Sri Lanka starts import substitution of sugar due to currency crisis

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Sri Lanka’s cabinet of ministers had approved the setting up of a new state sugar factor in Welioya in the Moneragala district, cabinet spokesman minister Ramesh Pathirana said.

Sri Lanka’s state-run Lanka Sugar (Pvt) Ltd has made a billion rupees profit, Minister Pathirana said.

Lanka Sugar is made up of two sugar companies expropriated in 2011.

Sugar prices have moved up in recent months and Sri Lanka has also banned the import of ethanol boosting profits of the sugar firms at the cost of lost import taxes.

Sri Lanka is estimated to require 600,000 metric tonnes of sugar each year, and 85 percent is imported.

Domestic production was 45,000 metric tonnes and the factory is expected boost local production.

Sri Lanka has been engaging in ‘import substitution’ after printing money to keep interest rates down.

Sri Lanka is now in a severe forex crisis, with policy rates at 6.0 percent, two years of balance of payments deficit.

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