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Thursday June 20th, 2024

China rejects debt trap charge; says making Sri Lanka logistics hub

ECONOMYNEXT – China has rejected charges of creating a debt trap in Sri Lanka despite gaining a 99-year lease on a port, which is much longer standard commercial deals, in return for cash to repay debt, and said the island will be made into a logistics hub.

China’s foreign ministry spokesman Lu Kang said building a port in Hambantota was an aspiration of successive governments in Sri Lanka.

"The Chinese financial institutions, in light of the needs of the Sri Lankan side, provided support for it to bridge the financing gap," Lu said.

"With the advancement of the project, China adjusted the assets allocation against all odds according to the aspiration of the Sri Lankan side. These moves are all conducive to our commercial cooperation.

"I can tell these people that China and Sri Lanka will stay committed to advancing the cooperation on the project of the Hambantota Port in a bid to make Sri Lanka the logistics hub of the Indian Ocean."

Lu comments came after a New York Times report on ‘How China got Sri Lanka to cough up a port’.

The report said Sri Lanka leased the port to China, because the island was unable to repay the Chinese debt taken to build it and there was not enough revenue.

The report alleged that the loans had been given despite feasibility report showing the port to be unvialble. In any case the port did not make enough money to repay the loan, burdening the port agency.

"As to the people who fabricated the lie of the so-called “debt trap”, if they are unable to offer tangible assistance to the developing countries, they can at least try to put the sincere cooperation between other countries in perspective," Lu said.

China got a 99-year lease on the entire Hambantota port, much higher than a 30 to 40 year lease on terminals that are the international norm.

 China had also got a standard commerical lease on a terminal in Colombo port, where it has grown volumes and is paying concession fees to the port agency.

Analysts sharply contrast the expansion of Colombp port where the Asian Development Bank funded and conduted a feasibility study with Hambantota.

Colombo port is profitable and can easily repay the ADB’s loan for the breakwater.

However analysts also fault Prime Minister Ranil Wickremesinghe’s government for not going ahead with a joint venture in the third terminal of Colombo port, despite global giants like MSC, Maersk responding to requests for proposals to complete it.

Critics say is one of the biggest failures of the administration. (Colombo/July04/2018)
 

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Sri Lanka shares debt management experience at global forum

ECONOMYNEXT – Sri Lanka has shared its experiences at a forum on debt management to “provide lessons for others”, State Minister of Finance Shehan Semasinghe has said.

Semasinghe spoke on “The Role of Debt Management in Navigating Crises” at the 14th Debt Management Facility (DMF) Stakeholders’ Forum, in Livingstone, Zambia.

“I shared the experiences of Sri Lanka which can provide valuable lessons for others and explored the critical elements of capacity building and sound institutional practices in managing debt, particularly in the context of economic challenges,” Semasinghe said on X (twitter).

“Sri Lanka’s experience demonstrates that effective debt management is not just about managing numbers but also about building robust institutions and capacities.”

The journey underscores the importance of transparent, accountable governance and the need for international support and cooperation in times of crisis, he said.

“Sri Lanka prioritized addressing gaps in public debt management by drafting a consolidated Public Debt Management Act, ensuring clarity and legal robustness and establishing a centralized Public Debt Management Office with operational autonomy.

“The role of debt management in navigating crises is multifaceted and critical. Further, by investing in capacity building, adhering to sound institutional practices, and strategically managing debt restructuring and liability operations, countries can better withstand economic shocks and pave the way for sustainable recovery.”

Developing countries face severe debt distress as they are more vulnerable to external shocks, Semasinghe said, and “managing global debt requires coordinated international efforts on debt restructuring where necessary, timely fiscal policy adaptation and help sustainable economic growth.”

The state minister also pointed out the financial impact of climate change was an emerging challenge, as countries need investment to mitigate and adapt to climate impacts, “especially through non-debt creating inflows, which would require private capital mobilization.” (Colombo/Jun20/2024)

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Sri Lanka rupee closes stronger at 305.10/30 to US dollar

ECONOMYNEXT – Sri Lanka’s rupee closed stronger ahead of the long weekend at 305.10/30 to the US dollar on Thursday, up from 305.40/55 to the US dollar Wednesday, dealers said, while some bond yields edged up.

A bond maturing on 15.12.2026 closed at 10.45/80 percent, up from 10.35/75 percent.

A bond maturing on 01.07.2028 closed at 11.20/45 percent.

A bond maturing on 15.09.2029 closed at 12.00/15 percent, up from 11.95/12.35 percent.

A bond maturing on 01.12.2031 closed at 12.05/25 percent.
(Colombo/Jun20/2024)

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Sri Lanka stocks close up, JKH trade pushes turnover

ECONOMYNEXT – The Colombo Stock Exchange closed up on Thursday, data on its site showed.

The broader All Share Index closed up 0.19 percent, or 23.11 points, at 12,249; while the more liquid S&P SL20 Index closed up 0.15 percent, or 5.33 points, at 3,610.

Turnover was 2 billion. Nearly half of this (Rs980mn) came from a crossing on John Keells Holdings Plc. The share closed down at 202.00.

“There were several crossings today which pushed turnover,” market participants said.

“Institutions and high net-worth activity drove the market, while the retail investors we feel are still about uncertain and adopting a wait-and-see approach.”

Melstacorp Plc was among the companies that saw active volumes (Rs194mn) in the day. The share closed up at 87.10.

Top contributors to the index included TeeJay Lanka Plc (up at 41.70), Sampath Bank Plc (up at 79.50), Hatton National Bank Plc (down at 201.00). Hayleys Plc (up at 105.00) and its subsidiary Hayleys Fabric Plc (up at 46.60) were also positive contributors. (Colombo/Jun20/2024)

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