Plans To Burrow US$ 4B From IMF, WB

The new government will seek to borrow more than $4.0 billion from the IMF and other international lenders as it ‘restructures’ expensive Chinese debt, Finance Minister Ravi Karunanayake said on Thursday, February 12.

He said he would be travelling to Washington this week for talks with the International Monetary Fund and the World Bank on securing support to boost reserves and finance investments in health and education.

“With the new government in place, there is a lot of international goodwill,” Karunanayake said and added, “We would love to have an enhanced programme with the IMF for balance of payments support.”

Sri Lanka plans to tap the IMF for about $4.0 billion while additional funding would be sought from the World Bank.
The previous IMF bail-out was $2.6 billion in 2009, when Sri Lanka faced a balance of payments crisis at a time when Tamil Tigers were being defeated in a major military move. China, Sri Lanka’s biggest lender in recent years, has funded much of the country’s post-war infrastructure projects under the previous administration of former President Mahinda Rajapaksa.

Pointing out that those loans had been granted on average at rates of between five and seven per cent, the minister said that, “In some cases, the interest rate on Chinese loans is as high as eight per cent. Where possible, we want to renegotiate and reduce the rate.”

Sri Lanka’s economy is among the fastest growing in South Asia, but the IMF last year warned the island was vulnerable to sudden external shocks due to high levels of foreign commercial borrowings.

By the middle of last year, Sri Lanka’s foreign borrowings stood at $42.4 billion, up from $39.7 billion at end 2013 and a figure the IMF considers high.
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Jan. Customs revenue up by Rs. 14 bn

By Maheen Senanayake

The Department of Customs has recorded a revenue growth of Rs. 14 billion in January over the same period last year.

"This just goes to show how we have worked without any fear or favour," said Finance Minister Ravi Karunanayake. "I have instructed all customs officials to carry out their duties without any interference from either my office or the PM’s office."

He said that he had directed the customs to impose deterrent penalties in accordance with the law saying "there is no point in instituting fifty rupee fines. We must discourage malpractice and we must strengthen the customs. This revenue is the people’s right."
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Depressed oil prices & weak rouble hurt tea prices

By Steve A. Morrell

Weakness of the Russian rouble and economic woes in the Middle East hurt by depressed oil prices are likely to drive down tea prices further hurting the tea industry here according to trade sources.

These and other concurrent phenomena have seriously affected tea sales at the Colombo auctions over the past few weeks and the signs that the market depression would continue over the short run.

CEO John Keells (Tea Brokers), Sudath Munasinghe said currently there was no real silver lining to this dark cloud. The only consolation was that Ceylon tea was not the only casualty affected by the Russian rouble. Other auction centers too were running at losses with Calcutta, Mombasa and Chittagong subject to ‘red line’ performances.

Middle East buying currently at reduced levels seriously affected Colombo. Additionally, the New Year in Iran hurt the market. Tea Board officials were not available for comment.

The John Keells tea market report last week said that Sri Lankan tea sales averages showed negative variance from a year earlier. Selling at an average Rs. 424.14 was ‘a staggering’ Rs. 85.64 below January last year. The brokers feared the negative trends would continue.

Additionally, the expected Western quality season was cut short by lashing rains that affected districts beyond Hatton. Low growns too saw price depression, down Rs. 102.60 per kilo from a year earlier. These teas with strong market acceptance in the Middle East had seen price declines due to restricted buying by Middle Eastern countries, the report said.

The Asia Siyaka tea market report too did not offer any optimistic comments. Crops were low and prospects for short term price improvements were remote.

The Planters Association late last year complained that productivity on the estates had dropped and called for a minimum two kilos per day crop intake increase by pluckers citing productivity in other tea growing countries.

However brokers did say that although in general terms the bulk of the industry was still dependent on traditional markets, there were smallholders who have found markets in the US and EU countries and were selling well at dollar prices.
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