Sri Lanka probing primary dealer

ECONOMYNEXT - Sri Lanka's central bank is probing a primary dealer in Treasuries who is alleged to have sold securities belonging to clients and are unable to repay them, Central Bank Governor Arjuna Mahendran said.

"The Central Bank is on top of it and we are investigating," Governor told reporters Thursday.

Governor Mahendran said he had seen the reports in the press relating to the primary dealer.

Media reports said the primary dealer with whom the pension fund of a state agency had entered into a securities transaction several years ago, apparently no longer had asset and the money could not be recovered.

Following allegations made shortly after the setting up of primary dealers that some of them were using the same security to borrow money from clients twice and re-invest them in private securities, the central bank introduced a safeguard in the form of a central depository account.

A primary dealer who either sells a Treasury bill or bond outright to a client has to place the security in a CDS account in the client's name whose balance can be checked including with period statements.

There was also market speculation that the dealer was not able to make payments on time.

Governor Mahendran said there was no systemic risk.

"If one company is finding it difficult to pay its depositors, there are windows through which the central bank will lend money to that company make good those deposits.

"Nobody needs be worried."

Asked whether the company had met the capital requirement of the Central Bank, Mahendran said the capital had been raised to a billion rupees from 300 million and all of them have reached the level.

Apparel exports can top US$ 16 bn revenue with GSP - Senasinghe

International Trade State Minister Sujeewa Senasinghe says Sri Lanka’s total apparel exports could reach the US$ 16 billion revenue mark if the suspended GSP plus facility is granted. To reach this target, the apparel industry also needs to be made into an industry of innovation for which GSP plus facility is important,Senasinghe said.

He said Sri Lanka’s overall exports as a share of GDP has been on the decline over the years. Commenting on the government’s ambitious plan of setting up 5,000 industries across the country in the future, Senasinghe assured that the government will take every possible step to further develop existing industries such as tea, rubber, coconut and service industries.

He also laid emphasis on heavy industries as a priority item of investment.Under these measures, the minister aims for a three-fold increase in overall export earnings.

The government will not only facilitate foreign investors to set up operations here, but also obtain their technical know -how and assistance to establish develop Sri Lankan based businesses to create a conducive environment for trade and investments and business links with the international investors. Support to commence manufacturing of electric cars, three wheelers,pharmaceutical products and computer chips in Sri Lanka will be provided,Senasinghe said.

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Sri Lanka Treasury issues bonds for state enterprises

(LBO) – Sri Lanka’s treasury has issued 50 billion rupees in bonds to repay outstanding loans or raise capital of state-owned enterprises, a Central Bank official said, explaining the likely scenario for an increase in bonds outstanding this month.

Data shows a bond maturing 15 December 2020, for 50 billion rupees, placed outside of Central Bank auctions.

“The treasury occasionally issues bonds to some institutions in lieu of cash. But those are restricted to only state-owned enterprises. I am not aware of any private placements, that has not happened,” Central Bank Governor Arjuna Mahendran said, speaking to media on Thursday.

According to the 2015 budget, there was a proposal for state-owned enterprises to receive 117 billion rupees to repay outstanding debts or raise capital, Nandalal Weerasinghe, the deputy governor of the Central Bank said.

“This may be one of those instances. It is basically the government providing capital to state-owned enterprises.”

Central Bank officials said the Bank of Ceylon was the likely recipient of these bonds for payments owed to the state bank. The Finance Ministry is yet to issue a statement on these bonds.

Megapolis plan presented to President, USD 30bn worth investments in pipeline

(LBO) – Sri Lanka’s President Maithripala Sirisena was presented with the new government’s Megapolis Plan formulated to develop the island’s Western Province by Minister Champika Ranawaka on Wednesday.

Minister of Megapolis and Western Development, Champika Ranawaka said Sri Lanka will be able to get about 30 billion dollars worth investments within next 10 years through this project.

The plan aims to transfer informal urban development into formal urban development and boost the living standards of the people n the region.

The Megapolis Development Plan has identified issues that should be given priority in the town development and includes traffic congestion, garbage disposal and housing facilities for slum dwellers as well as drinking water and sanitary facilities, Ranawaka said.

“The implementation of the development plan will be carried out under three phases and will be completed by 2030.”

Speaking at this occasion, the President said everybody should contribute to make the Megapolis Development Plan, the main development project to be implemented by the government in the new year, successful.

“The Megapolis Development Plan will be implemented at the beginning of 2016 and every ministry, department and government officer should fulfill their responsibilities in that regard, considering it as a prominent task,” he said.

The President said this plan aims at developing every mega town to a similar level and thereby reduce the number of people who are migrating to Colombo, seeking better facilities.

Ministers Rajitha Senaratne, Susil Premajayantha, Arjuna Ranathunga and Western Province Chief Minister Isura Dewapriya also participated in the event.

Sri Lanka may request IMF loan in February: CB Governor

ECONOMYENXT - Sri Lanka may make a formal request for a loan from the International Monetary Fund early next year, Central Bank Governor Arjuna Mahendran said.

Informal discussion on a loan has started already he told reporters in Colombo.

An IMF team was due for regular discussions in February 2016, when a formal request may be made, he said.

At the moment reserves are comfortable he said.

Sri Lanka inflation slows to 2.8-pct in December

ECONOMYNEXT - Sri Lanka's inflation slowed to 2.8 in the 12-months to December 2015, down from 3.1 percent in November, the statistics department said.

Prices rose 0.3 percent during the month with the Colombo Consumer Price Index rising to 185.2 from 184.7 points.

Food price inflation slowed to 0.8 percent during the month from 3 percent in November.

The statistics department said year-on-year inflation of the Food Group fell to 4.2 percent in December 2015 from 5.2 percent in November 2015 while the Non‐food Group increased to 1.5 percent from 1.1 percent during this period.

For the month of December 2015, on a year-on-year basis, contribution to inflation by food commodities was 1.99 percent while contribution of Non food items was 0.77 percent.

The core inflation index, which excludes items like fresh food, energy, and transport edged back up to 4.5 percent in December, the highest in two and a half years, after having fallen from 4.5 percent in October to 4.3 percent in November.

Sri Lanka removes share trading levy

ECONOMYNEXT – A share transaction levy of 0.3 percent from the buyer and seller on Sri Lanka’s stock exchange will be removed with effect from 1 January 2016, the Colombo stock exchange announced.

The proposal was announced in the government’s 2016 budget presented to parliament in November aimed at encouraging share market trading.

The CSE said in a statement that under the new fee structure, total transaction fees on equities up to 50 million rupees would be 0.82 per cent while the fees for trades over 50 million rupees would be 0.31 percent.