Category: Economics

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Economics

Domestic Bank Loans to Private Sector up 17.4%

Total credit to the private sector increased by 15.5 percent to Rs. 1.36 trillion year-on-year in September with domestic banks increasing their lending by 17.4 percent to Rs.1.21 trillion and foreign banking units increasing their lending 1.8 percent to Rs.150.1 billion.
A year ago, total credit to the private sector had declined 5.3 percent amounting to Rs. 1.17 trillion, with domestic banking sector loans decreasing by 4.4 percent to Rs. 1.03 trillion.

Net credit to the government increased by 6.8 percent to Rs.693.1 billion. Credit from monetary authorities increased 43.1 percent to Rs. 100 billion, increased by 9.4 percent to Rs.495.4 billion from the domestic banking sector and increased 9.4 percent to Rs. 97.7 percent from foreign banking units.

Total credit to public corporations increased by 48.6 percent to Rs.104.6 billion with the credit from the domestic banking sector increasing by 14.4 percent to Rs. 80.5 billion.

The average weighted prime lending rate, applicable to high net-worth individuals and corporations, was 9.43 percent as at November 26, 194 basis points lower than 11.37 percent a year ago.

The average weighted deposit rate of the banking sector was 6.43 percent, 333 basis points lower than 9.76 percent a year ago.

The average weighted fixed deposit rate was 8.48 percent, 457 basis points lower than 13.05 percent a year ago.

The total number of active credit cards amounted to 816,521 as at end September down 2.85 percent from 840,509 a year ago. Outstanding balances amounted to Rs. 29.12 billion down 7.16 percent from Rs. 31.3 billion a year ago.

Excess liquidity in the banking system averaged Rs.126.33 billion each day during the week ended November 26.

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Economics

Partnership Model

Sri Lanka said keen on public-private partnerships
Dec 13, 2010 (LBO) – Sri Lanka is keen on partnerships between the public and private sectors in developing its economy, the International Finance Corporation, which is supporting the initiative, said in a statement.

“Sri Lanka is actively considering options to increase private participation in development,” it quoted Sarath Amunugama, Sri Lanka’s Senior Minister of International Monetary Cooperation as telling a forum.
“A sustainable public-private partnership model is an important part of our framework for economic growth and infrastructure development.”

The IFC, a member of the World Bank Group, said it is working with policymakers and private sector players to help meet Sri Lanka’s ongoing development agenda through public-private partnerships.

The forum held in Sri Lanka Monday was part of a series of IFC-led events in South Asia to identify and address concerns and challenges related to public-private partnerships among stakeholders, it said.

The event brought together specialists and expert speakers from around the world and was attended by officials of ministries and public sector departments of health, transportation, and municipal infrastructure and other multilateral partners.

“Improving quality of services in Sri Lanka, gaining efficiencies, and boosting economic growth through private participation in social and physical infrastructure were part of the discussions,” the IFC said.

“Long lasting public-private arrangements receive public ownership while generating interest among local private sector players and other development partners with shared goals,” said Vipul Bhagat, Manager of IFC Advisory Services for Public-Private Partnerships in South Asia.

The Sri Lankan government is committed to facilitating the transition necessary to boost the country’s economic growth and build on development fundamentals, the IFC statement said.

“Public-private partnership activity can make an important contribution to help address the country’s immediate infrastructure needs and garner needed funding for the purpose.”

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Economics

Investment Option

Sri Lanka new gilt-edged fund eyes small investors

Nov 30, 2010 (LBO) – Ceybank Asset Management (CAM), Sri Lanka’s largest unit trust fund manager, has launched an open ended gilt-edged fund aiming to attract small investors especially in rural areas, officials said.

The ‘Ceybank Surakum’ fund will invest in government Treasury bills and bonds and other government-backed securities but not in equities and aim to give a return higher than interest rates on bank deposits which have been falling.
Chitra Sathkumara, chief executive of CAM, said their initial target is to raise at least two billion rupees

“This will give small investors a better choice,” he told a news conference.

