Sri Lanka’s imports in October declined for the eight consecutive month, despite recording an increase, compared to September 2022.

Central Bank said expenditure on merchandise imports declined by 21.2% to $ 1,336 million in October 2022, compared to $ 1,694 million in October 2021 but grew compared to the September 2022 figure of $ 1,284 million.

On a cumulative basis, import expenditure from January to October 2022 amounted to $ 15,421 million, down 7.3% from $ 16,632 million recorded in the corresponding period in 2021.

CBSL said the import volume index declined by 28.9% (y-o-y), while the import unit value index increased by 10.9%, in October 2022, implying that the decline in import expenditure in October 2022, compared to October 2021, was mainly driven by the volume effect.

Earnings from merchandise exports declined in October 2022, on a year-on-year basis, for the first time since March 2022, mainly due to lower earnings from garments exports.

Resultantly the merchandise trade deficit recorded a notable contraction in October 2022 to $ 285 million compared to the previous year’s figure of $ 502 million.

Exports in the first 10 months were $ 11 billion up 9%. Trade deficit reduced to $ 4.38 billion from $ 6.5 billion.

Detailing November import sector performance, CBSL said a decline in import expenditure was observed in intermediate goods, investment goods and non-food consumer goods, mainly reflecting the lower activities in the economy, compared to 2021.

Another reason for the imports was the measures taken to compress imports, while an increase was recorded in imports of food and beverages.

Expenditure on the importation of consumer goods declined by 13.5% in October 2022, compared to October 2021, led by lower expenditure on non-food consumer goods.

The decline in import expenditure on non-food consumer goods was observed in almost all subcategories, with a notable drop in imports of home appliances (primarily, televisions and refrigerators); telecommunication devices (primarily, mobile telephones); household and furniture items; medical and pharmaceuticals; and clothing and accessories.

Meanwhile, expenditure on the importation on food and beverages increased by 22.1% in October 2022 (y-o-y), mainly with an increase in import volumes of cereals and milling industry products (primarily, rice) and sugar.

Further, the imports of vegetables (mainly, dhal and potatoes) also improved to some extent. In contrast, expenditure on dairy products (mainly, milk powder), oils and fats (mainly, coconut oil), seafood (mainly, dried fish), fruits and spices declined in October 2022, compared to October 2021, which was mostly led by lower import volumes.

The listing of the National Investment Fund (NIF) on the Colombo and London Stock Exchanges is to help the Government raise US$ 400-500 million, foreign expert economist said.

Furthermore, at any point in time there is a need for additional funding, the Government will have the option of monetization of stakes held in the NIF and/or the underlying portfolio companies at valuations that should be higher over time as a result of the efforts to increase efficiency and profitability.

This was stated by Franklin Templeton Deputy CEO of Corporate Strategy Marius Dan adding that listing was a good way of raising short-term funds without losing any control.

He said: “It could help Sri Lanka from doing any fire sales now. It would help the Government with any short-term funding gaps.”

“Such transactions, through Accelerated Book building Offerings, generally take 48-72 hours to execute,” he further observed.

The creation of the NIF, its IPO, and the promotion of the country will allow large foreign institutional investors to access and invest in Sri Lanka, and will help raise the country’s profile around the world.

Additionally the fund managers can look at the best ways to integrate Franklin Templeton Deputy CEO of Corporate Strategy Marius Dan noted that listing was a good way of raising short-term funds without losing any control.

He said: “It could help Sri Lanka from doing any fire sales now. It would help the Government with any short-term funding gaps.”

“ESG has become a global theme and fund flows have increased significantly into companies who show a commitment to improving their operating model.”

Several experts recently at a webinar identified listing as a better step to raise capital for SOEs. Franklin Templeton Deputy CEO of Corporate Strategy Marius Dan noted that listing was a good way of raising short-term funds without losing any control.

He said: “It could help Sri Lanka from doing any fire sales now. It would help the Government with any short-term funding gaps.”

This new National Investment Fund will help the government to restructure ailing State owned Enterprises (SOEs).

The total loss of the key 52 SOEs was Rs.726.9 billion for the first eight months of 2022of which 31 SOEs recorded a profit beforetax of Rs. 134.9 billion and the balance, 21SOEs reported a net loss of Rs. 861.7 billion.

Notably, 99 percent of the total loss has been generated by three SOEs namely, CPC, CEB, and Sri Lankan Airlines (SLA) totaling a cumulative loss of Rs. 854.5 billion from these entities.

These three entities have been loss making for years which has resulted from debt overhang warranting cost reflective.

World Bank Vice President for South Asia Martin Raiser this week underscored the need for urgent action to reverse the deep crisis through long overdue reforms.

He prioritized debt relief, reform actions based on consensus and well-targeted measures to protect the poor.

During a three-day visit to Sri Lanka, Raiser met with Sri Lankan President and Finance Minister Ranil Wickremesinghe, Prime Minister Dinesh Gunawardena and other senior officials to discuss the Government’s priorities for Sri Lanka’s recovery and key areas for World Bank support.

“This deep crisis is an opportunity for fundamental reforms, and it should not be wasted. The international financial institutions can help but quick and decisive action is needed on debt relief,” said Raiser.

“While Government reform action is urgent, its success will depend on strong economic, social and political consensus as the reforms will require everyone to adjust – companies, workers, and taxpayers.

He said, we also must not forget about the people who will need help with the adjustment and protect the poor and vulnerable.”

A high-level roundtable discussion organised by the Office of the President, focusing on the Government’s reform agenda and sustainable and equitable economic growth for the country, was also part of the visit.

The discussion focused on key reform priorities to inform future collaboration and support from international partners, including the World Bank, International Monetary Fund, Asian Development Bank, Asian Infrastructure Investment Bank, and other development partners.

During his remarks at the Sri Lanka Economic Summit 2022 organised by the Ceylon Chamber of Commerce, Raiser emphasized improved economic governance, stronger private sector competition and better targeted social protection as three priorities for Sri Lanka to reset from turmoil to opportunity.

He highlighted private-sector job creation as an important driver of growth and stressed the importance to preserve human capital as the main asset of society.

Raiser also met with representatives of the civil society, private sector, and development partners and visited a World Bank-supported agriculture project in Divulapitiya.

To date, the $ 125 million Agriculture Sector Modernization Project has benefited close to 128,000 Sri Lankans and generated about $ 150 million in new export earnings and foreign exchange savings from import substitution for Sri Lanka.

The World Bank was one of the first to respond to Sri Lanka’s economic crisis. The Bank’s emergency response repurposed $ 325 million from existing projects to protect the poor and vulnerable.

Of these funds, $ 241.3 million have already been disbursed to support close to one million vulnerable Sri Lankans with cash transfers, six million Liquid Petroleum Gas (LPG) cylinders for households and small businesses, $ 22.3 million-worth medicines and medical supplies to sustain essential services and 132,500 metric tons of urea fertilizer to support smallholder paddy farmers in the Maha harvesting season.