By: Staff Writer

Colombo (LNW): Sri Lanka’s private sector credit growth has been on the decline due to expectations of market interest rates falling, Central Bank report revealed.

It has come down to Rs 7,094.5 billion in June comparing to Rs.7714.2 billion in the same month last year, latest CB statistics shows.

Despite reduction in the central bank’s key policy rates and this month’s Commercial Bank’s Statutory Reserve Ratio (SRR), the private sector credit growth has still been on the decline.

The last available official data showed the year-on-year private sector credit growth contracted 8 percent in June following a 9.5 percent contraction in the previous month.

“The month-to-month changes are difficult to explain. Probably when the interest rates are coming down, still the expectation is that the rates are to come down further,” CB Governor Weerasinghe said.

The central bank held the key policy rates steady while announcing some reduction for the rate on pawning facilities, pre-arranged temporary overdrafts, credit cards, and penal interest rates to push the market interest rates down.

The central bank changed its tight monetary policy stance to an easing from June this year, aiming to spur a faltering economy with contraction. The central bank has estimated a 2 percent contraction this year.

The island nation has mostly seen contractions on a quarterly basis since it declared sovereign debt default in April 2022.

Though the central bank has reduced its monetary policy rates, the market lending rates are still high, analysts say. The central bank’s latest move to reduce some rates including on credit cards and pawning come as an effort to slash the market lending rates and boost the private sector credit.

“There may not be a significant demand for credit yet. When the expectation is for interest rates to come down further… the businesses would not start borrowing more and it’s only repricing the old loans into new loans that’s what is happening,” Weerasinghe said.

“It is too early for us to see the trend but (we) can see the decline of credit has probably turned around.

We will have to wait and see what the next month’s credit is. I think because of the expectations of interest rates coming down further, we may not see a significant expansion in private sector credit, he pointed out.

The State Trade Corporation (STC) has affirmed the government’s commitment to continue importing eggs as part of its strategy to alleviate the scarcity of eggs in the domestic market.

Asiri Walisundara, Chairman of the STC, stated that the decision to import eggs has proven effective in mitigating the shortage and ensuring a consistent supply. The STC, in line with a directive from the Cabinet, has been actively engaged in importing egg shipments to cater to the daily demand of 1 million eggs.

Walisundara further highlighted that the STC has obtained approval to carry out egg imports for the forthcoming three months, underscoring the government’s steadfast approach to addressing the supply-demand gap.

In an effort to tackle the shortage earlier this year, the Cabinet of Ministers granted authorization for the import of eggs from India. This move was aimed at alleviating the strain on the local market and ensuring a steady availability of eggs for consumers. The continuation of egg imports reflects the government’s commitment to sustaining a stable food supply and maintaining reasonable prices for essential commodities.

By: Staff Writer

Colombo (LNW): Central bank governor Nandalal Weerasinghe dismissed concerns over Sri Lanka purportedly failing to meet a number of commitments made to the International Monetary Fund (IMF) ahead of a September review, arguing that the authorities have made “good progress” in meeting quantitative targets.

Performance of the EFF arrangement will be monitored in terms of a comprehensive mechanism that comprises Quantitative Performance Criteria (QPCs), Continuous Performance Criteria (CPC) related to external arrears and Article VIII obligations, Indicative Targets (ITs), and the monetary policy consultation clause.

The first review of the IMF programme is set to take place from September 14 to 27 and will consider the programme’s performance until end-June.

If the IMF is satisfied with the progress of the programme, the executive board will approve a disbursement of roughly 338 million US dollars as the next tranche of the 2.9 billion-dollar EFF.

Responding to a question at a press conference on Thursday August 24, Weerasinghe said reports tracking the progress or lack thereof of Sri Lanka meeting its commitments to the IMF in exchange for a 2.9 billion-dollar extended fund facility (EFF) were largely based on inaccurate information.

