Short Respite

Treasury Bill yields fell by 200 basis points at Wednesdays auction due to excess liquidity in the money market and less pressure on short-term interest rates.
The Central Bank offered and accepted bids amounting to Rs. 6,743 mn, and retired Rs. 1.5 bn worth of bills. The bank said it received bids worth Rs. 13,038 mn.rn

rnYields on one-year paper slipped one percent to 7.71 percent, six-month bills to 7.76 percent and three-month paper to 7.79 percent.rn

rnDealers expect pressure on interest rates to ease in the short-term after Finance Minister Sarath Amunugama said Tue. that the government will go ahead and divest stakes in SriLankan Airlines and Sri Lanka Telecom as part of its plans to raise Rs. 13 bn in privatisation receipts.rn

rnThe government, Amunugama says, plans to continue with the previous regimes privatisation plan, but with some minor re-adjustments.rn

rnApart from SLT and SriLankan Airlines, the government is also on track to divest a third of Ceylon Petroleum Corp. and minor stakes in remaining plantations, farms, public corporations and quoted public companies.rn

rnIn the run up to the polls, the United Peoples Freedom Alliance said it was opposed to selling State ownership to private investors. Instead, the party was keen to revamp and make State entities more profitable.rn

rnThough short in cash, with the change of government, the Treasury has allocated over a billion rupees to subsidise rising fertilizer imports over the next nine-months. To fill the hole and generate revenue for new welfare schemes, Amunugama said the government was looking at raising surcharges on food imports such as sugar, onions and chillies and excise duties alcohol and tobacco.rn

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-LBO Newsdesk: LBOEmail@vanguardlanka.comrn

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