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ECONOMYNEXT – Sri Lanka Tourism Development Authority (SLTDA) has requested foreign visitors to fill out a form to obtain emergency fuel in a move to ease the travelling for tourists amid acute fuel shortage and boost foreign revenue from the industry.

The facility is available till the 10th of July and will be given on a priority basis.

“Sri Lanka Tourism Development Authority with Ministry of Tourism is facilitating emergency assistance to provide fuel for commuting and arriving guests,” a request form on the SLTDA website showed.

Travelers after submitting the form will be notified via email/WHatsApp and directed to obtain the fuel from a state-run Sri Lanka Transport Board deport or a nearby Army Camp for fuel.

Sri Lanka has almost dried out it’s fuel bunkers as of now but it’s awaiting shipments this month amid a severe dollar shortage in the ongoing economic crisis.

The earliest one is said to arrive between July 8 and 9 – a 40,000 metric tonne diesel shipment worth 66.5 million US dollars from the UAE.

Related : https://economynext.com/sri-lanka-to-receive-9-fuel-ships-between-july-august-96808/

The island nation’s move comes as it’s usable foreign reserves have plummeted to almost zero while the tourism industry saw a revival from Covid-19 hit pandemic last year though the political crisis since April has dampened the arrivals. (Colombo/Jul05/2022)

ECONOMYNEXT – Sri Lanka stocks fell over 1.5 percent on Tuesday (05) to more than two-month low, after a gloomy picture on the economy given by Prime Minister Ranil Wickremesinghe in the parliament amid acute fuel shortage has almost grounded the economy to a halt, brokers said.

The main All Share Price Index (ASPI) closed 1.64% or 120.96 points lower at 7,238.59, the lowest since April 26.

“We saw some profit-taking today in Lanka IOC share shares as it continued to gain in the past few days. However, the market was mainly brought down by the PM’s speech,” a top market analyst said.

The PM said the GDP would shrink to 76 billion dollars in 2022 from 84 billion dollars, while the inflation to hit 60 percent by end of this year.

The market sentiment did not improve despite the PM informing the parliament that a staff-level agreement with IMF could be reached by August 2022 once the country presents a debt restructure plan.

Many public offices and all schools were closed on Monday due to a government decision to save fuel. Sri Lanka is facing the worst fuel crisis in its post-independent era.

Analysts have said the market had a lot of gloomy sentiments as investors did not know what to do as the market was under selling pressure with no takers.

Last week’s T-bill auction saw yields rising between 180-312 basis points, which also raised concerns among stock market investors.

Government has also declared that it can only provide fuel for essential services including health until July 10 and all non-essential services to work online as the country has run out of fuel.

The turnover was 916 billion rupees, less than a half of this year’s daily average turnover of 3.38 billion rupees.

Market analysts have said investors were heavily feeling the pinch of economic crisis as the country’s fuel bunkers have dried out the island nation was frantically looking for dollars to purchase fuel.

The more liquid S&P SL20 index dipped 2.21% or 51.84  points to 2,293.24.

The main ASPI has lost 1.4% in July so far after falling 9.3% in June, reversing a 6% gain in May. It lost 23% in April followed by a 14.5% fall in March.

The market has lost 40.8% so far this year after being one of the world’s best stock markets with an 80% return last year when large volumes of money were printed.

Sri Lanka’s sovereign debt default has already led the country to be rated with restricted/selective default rating by rating agencies, which has weighed on investor sentiment.

Investors are also concerned over the steep fall of the rupee from 203 to 370 levels so far in 2022.

The fall was led by the market heavyweight Expolanka, which fell 5.4% to 162.3 rupees a share.

Sampath Bank slipped 3.7% to 28.6 rupees a share, while Browns Investment closed weaker 4.2% at 6.80 rupees a share. (Colombo/July 05/2022)

ECONOMYNEXT – The World Bank has agreed to provide 110 million US dollars to purchase fertilizer to Sri Lanka, Agriculture Minister Mahinda Amaraweera said on Tuesday as the island nation is facing a looming food shortage amid an economic crisis.

Sri Lanka’s fertilizer shortage has hit the production of its staple food rice and the price of rice has already more than doubled due to supply shortage. The rice production has reduced by up to 40 percent in the last Maha cultivation season ended in February this year, the government has said.

President Gotabaya Rajapaksa’s gamble to make the country ‘only organic cultivation’ by banning chemical fertilizer hit farmers as well as consumers due to lower production.

The ban was lifted in November last year, but the country could not import any fertilizer as it does not have dollars.

“The amount given by the World Bank goes as a concessionary loan. It is not a commercial loan,” Amaraweera told the weekly cabinet media briefing on Tuesday (05) adding that the loan will bear lower interest rate.

He also said the World Food Program (WFP) has pledged to provide 365,000 urea bags free of charge for low income Sri Lankan farmers.

Related: https://economynext.com/fao-to-provide-urea-cash-for-crisis-hit-sri-lankan-small-hold-farmers-95882/

Amaraweera said the ultimate goal is to have a successful Maha cultivation season which starts in November this year to ensure self-sufficiency in rice production.