Colombo-based private think tank Verité Research said on August 21 that Sri Lanka had verifiably met 35 of the trackable programme commitments of the IMF programme as of the end of July 2023, but had failed seven, according to the institute’s ‘IMF Tracker‘ online tool.

Though there will be an IMF mission arriving in Sri Lanka in September to assess the progress of the programme, it is not the deadline for all targets, according to the central bank chief.

“Structural reforms such as the recently passed central bank act are also being met, he said.

“So probably this assessment of this institution should be based on that kind of analysis. I’m sure knowledgeable media people will not be misled by that kind of statement.

With regard to domestic debt restructuring, Weerasinghe said both the government and central bank will make note of developments.

“There could be delays in implementation, but that doesn’t mean the direction we’re moving in has been reversed. [It may be] at a slower pace but still the commitment is to meet all the commitments by the completion of the first review,” he said.

The first review of the IMF programme is set to take place from September 14 to 27 and will consider the programme’s performance until end-June. If the IMF is satisfied with the progress of the programme, the executive board will approve a disbursement of roughly 338 million US dollars as the next tranche of the 2.9 billion-dollar EFF.

The Ministry of Foreign Affairs has announced that the 5th Round of Bilateral Political Consultations between Sri Lanka and Thailand is scheduled for August 28, 2023. This significant diplomatic engagement will take place at the Ministry of Foreign Affairs in Colombo.

Chaired jointly by Aruni Wijewardane, the Foreign Secretary of Sri Lanka, and Sarun Charoensuwan, the Permanent Secretary for Foreign Affairs of Thailand, the consultations aim to comprehensively review the state of bilateral relations between the two nations. The discussions will encompass various domains of cooperation and mutual interest, including politics, trade and investment, defense, culture, and tourism.

This engagement marks the continuation of diplomatic efforts to enhance and strengthen the relationship between Sri Lanka and Thailand. The previous round of Bilateral Political Consultations took place on February 28, 2018, in Colombo, and this forthcoming round is expected to build upon the progress made and explore new avenues of collaboration.

The consultations provide a valuable platform for both countries to assess their ongoing cooperation and strategize on areas of common concern, fostering a deeper understanding and reinforcing the bond between Sri Lanka and Thailand.

By: Staff Writer

Colombo (LNW): Colombo Port City Commission has received the parliamentary approval for its proposal to implement a comprehensive incentives programme in consultation with the Minister of Investment Promotion, with the guidelines for granting exemptions or incentives to businesses designated as Businesses of Strategic Importance (BSI).

This was a significant milestone in its journey, to transform the Colombo Port City into a globally competitive special economic zone (SEZ) Port City Commission sources revealed.

The Commission aims to attract global investors, promote economic stability, and position Sri Lanka as a leader in service exports. In accordance with the Act, the Commission identified businesses important for the success of the Colombo Port City to be designated as a BSI and recommended exemptions or incentives from the scheduled statutes of the Act.

To offer a competitive value proposition to potential investors, the Commission engaged with top international advisory firms such as PricewaterhouseCoopers, Ernst & Young, KPMG, and Boston Consulting Group for international benchmarking of selected factors.

These collaborations resulted in a proposed framework that establishes Colombo Port City as a globally competitive SEZ with transparent regulations and good governance principles, along with proposed sector incentives.

Businesses of Strategic Importance in Colombo Port City are classified into two groups: One is the “Primary Businesses of Strategic Importance” and the other “Secondary Businesses of Strategic Importance”.

Primary businesses involve the development of physical infrastructure of USD 100 million per land plot or USD 25 million in the Marina or Social Infrastructure. Secondary businesses encompass sectors such as international trade, shipping logistics, banking and financial services, information technology, and tourism, among others.

For “Primary Businesses of Strategic Importance,” two optional incentive schemes are available.

Scheme A offers exemptions or incentives from relevant enactments for 25 years, along with 50% off the prevalent corporate tax rate for 10 years after the initial 25-year period.

Scheme B provides an enhanced capital allowance of 300% on depreciable assets used within Colombo Port City, with deductions allowed for up to 40 years. All Authorized Persons thus qualified must select their preferred structure at the outset.

