanwhile, all Ruling Party MPs have been informed to attend today’s Parliament sitting as a mandatory requirement, sources said.

MIAP