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CBSL further relaxes its monetary policy stance

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The Monetary Policy Board of the Central Bank of Sri Lanka, at its meeting held on 23 November 2023, decided to reduce the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) of the Central Bank by 100 basis points (bps) to 9.00 per cent and 10.00 per cent, respectively.

Making the announcement, the CBSL further states :

The Board arrived at this decision following a careful analysis of the current and expected developments in the domestic and global economy, with the aim of achieving and maintaining inflation at the targeted level of 5 per cent over the medium term, while enabling the economy to reach and stabilise at the potential level.

The Board took note of possible upside risks to inflation projections in the near term due to supply-side factors stemming from the expected developments domestically and globally. However, the Board viewed that such near-term risks would not materially change the medium-term inflation outlook, as inflation expectations of the public remain anchored and economic activity is projected to remain below par in the near to medium term.

Further, the Board viewed that with this reduction of policy interest rates, along with the monetary policy measures carried out since June 2023, sufficient monetary easing has been effected in order to stabilise inflation over the medium term.

Hence, the Monetary Policy Board underscored the need for a swift and full passthrough of monetary easing measures to market interest rates, particularly lending rates, by the financial institutions, thereby accelerating the normalisation of market interest rates in the period ahead.

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Rs. 20 Bn loan lifeline for SMEs

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The government has taken measures to implement a Rs.20 billion credit scheme to revive the micro, small and medium enterprise sector in Sri Lanka.  

Accordingly, the Cabinet of Ministers has granted its consent to the proposal forwarded by President Ranil Wickremesinghe in his capacity as the Finance, Economic Stabilization and National Policies Minister to implement a credit scheme to revive the micro, small and medium enterprise sector.

Speaking at the weekly Cabinet media briefing held yesterday at the Government Information Department, Cabinet Spokesman, Transport, Highways and Mass Media Minister Dr. Bandula Gunawardhana said the proposed Rs.20 billion will be spent on the entire project which has two components.

“Out of this, Rs.15 billion will be used to strengthen existing and new enterprises and the remaining amount of Rs.five billion will be used to support enterprises under the non-performing loan category.

A significant number of small and medium scale entrepreneurs involved in manufacturing, import, export, tourism, apparel and various other commercial operations have found it very difficult to continue running their enterprises as a result of the economic downturn and the impact of external factors beyond their control.

The Asian Development Bank has agreed to provide working capital support for the Small and Medium Enterprise sector as a relief. The proposed programme is intended to provide credit facilities to existing micro, small and medium scale enterprises for further expansion and recovery of their businesses through licensed commercial banks and licensed specialised banks at concessional interest rates.

(dailynews.lk)

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Won’t be able to offer SriLankan to investors even for free – Minister

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Ports, Shipping, and Aviation Minister Nimal Siripala de Silva yesterday (26) spoke firmly on the national carrier – SriLankan Airlines, stating that the airline’s disruptive employees and tarnished reputation would deter potential buyers in the privatisation process.

Speaking at a media briefing yesterday, he said  “We cannot run an airline with disruptive employees. This is a critical moment for SriLankan Airlines. We cannot afford to entertain employees who fail to handle situations under pressure.”

“The deadline for the Expressions of Interest (EOIs) is set for 5 March and in the present scenario, according to the information I received some of the bidders want to withdraw. With the negative reputation plaguing the airline, we will not be in a position to offer it free-of-charge even,” the minister claimed.

However, SriLankan Airlines Chairman Ashok Pathirage’s views had contrasted starkly with that of Minister de Silva.

The discussion saw a disagreement regarding ground handling. Minister De Silva advocated for immediate privatization of the service, citing shortcomings. Chairman Pathirage, while acknowledging areas for improvement, argued that the lack of aircraft, not ground handling, was the primary issue. He blamed lengthy government procurement procedures for hindering fleet acquisition.

De Silva justified his push for privatization by citing the airline’s struggles and reports of potential bidders withdrawing their interest. While not inherently opposed to privatization, Pathirage emphasized the ongoing process and the lack of control the airline has in the decision.

Meanwhile, trade union representatives commended Pathirage for his leadership whilst blaming political interventions and its past management. 

“We all undoubtedly praise the Chairman for his leadership and unwavering commitment to operate this airline amidst all odds. Neither the employees nor the current management of the SriLankan Airlines are responsible for the cancellations and bad reputation, but the political intervention,” they stated.

They also slammed the former COPE Chairmen and MPs Dr. Harsha de Silva and Dr. Charitha Herath for disrupting the lease procedure of the airline when the aircraft were at a lower price. “They are responsible for all the operational delays the airline is facing at present,” they claimed.

(Excerpts : DailyFT)

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Australia’s United Petroleum enters SL market

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Australia’s United Petroleum has entered into an agreement with the Sri Lankan government to supply petroleum products to the Sri Lankan market.

According to United Petroleum Lanka, Australia’s United Petroleum entered into the relevant agreement with Sri Lanka’s Ministry of Power and Energy on Feb 22.

Following the signing of the agreement, United Petroleum is assigned 150 existing fuel stations and also has the right to build 50 new fuel stations in Sri Lanka.

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