Business
Positive outlook on post COVID-19 economic recovery
Top economists and business leaders discussed the outlook for the global and local economy during the first session of the Sri Lanka Economic Summit 2020 organised by The Ceylon Chamber of Commerce (CCC). Eric Robertsen – Global Head, Research and Chief Strategist, Standard Chartered Bank and Deshamanya Prof W D Lakshman – Governor, Central Bank of Sri Lanka (CBSL) were the two speakers at the session while Deshamanya Mahesh Amalean – chairman, MAS Holdings and Krishan Balendra – chairman, John Keells Holdings PLC joined the panel discussion moderated by Shiran Fernando – Chief Economist, CCC.
Despite the impact of the pandemic, Eric highlighted in his speech several positive global developments to take note of. He stated that export levels of emerging markets in Asia had rebounded to pre COVID levels. The recovery in global trade was recorded in two quarters compared to 6-7 quarters in the period post the global financial crisis. Further, he highlighted that a combination of monetary policy support, low level of interest rates and inflation would create a platform for a better economic narrative in 2021.The continuation of a weaker dollar would also be favourable for emerging market assets. Eric stated that according to their research they believe that the recovery of 2021 will look almost like the post war economic recovery with similar economic destruction as a result of the health crisis due to COVID-19.
Central Bank Governor Prof W D Lakshman highlighted that with National Budget 2021 and the policy measures put in place by CBSL and the government, Sri Lanka possesses the potential to emerge as a stronger and more resilient economy in 2021. The focus was in developing the real sector in reviving industries and expanding business opportunities through encouraging home-grown industries, large as well as Small and Medium Enterprises (SMEs).
Addressing the fiscal and debt concerns the Governor highlighted that high levels of debt could be sustainable when domestic debt was the predominant component in the debt portfolio. He went on to state that the ratio of government’s foreign non-concessional debt to GDP was around 23 per cent, and the remainder was either domestic debt that can be rolled over or long-term concessional financing. The annual foreign debt service payments as a percentage of export earnings and remittances stood around 12 per cent in ‘business-as-usual’ years such as 2018. The Governor highlight that public debt will be managed in such a way the domestic to foreign component of the debt will adjust from 55:45 in 2020 to 60:40 in 2021. This and the stated policy of not pursuing foreign debt-creating public investments will make government debt more manageable.
In the panel discussion, Mahesh highlighted that exports should be the key element in the roadmap for economic recovery of Sri Lanka. In terms of the apparel sector, he highlighted two trends which Sri Lankan businesses must focus on which were that customers were increasingly looking vertically in their sourcing and the rapid growth of digitalisation in the value chain. Krishan highlighted the setback due to COVID-19 for the domestic economy but was optimistic in a rebound during 2021. Citing one example in tourism, he highlighted that their resorts in Maldives has seen higher forward bookings for March-April 2021 compared to previous year’s.
Responding to questions by the participants on the potential for low global interest rates driving capital inflow into markets like Sri Lanka, Eric noted that initially investments would flow to the largest and most liquid markets but could later expand to other diversified investment portfolios with higher risks and returns. In closing Mahesh highlighted three areas for businesses to focus on: operate close to the customer and understand the expectations, understand the capabilities required by companies to operate in this challenging environment and strive for operational excellence in terms of manufacturing competitively and agile. (CCC)
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SLT-Mobitel, the nation’s ICT and Telecommunications Service Provider recently partnered with Spotify, to mark their launch in Sri Lanka. Spotify is a paid premium music streaming app which allows subscribers to listen to music to their hearts content. Both, SLT-Mobitel Post-Paid and Pre-Paid customers will now be able to enjoy Spotify by activating a monthly recurring subscription or one-time subscription plan and access unlimited music streaming and downloading facilities.
The subscription charges will get added to the user’s customary billing, where payment will be deducted in real time. Starting from the payment date, the user will be able to access Spotify and download their favourite songs, for the next 30 days. Users who sign up for their first monthly subscription will receive an additional one month, courtesy of Spotify. The one-month subscription plan is not applicable with one-time subscription plans. SLT-Mobitel data rates, depending on the user’s respective broadband charges, will apply.
Spotify also has some exciting features that will provide SLT-Mobitel customers with the opportunity to listen to ad-free music, access millions of uninterrupted music under one platform, play any song they like, anywhere they go, and also be able to enjoy their music offline.
SLT-Mobitel customers can select their preferred premium package under four categories; Individual, Duo, Family, Student. Each category has recurring and non-recurring plans. After one month of free streaming, the package will activate once the offer period terminates. While both, the Individual and Student premiums are limited to one account user, the Duo package offers two accounts and the Family premium is accessible through six accounts. To view Spotify plans, users can log on to https://spoti.fi/3aLWvce
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by Sanath Nanayakkare
Anyone conversant with the elements of a political economy would know that Sri Lanka is using its ‘sovereign power’ to manage the different dynamics of the economy in a sustainable manner, Professor W. D Lakshman Governor of the Central Bank said on Wednesday.