“In Sri Lanka most people invest a part of their money in savings accounts and fixed deposits but interest rates on savings accounts are falling while the cost of living is increasing, and people get poorer.”

This had prompted some investors to search for high interest yielding but risky products and lose money in financial scams, he said.

“Many investors lost their life saving trying to get super returns. The Surakum fund aims to earn returns above savings accounts while ensuring safety. We aim to bridge the gap between savers and investors through this fund.”

The minimum investment in the fund is 10,000 rupees and each unit 10 rupees.

The Ceybank Surakum fund will pay two dividends a year in January and July, with the first dividend being paid in July 2011.

Dividends from investments are tax free, the investments can be encashed at the prevailing market price and investors can switching their money among other funds managed by CAM.

The fund will be marketed with the help of the branch network of the state-owned Bank of Ceylon, which has a 43.4 percent stake in CAM.

Other shareholders are state-owned Sri Lanka Insurance, Carson Cumberbatch & Co. and Unit Trust of India, said K Hewage, chairman of Ceybank Asset Management.

Proposals in the government’s 2011 budget announced last week exempting unit trusts from certain taxes and relaxing foreign exchange controls to allow foreigners to invest in the funds will help promote the industry, he said.
The budget also made income earned by unit trusts from listed stocks and bonds free from income tax.

Categories
Economics

Sri Lankan Accountants Lure Global Outsourcers

Southern China has its assembly plants. India has customer support centers, research laboratories and low-cost lawyers.

And Sri Lanka’s contribution to global outsourcing? Accountants — thousands of them, standing ready to crunch the world’s numbers.

As this tiny island nation staggers back from a bloody, decades-long civil war, one of its brightest business prospects was born from a surprising side effect of that conflict. Many Sri Lankans, for various reasons, studied accounting in such numbers during the war that this nation of about 20 million people now has an estimated 10,000 certified accountants.

An additional 30,000 students are currently enrolled in accounting programs, according to the Sri Lankan Institute of Chartered Accountants. While that ratio is lower than in developed economies like the United States, it is much greater than in Sri Lanka’s neighboring outsourcing giant, India.

Offices in Sri Lanka are doing financial work for some of the world’s biggest companies, including the international bank HSBC and the insurer Aviva. And it is not simply payroll and bookkeeping. The outsourced work includes derivatives pricing and risk management for money managers and hedge funds, stock research for investment banks and underwriting for insurance companies.

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Economics

Now OPEN: Treasury bill and Treasury bond Market for Sri Lankan Diaspora

Treasury bills and Treasury bonds are issued by the Government of Sri Lanka to Sri Lankan Diaspora and Migrant Workforce since January 6th, 2009.

Through this scheme, it is expected to widen the investor base, diversify the Government Securities market, make it more convenient for Sri Lankans living abroad to access Government Securities, and to create a more stable Government securities market.

This scheme will also provide a safe and highly liquid investment opportunity for Sri Lankans living abroad, while providing them with an attractive return on their investments.

To facilitate this endeavour, which is expected to cover almost the entire globe, six Joint Lead Managers, namely, Bank of Ceylon, Commercial Bank of Ceylon PLC, National Savings Bank, NatWealth Securities Ltd., People’s Bank and Sampath Bank have been appointed.

Investments in Treasury bills or Treasury bonds could be channelled through any one of the Joint Lead Managers, using the Treasury bill/bond Investment External Rupee Account-D (TIERA-D) to be opened by the investor for that purpose.Remittances into and out of TIERA-D accounts would be free from exchange controls.This scheme will benefit, Sri Lankans living abroad, including Sri Lankans who have made their permanent residence overseas (Non-residents), citizens of Sri Lanka who have taken up overseas employment or set up business abroad, citizens of Sri Lanka with dual citizenship living in Sri Lanka or abroad, and Sri Lankan professionals living in Sri Lanka or abroad who earn income in foreign currency.