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Economic Capsule - Mar 19
Economic Capsule - Mar 19
Economic Capsule
March 2019
Research & Development Unit
ECONOMY & BUSINESS
IMF Reaches Staff-Level Agreement on the Fifth Review of Sri Lanka’s Extended Fund Facility
CB raises USD 2.4bn in ISB offering
Infrastructure Developments
Land Price Index – Second Half of 2018
Italy’s Noberasco to invest in Sri Lankan fruit, vegetable businesses
CONTENTS
LAUGFS expects its new storage facility to propel a regional gas hub strategy
INTERNATIONAL
China’s exports fall more than 20% in February; overall trade data come in much weaker
Turkey falls into recession as lira crisis takes long-lasting toll
Three cities have been jointly named as the world’s most expensive in 2019
Asia’s billionaire population will top 1,000 within five years, report projects
Economy & Business
IMF Reaches Staff-Level Agreement on the Fifth
Review of Sri Lanka’s Extended Fund Facility
• At the recent talks with the International Monetary Fund (IMF) the government had reportedly
requested the IMF to extend its USD 1.5Bn loan to the government by another year. The loan is crucial
for Sri Lanka, which plans to sell up to USD 3Bn of bonds in early March, 2019 and needs the IMF
program to ensure continuity of more attractive borrowing terms.
• The latest discussions between the government and the IMF were focused on the budget deficit and
expenditure numbers according to informed sources.
• A staff team from the IMF led by Manuela Goretti visited Colombo during February 14-28, 2019 to
resume discussions on the fifth review under Sri Lanka’s economic reform program supported by a
three-year Extended Fund Facility (EFF) arrangement.
• The team reached understandings at the staff level with the Sri Lankan authorities on the fifth review
and their request to extend the EFF arrangement for an additional year with the remaining
disbursements being evenly spread over this period to allow more time for the completion of the
economic reform agenda.
Source: IMF
• Subject to the planned submission to Parliament of the 2019 budget consistent with the EFF-
supported program, the Board is expected to consider Sri Lanka’s request for completion of the fifth
review in May 2019. The authorities are taking steps to complete all the pending actions and structural
benchmarks for this review over the next few weeks.
• The team welcomed the authorities’ commitment to put the high public debt on a downward path,
bringing the fiscal deficit to 3.5 percent of GDP in 2020, in line with the reform program objectives,
and 2 percent of GDP over the medium term, by adopting a sound fiscal rule and launching a new
medium-term debt strategy (IMF).
Source: IMF
The Central Bank said it has successfully raised USD 2.4bn after launching its first
International Sovereign Bond (ISB) for 2019, which will be largely used for debt repayments
and bolstering reserves.
• In a first for Sri Lanka, the Bonds are also expected to be listed on
the London Stock Exchange (LSE), to be admitted to the LSE’s
International Securities Market (ISM), in addition to the listing on
the Singapore Exchange Securities Trading Limited (the SGXST),
for the listing and quotation of the Bonds on the SGXST.
Source: CBSL
• Land Price Index (LPI) for Colombo District, compiled by the Central
Bank of Sri Lanka (CBSL), reached 125.9 during the 2nd half of 2018,
recording an increase of 18% compared to the 2nd half of 2017.
The three sub-indices of LPI, namely residential, commercial and
industrial have contributed to this increase.
• Sri Lankan fruit and vegetable businesses are set to boost exports following a new
partnership with the dried fruits and nuts company Noberasco. The Lanka Fruit and
Vegetable Producers, Processors and Exporters Association (LFVPPEA) signed a
memorandum of understanding with Italy-based Noberasco .
• The goal of this partnership is to help Sri Lankan fruit and vegetable producers and exporters
to comply with international food quality and safety requirements, enabling them to sell
their products to Europe so they can do more business and earn higher incomes.
• Fruit and vegetable products are a priority within the food and beverage sector, identified
for its growth potential in the National Export Strategy, which was developed with ITC
(International Trade Centre) support. Study tours taken to Italy under this project helped Sri
Lankan businesses to identify niche markets for natural and organic dehydrated fruits.
2.5KM -Length of the pipeline from the port terminal to the storage facility
65,000 Metric Tonnes - Volume of Laugfs’ Bangladeshi unit’s annual LPG imports
USD 1BN - Projected annual gas re-export value from the new facility
Research & Development Unit
Source: Echelon – February 2019
International
China’s exports fall more than 20% in February;
overall trade data come in much weaker
• China, reported worse than expected trade data for
the month of February.
Source: CNBC
Source: FT.com
• A report compiled by a London based real estate agency and consultancy ‘Knight
Frank’ found that the number of billionaires in Asia is set to rise above 1,000 in the
next five years.
• By 2023, the world’s billionaire population is expected to reach 2,696 — with Asia
accounting for a third of that figure.
• Asia had 787 billionaires in 2018. That easily exceeded the 452 in Europe and 631
in North America, according to the data.
Source: CNBC
The views expressed in Economic Capsule are not necessarily those of the Management of Commercial Bank of Ceylon PLC
The information contained in this presentation has been drawn from sources that we believe to be reliable. However, while we have taken reasonable care to maintain accuracy/completeness of the information,
it should be noted that Commercial Bank of Ceylon PLC and/or its employees should not be held responsible, for providing the information or for losses or damages, financial or otherwise, suffered in consequence
of using such information for whatever purpose.
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