For “Secondary Businesses of Strategic Importance”, there are 04 alternatives of eligibility criteria for receiving the incentives or exemptions.

The criteria laid out are revenue, employment creation, projected enterprise valuation growth or a significant contribution to enhancing social development in Sri Lanka and creating an international financial centre within Colombo Port City.

Secondary Businesses of Strategic Importance will be eligible for exemptions or incentives from scheduled statutes of the Act for 25 years.

The Colombo Port City Economic Commission is the focal point, for investors as the Single Window.

Investment Facilitator, creating a Business Enabling Environment within the Colombo Port City’s Multi-Service, SEZ, and is also committed to fostering a successful ecosystem that attracts global investment and drives sustainable development in Sri Lanka.

The Central Bank of Sri Lanka (CBSL) has taken decisive action by issuing an Order to lower interest rates on lending products provided by all licensed commercial banks (LCBs) and licensed specialized banks (LSBs), effective from August 25th.

This directive applies to a range of lending products including pawning facilities, pre-arranged temporary overdrafts, credit card advances, and both new and existing loans denominated in Sri Lanka Rupees (LKR).

The CBSL’s Order outlines the maximum interest rates applicable to LKR-denominated lending products, emphasizing the need for reductions to ensure that lending rates align with the current monetary policy stance.

Despite previous efforts to ease monetary conditions through policies such as reducing policy interest rates and the statutory reserve ratio, some financial institutions have maintained excessively high interest rates on lending products. This situation poses challenges for individuals and businesses.

In response, the Monetary Board of the CBSL issued a directive to licensed banks. The order stipulates that pawning facilities should carry an annual interest rate of 18%, pre-arranged temporary overdrafts should carry a rate of 23%, and credit card advances should be subject to an interest rate of 28%, all beginning with the next billing cycle.

Furthermore, the CBSL has mandated that licensed banks reduce the annual nominal interest rates for all new and existing LKR-denominated lending products (excluding credit card facilities and other categories) by a minimum of 250 basis points by October 31, 2023, and an additional 100 basis points by December 31, 2023. This reduction is in comparison to the interest rates prevailing as of July 31, 2023.

However, the CBSL clarifies that if the annual nominal interest rate for any LKR-denominated lending product is already 13.5% or lower as of August 25 or any time thereafter, the mandatory reduction is not applicable.

Additionally, if the applicable annual nominal interest rate as of the effective date or any time thereafter is 13.5% or lower, licensed banks are instructed not to increase interest rates on such lending products beyond the levels maintained as of August 25.

This move by the Central Bank of Sri Lanka underscores its commitment to fostering a lending environment that aligns with the prevailing monetary policy objectives and supports the economic well-being of both individuals and businesses in the country.