“To have a successful Maha season we are underway with the relevant discussions. We will be able to produce the required rice with no requirement of importing in the next Maha season.” (Colombo/July 05/2022)

ECONOMYNEXT – Sri Lanka will supply fertilizer at 10,000 rupees per 50 kg bag for paddy cultivation, 25 percent of the original cost of 40,000 rupees as the crisis hit nation is trying to boost its rice production amid a looming food shortage after an ill-sighter fertilizer policy.

Sri Lanka’s rice production has dropped sharply since President Gotabaya Rajapaksa banned chemical fertilizers in April last year. Agriculture Minister Mahinda Amaraweera said the rice production has fallen up to 40 percent in the last ‘Maha’ cultivation season ended in February this year.

“Paddy farmers will be given fertilizer for 10,000 rupees and in the global market is selling it for 40,000 rupees,” Amaraweera, also a co-cabinet spokesman told a weekly cabinet media briefing on Tuesday (05).

He also said corn cultivators and other crop producers will be also receiving the fertilizer at the same price in the future.

Before the ban, the government had been providing a 50 kg fertilizer bag at 350 rupees. However, increased global prices and nearly 80% depreciation in the rupee currency against the US dollar have increased the import price of fertilizer.

The lack of fertilizer application has forced the government to import rice from India and Myanmar. The shortage and looming food crisis have increased the prices to more than doubled. Rice is the staple food in the island nation.

Rajapaksa stubbornly maintained the fertilizer ban policy despite many protests by farmers. He was forced to cancel the policy after the production of rice and vegetables started to fall in November. However, the government could not supply the required fertilizer to farmers due to dollar shortage.

Sri Lanka brought an organic fertilizer shipment from China, however it was not approved Sri Lankan authorities because the supply did not meet the required standards.

Later, the government imported nitrogen fertilizer from India, but farmers rejected it because of bad odour.

Amaraweera said Sri Lanka will receive a shipment of 40,000 MT of chemical fertilizer on July 9, from Oman under the Indian Credit Line, this will be distributed to farmers. Another 25,000 MT is expected to be reach the country in the near future.

The fertilizer will be used in the next Maha cultivation season starting in November this year, Amaraweera said adding that Sri Lanka will reach self-sufficiency and will no longer have to import rice.

“We want the next Maha season to be successful and for all this to be carried out we have taken the relevant measures,” the Agriculture Minister said.

He also said the paddy has been cultivated in 475,000 hectare land across the country in the on going Yala cultivation season, much higher than the expected 275,000 hectare. (Colombo/July 05/2022)

ECONOMYNEXT – Sri Lanka’s debt has shot up to 140 percent of gross domestic product Prime Minister Ranil Wickremesinghe said as the rupee fell in the worst currency crisis in the history of the island’s intermediate regime central bank.

Sri Lanka rupee has fallen to 360 to the US dollar from around 200 at the beginning of the years.

Wickremesinghe said Sri Lanka is making progress towards and 4 year Extended Fund Facility with the International Monetary Fund.

“With the IMF we hope to reduce it (debt) to 95 percent of GDP by 2032,” Wickremsinghe told parliament.

Sri Lanka’s government debt which was Rs17,580 billion by end 2021 and risen to 2022 March Rs21,969 billion, he said.

Sri Lanka defaulted on its foreign debt after three currency crisis from 2015.

Sri Lanka now had to repay the following debt, he sad.

June – Dec repayments of US$3489mn

2023 – US$5862mn

2024 – US$4916mn

2025 – US$6287mn

2026 – US$4030mn

2027 – US$4381mn

Sri Lanka’s economy is expected to shrink to 76 billion US dollars in 2022 from 94 billion in 2018.

It is expected to come back to the earlier level by 2026. (Colombo/July05/2022)

ECONOMYNEXT – India has become the top lender to Sri Lanka in early 2022, official data showed as the neigbhour stepped in with emergency financing as the island was gripped by the worst currency crisis in the history of its 72 year old intermediate regime central bank.

Up to April 2022, India had disbursed 376.9 million US dollars, mostly a credit line for petroleum imports up from 13 million US dollars last year.

Sri Lanka had signed up 1,550.4 million US dollars in new loans up to April 2022, with 1.5 billion coming from India, a Finance Ministry report said.

Sri Lanka is facing severe forex shortages after a the credibility of a peg was lost by liquidity injections and float attempted with a surrender rule in place failed and is unable to fund large import bills.

However rates have since been hiked and private credit is slowing giving more resources to fund a deficit and pay state workers, though the steep currency collapsing is destroying real savings.

Asian Development Bank disbursed 359.6 million US dollars up to April 2022 up from 113.6 million US dollars last year.

China disbursed 67.9 million US dollars up to April 2022, down from 514.9 million US dollars a year ago.

China last year gave a 500 million US dollar budget support loan.

Many Chinese projects are now winding down.

Sri Lanka had committed undisbursed loan balance of 8.05 billion US dollars, which relate to projects over the next 3 to 5 years.