“Some critics are saying that we adopt a so-called modern monetary theory. That’s not the case. In fact, Sri Lanka is using its sovereign power in a number of economic aspects to honour its external debt repayment commitments as well as to reduce its debt burden in the medium term as well as achieve resilient growth in the medium to long term, he said.
“We make policy decisions to boost our gross foreign reserves, meet our external debt servicing, to facilitate monetary expansion, to boost our GDP growth, to strengthen our current account balance and manage our domestic and external economic variables in a sustainable manner. This is not a modern monetary theory. This is an age-old tool used by central banks around the world when the circumstances demand it, he said.
“Certain trade-offs will be necessary when dealing with an economy which has a big fiscal gap to bridge. There are efforts to push Sri Lanka towards the IMF again which would in turn have influence on our policymaking. We have taken policy measures to stabilize the economy and we have adequate reserve levels to meet our debt repayments. Meanwhile, we are in negotiations with overseas central banks and multilateral agencies to further boost our reserve level and it would materialise within a matter of weeks,” he noted.
“One of the tools the Central Bank has introduced is in respect of repatriation of export proceeds into Sri Lanka and conversion of such proceeds into Sri Lankan rupees in order to strengthen the foreign exchange situation of the country,” he said.
The Governor made these remarks while delivering the keynote speech at a webinar organised by the Veemansa Initiative led by its Managing Director Luxman Siriwardene – the former Executive Director of Pathfinder Foundation.
The webinar revolved round the topic ‘External debt situation in Sri Lanka: Are we heading for a resolution or crisis?’
Professor Sirimal Abeyratne, Prof. Sumanasiri Liyanage, Dr. Nishan de Mel and Dr. Ravi Liyanage were the other speakers on the panel.
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By Hiran H.Senewiratne
CSE produced signs of a rebound yesterday with both indices closing positive, though turnover remained low. Central Bank Governor W.D Lakshman’s recent statement on managing foreign reserves gave some boost to the market yesterday, stock market analysts said.
The index experienced a zigzag movement within the early hours of trading; thereafter, it recorded a slight up-trend as it reached its intraday high of 7,439. Later, the market witnessed a down-trend at mid-day, followed by a sideways movement and closed at 7,372, gaining 43 points during the month of February, market sources said.
It is said the banking sector dominated turnover with a contribution of considerable parcel trades in Sampath Bank, Commercial Bank and HNB.
Further, the Commercial Bank’s impressive quarterly results during the recent turbulent period also built investor confidence. Commercial Bank was able to register a18 percent net interest income when other banks were reporting a decline. Its share price increased by Rs. 3 or 3.5 percent. On the previous day, its shares started trading at Rs. 85 and at the end of the day they moved up to Rs. 88. Due to the positive growth results, the bank announced a Rs. 4.40 dividend per share, plus a Rs. 2 script divergent for every share.
Further, Sampath Bank shares also appreciated in both crossing and retail. In crossings its shares appreciated by Rs. 1.At the end of the day they moved up to Rs. 154.50. In the retail market, its shares moved up by Rs. 2 or 1.3 percent. Previously, its shares fetched Rs. 154 and at the end of yesterday they moved up to Rs. 156.
Amid those developments, both indices moved upwards. The All Share Price Index went up by 104.48 points and S and P SL20 rose by 67.78 points. Turnover stood at Rs. 3 billion with four crossings. Those crossings were reported in Sampath Bank, where 3.9 million shares crossed for Rs. 602.2 million, its share price being Rs. 154.50, HNB 375,000 shares crossed for Rs. 39.4 million, its shares traded at Rs. 105, Pan Asia Power 9.5 million shares crossed for Rs. 33.2 million, its shares traded at Rs. 3.50 and Access Engineering 1.2 million shares crossed for Rs. 28.2 million; its shares traded at Rs. 24.
In the retail market top five companies that mainly contributed to the turnover were, Expolanka Rs. 450 million (10 million shares traded), JKH Rs. 205 million (1.3 million shares traded), Browns Investments Rs. 199 million (34.9 million shares traded), Sampath Bank Rs. 191 million (1.2 million shares traded) and Dipped Products Rs. 137.7 million (2.8 million shares traded). During the day 101 million share volumes changed hands in 18046 transactions.
During the day, Expolanka, the biggest contributor to the turnover, saw its share price appreciating by Rs. 6.20 or 15 percent. Its share price quoted on the previous day was Rs. 41 and at the end of trading yesterday it moved up to Rs. 47.
Sri Lanka’s rupee quoted wider at 193.50/195.50 levels to the US dollar in the spot next market on Thursday while bond yields remained unchanged, dealers said. The rupee last closed in the spot market at 194.50/195.00 to the dollar on Wednesday.