1. Former CB Deputy Governor P Samarasiri says the Forex debt default declared on 12April’22 was not a default of debt by the Govt but a default of foreign currency payments by the Central Bank: warns the macro-economic catastrophe that the public confronted after the default by the Central Bank will spread across society for several decades to come: calls for the conduct of a special investigation into the circumstances of the default, including undisclosed conspiracies behind the default.
2. CEB spokesperson Engineer Nandika Pathirage says water in the CEB hydro-power reservoirs had dropped to 25% of capacity: asserts the CEB had to go for “emergency power” purchases because drinking water for Colombo is supplied from the Laxapana reservoir and priority has to be given to that.
3. Officials in the livestock sector warn that the lack of water and feed for cattle and buffaloes in the prevailing drought condition will have a severe impact on the country’s milk production.
4. SLPP rebel MP and PHU leader MP Udaya Gammanpila requests President Ranil Wickremesinghe to take steps for SL to become a member of BRICS, originally consisting of Brazil, Russia, India, China and South Africa: says the world power is shifting towards Asia and that it is time for SL to review its foreign policy in the latest context and reset it accordingly.
5. Leader of the House Susil Premajaynath says the ruling party is ready to confer with the Opposition to amend standing orders to expel MPs who commit various offences and tarnish the image of Parliament.
6. Minister of Defence of India Rajnath Singh is scheduled to visit SL from 2-3 September: expected to hold discussions with President Ranil Wickremasinghe and his Chief of Staff Sagala Ratnayaka: also expected to visit Trincomalee to inspect the fuel pipeline system to be built between the two countries.
7. President Ranil Wickremesinghe announces the “swift implementation” of a “comprehensive plan” to elevate the Arugam Bay tourist zone into a highly desirable destination for both local and international tourists, with the potential to generate substantial revenue.
8. Gampaha Magistrate Sheelani Chaturanthi Perera acquits former CID Director Shani Abeysekara and 4 others who were charged with introducing a stock of explosives and weapons including a claymore mine and T56 rifles into a outhouse at Kalagedihena in Gampaha and fabricating evidence that the stock of weapons and explosives belonged to former DIG Vaas Gunawardene & others, and thereby implicating them in a false charge.
9. Sources say SL High Commissioner in Kenya Kana Kananathan has been selected as an Observer of Zimbabwe’s 2023 Presidential and Parliamentary elections, for the 4th time.
10. Sri Lanka Tourism Development Authority introduces a programme for Kandy residents to list their properties, including residences as accommodation for the upcoming Asia Cup Cricket Tournament: under the scheme, Kandy property owners will be able to rent out their extra rooms, homes or apartments to cater to the high demand for accommodation during the Asia Cup series.

Officials from the Gampola Divisional Crime Bureau have successfully arrested an interdicted Police Constable along with an accomplice in Matale for their involvement in stealing three parcels of heroin, collectively weighing over 3 kilograms. The theft occurred after the duo illicitly entered the storeroom at the Panadura Court where Court productions are kept.

Investigations have revealed that the police constable in question had managed to gain access to the production storeroom by removing the asbestos roofing sheets on the previous Saturday (19). While descending from the roof to the storeroom, a part of the ceiling had collapsed. Nonetheless, the constable reportedly absconded with the three parcels of drugs after replacing the asbestos roofing sheet as it was.

It wasn’t until Monday (21), when court staff arrived for work and discovered the collapsed ceiling, that the officer in charge of the room notified authorities. However, suspicions of theft had not arisen at that point. It was only after the suspects were apprehended and the narcotics were discovered that court staff realized the theft had taken place.

The investigation was initiated based on information received by the Central Province Senior Deputy Inspector General (SDIG) Lalith Pathinayake, indicating that an individual posing as a sales representative in the Ovilkanda area of Matale was attempting to sell a substantial amount of drugs. In response, the Gampola Division Criminal Investigation Bureau carried out the operation, leading to the arrest of a 30-year-old man named Lakmal Bulathwatta, residing in Owilkanda. He was found with 20 grams of heroin near the children’s stadium of the Matale Municipal Council.

Further investigation into Bulathwatta revealed information about the interdicted police constable’s involvement. Subsequently, the police arrested the constable, seizing 3.75 kilograms of heroin from his residence in Ovilkanda, Matale. This stash of drugs was traced back to the theft from the Panadura Court’s warehouse.

The investigation unveiled that the constable and his accomplice had driven to Panadura and entered the court complex by scaling the wall behind it, where they conducted the theft.

The constable had been attached to the Moranthuduwa Police station since the commencement of his service. His interest in accessing the case production room during his visits to the Panadura court was noted, and he was later transferred to the Mirigama Police Station due to suspicions of drug use. He was subsequently interdicted from his duties while stationed at the Mirigama police station for the theft of money from officers’ wallets at the Mirigama Police Barracks on July 16.

Following his release on bail and subsequent court appearance, investigations revealed that the constable had planned the theft in Matale, leading to his recent arrest and the recovery of the stolen drugs.

Except for a few showers in Western and Sabaragamuwa provinces and in Galle and Matara districts, mainly fair weather will prevail over most parts of the Island.