India has the majority of the balance to be disbursed followed by, the Asian Development Bank, World Bank, China, and Japan.

Sri Lanka defaulted on its foreign debt in April 2022, after 7 years of flexible inflation targeting cum output gap targeting triggered three currency crises in a row and growth declined amidst the most severe monetary instability seen in history of the islands intermediate regime central bank. (Colombo/July05/2022)

ECONOMYNEXT – Sri Lanka’s state-run SriLankan Airlines has lost 248 billion rupees up to April 2022 with most of it coming from the collapse of the currency, official data showed, amid the worst currency crisis in the history of its intermediate regime central bank.

SriLankan Airlines had earned revenues of Rs71.82 billion in the first four months of 2022.

The airline had lost Rs248.44 billion in the first four months with 145 billion rupees coming from a foreign exchange loss.

Sri Lanka’s rupee collapsed from 200 to 341 to the US dollar by end April 2022 in an attempt to float the currency with a surrender rule.

SriLankan Airlines (SLA) has Rs 618,677.61 million in liabilities, including sovereign guaranteed US$ 175 million bond, Treasury guaranteed bank loans from state banks, aircraft leases, and debt with trade creditors, primarily Ceylon Petroleum Corporation, a Finance Ministry report said.

Sri Lankan has a dollar arrears to Ceylon Petroleum Corporation on fuel bought before 2019. But now it pays in US dollars in time.

“In this context, the government is no longer able to finance SLA’s losses and there is an urgent requirement to restructure SLA’s balance sheet and convert its operating model into a profitable structure,” the report said.

While aircraft leases relate to currently revenue earning assets, the 175 million bond and CPC arrears were taken to fund legacy losses.

Prime Minister Ranil Wickremesinghe has said the airline has to be privatized.

The rupee has collaped from 131 to around 370 to the US dollar after ‘flexible inflation targeting’ began where a notoriously unstable reserve collecting soft-peg was bombarded with open market operations, either to boost inflation (2015) or to boost growth (output gap targeting) from 2018.

State-run Ceylon Petroleum Corporation has been hit a 648 billion loss due to the soft-pegged exchange rate regime.

Sri Lanka has turned its back on classical economics and has rejected single anchor regimes like a clean float or a currency board and is operating an intermediate regime that has depreciated from 4.70 to 370 to the US dollar in belief that there is prosperity at the end of monetary instability and depreciation. (Colombo/June05/2022)

ECONOMYNEXT – Sri Lanka stocks fell over 1 percent on Monday (02), as uncertainties in the market continued with the economy was gradually coming into a halt due to an acute fuel shortage, brokers said.

The main All Share Price Index (ASPI) closed 1.31% or 97.93 points lower at 7,359.55.

Many public offices and all schools were closed on Monday due to a government decision to save fuel. Sri Lanka is facing its worst fuel crisis in its post-independent era.

“The uncertainty in the market is continuing to bring the sentiments down meanwhile the market is expecting the central bank to hike rates at July 07 policy review meeting,” a market analyst said.

“This sentiment will continue.”

Analysts have said the market had a lot of gloomy sentiments as investors did not know what to do as the market was under selling pressure with no takers.

Sri Lanka is yet to finalise a deal with the IMF while potential lenders are waiting for an IMF deal, government officials say.

Last week’s T-bill auction saw yields rising between 180-312 basis points, which also raised concerns among stock market investors.

Government has also declared that it can only provide fuel for essential services including health until July 10 and all non-essential services to work online as the country has run out of fuel.

The turnover was 1.3 billion rupees, less than a half of this year’s daily average turnover of 3.38 billion rupees.

Market analysts have said investors were heavily feeling the pinch of economic crisis as the country’s fuel bunkers have dried out the island nation was frantically looking for dollars to purchase fuel.

The more liquid S&P SL20 index rose 1.48% or 35.18  points to 2,345.08.

The market in the month of June has lost 9.3% after gaining 6% in May. It lost 23% in April followed by a 14.5% fall in March.

The market has lost 39.8% so far this year after being one of the world’s best stock markets with an 80% return last year when large volumes of money were printed.

Sri Lanka’s sovereign debt default has already led the country to be rated with restricted/selective default rating by rating agencies, which has weighed on investor sentiment.

Investors are also concerned over the steep fall of the rupee from 203 to 370 levels so far in 2022.

The fall was led by Sampath Bank, which fell 4.2% to 29.70 rupees a share.

Browns Investment slipped 6.6% to 7.10 rupees a share, while Expolanka closed weaker 2.8% at 171.50 rupees a share. (Colombo/July 02/2022)

ECONOMYNEXT – Sri Lanka’s GCE Advanced Level (A/L) examination will likely be postponed by a month, Education Minister Susil Premajayantha said.

The minister told parliament on Monday July 04 that the exams, previously scheduled to be held from October 17 to November 12, will likely be delayed a month.

Sri Lanka is going through its worst fuel crisis on record, as a consequence of crippling dollar shortages, threatening to bring the country’s transport to a standstill. Education is one of many areas that have been affected by the crisis. (Colombo/Jul04/2022)