New liability Mgmt. bill to raise money above borrowing limit: CB Chief

LBO – Sri Lanka’s Central Bank Chief says the proposed liability management bill will enable the government to exceed the borrowing limit approved by the appropriation bill.

Speaking at a conference, Governor Indrajit Coomaraswamy said the new bill, expected to be presented in Parliament this month, will enable the government to exceed the borrowing cap for specific purposes like liability management.

“Again, there would be another cap, so it’s not a kind of opening the door out completely; but to create some space to borrow some extra money which can be used for liability management,” he said.

An appropriation bill does not enable the government to raise any money more than what is required for a particular year’s deficit.

“So that would be used to raise some additional resources in 2018 to help us to do some switching for the money due from 2019 onwards.”

Coomaraswamy said the government has decided to use the proceeds of all divestitures of public assets for debt repayments.

“So, the 1.1 billion dollars which is going to come in starting from the 9th of December on the Hambantota Port lease will go into a special account for liability management,”

“Foreign proceeds of all divestitures will go into one account and rupee proceeds into another for liability management of foreign and rupee debt.”

Central Bank Governor said Sri Lanka now has a buffer of around 100 to 110 billion to be used for the management of debt repayment peak next year.

“Fortuitously for us, the last five months of this year, there were no debt maturities; so we’ve used that space to raise money,”

“Though there were no maturities, we raised 20 to 25 billion each month since August.”

He said there are seven large issuance days next year and even between those there will be 4 or 5 months where Sri Lanka can raise money to boost the buffer to manage the peak.

“External debt side again as you know there’s a bunching from 2019 onwards,” Coomaraswamy said.

“Though we have something like 600 million US dollars worth of interest payments next year there is no sovereign bond maturity. So that gives us a bit of space.”

Foreign liability management becomes an immediate priority as the economy is facing the largest ever foreign debt servicing requirements, clustered during 2019-2022.

Finance Minister recently said the next 3 years will be crucial with debt repayments amounting to almost 7,000 billion rupees.

This includes the repayment of international sovereign bonds which will mature every year amounting to almost 600 billion rupees.

Finance Minister added that in 2018 alone, the debt repayment amounts to 1,970 billion rupees.

Electric car plant, lithium battery factory in Lanka soon - Dr Yaddehige

Richard Pieris & Company PLC plans to invest between Rs 15 to 20 billion in several unique projects in the next three years that will see electric cars, lithium batteries and Oud perfume manufactured in Sri Lanka.

Dr. Sena Yaddehige, Chairman of Richard Pieris & Company PLC, said the group profit that stood at Rs 180 million in 2002, today, before even finishing the year has increased to Rs 4,100 million, a 28 times increase. He further said the business that commenced manufacturing rubber erasers has developed to such a extent that there was not a single house that had no Arpico product in Sri Lanka today.

Dr. Yaddehige owns 10 patents has over 20 million cars all over the world running with his chips.

The Chairman said he would embark on enormous important projects and one of them is building a lithium battery factory. This was required to complement his other major project which is to build electric cars in Sri Lanka.

“For this, an 80 acre plot of land has already been purchased for Rs 730 million,” he said addressing a gathering in Colombo on Wednesday. Dr Yaddehige said he plans to introduce the four-door electric car for a very competitive price of Rs 1.5 million.

He said his next project is to manufacture the world’s most expensive Oud perfume in Sri Lanka which is made from the resin of the wallapatta tree. He said they would convert 68% of their plantation to grow wallapatta. The wood of a 9 to 10 year wallapatta tree has a value of Rs 225,000. If 400,000 such trees are grown, the value of those trees would be in excess of Rs 100 billion in 8 to 10 years time, he said. “But the trick is we have to inoculate a certain fungus into it and we are working on it.

Richard Pieris & Company has another project involving tea, to extract its flavour and essence and market it as green tea. “Last year it was launched in Las Vegas,” he said. An extract of the plant will be set up in Maskeliya for this purpose.

Dr Yaddehige said they have also decided to replace the soil of their plantations and a team of five top scientists of the country was on the job. He said they plan to take 180 tons of special kind of enriched and enhanced compost every three months to the plantations to enhance the quality of soil in the plantations.

He said they plan to set up an electronic division with a target of Rs 25 billion turnover in the next five years and a retail sector with a target of Rs 40 billion turnover in the next five years.

The asset base of their finance company has grown to Rs 11 billion with Rs 4 billion in deposits within five years. The Group’s plantation sector is expected to record a Rs 1.5 billion turnover.

He said they own the fastest growing life insurance company with a hundred percent growth. The Group employs 32,000 and in addition provides indirect employment to a further 200,000.

The 25th Arpico Supercentre has been also opened at Talawatugada and the three storeyed, 60,000 sqft biggest Supercentre will be opened in Kegalle in February and the Kandy Supercentre is being expanded at the moment with the addition of another 25,000 sqft and will be opened by the end of this month. Arpico Supercentres will also be opened in Katugastota, Kundasale, Moratuwa and Wattala.

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