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Thursday June 20th, 2024

China working with other lenders on ‘easing’ Sri Lanka debt

ECONOMYNEXT – China is working with other lenders on easing Sri Lanka’s debt burden, a Chinese diplomat said as country attempts to re-structure debt after the country defaulted on foreign debt after two years of money printing.

“China is actively working with relevant countries and international financial institutions to support Sri Lanka to ease the debt burden and realize sustainable development,” Li Guangjun, Economic and Commercial Counselor, Embassy of Peoples’s Republic said.

He was speaking at the 21st Annual General Meeting of Sri Lanka – China Business Council of the Ceylon Chamber of Commerce.

Sri Lanka and China is celebrating 65th anniversary of diplomatic relations.

2022 was also the 70the anniversary of a rubber-rice pact, a barter deal made when the US Fed fired a global commodity bubble purchasing Liberty Bonds for new money, and hit the monetary brakes sending ripples similar to 2022 across the world.

“Over the past decade bilateral relations have been cordial and friendly which had made the possibility of great progress in achieving economic and trade co-operation between our two countries,” Li said.

In 2021 China was Sri Lanka’s second largest trading partner and the largest source of foreign direct investment, he said.

“In spite of the pandemic and sluggish global growth business ties have continued to grow,” Li said.

Sri Lanka ran up foreign debt steeply from 2015 to 2022 taking in so-called ‘cover up’ loans as the country experienced three currency crises in a row while printing money to suppress rates under flexible inflation targeting and lost the ability to make foreign payments.

China itself gave monetary instability loans without pressing Sri Lanka to tighten monetary policy.

 

China on track to bail out Sri Lanka with US$1.25bn in 2018

Sri Lanka signs US$500mn loan with China Development Bank

Sri Lanka gets US$500mn loan to help fight Coronavirus China says

Sri Lanka is now seeking a 2.9 billion US dollar loan from IMF, with domestic investment smashed to reduce outflows and regain external stability.

However an agreement from from China and India to re-structure debt called a ‘creditor assurance’ is needed to unlock new funding. (Colombo/Nov20/2022)

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  1. sacre blieu says:

    The rubber/rice pact ensured that we get rice supplied with rice by China and regularly so. However, the rubber that was bought and shipped to China was given a premium for grades up to RSS No.3 and was surveyed for quality before shipment, and the first board of surveyors brought credit to the country, and was recognised by them and appreciated, and even earned the praise of the Minister, R.G.Senanayake, who was among the many devoted Ministers and honest to the last cent. His wife served him as his private secretary and hardly claimed anything in return. It all ended on a disgraceful note, with the continued interference of political appointees who passed substandard rubber, and were allowed to get away with it. They have always been a friend to us and have been a friend indeed. Today, our parliament and most commanding posts have become a den of thieves, with the government being illicitly appointed and issuing illegal orders.

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  1. sacre blieu says:

    The rubber/rice pact ensured that we get rice supplied with rice by China and regularly so. However, the rubber that was bought and shipped to China was given a premium for grades up to RSS No.3 and was surveyed for quality before shipment, and the first board of surveyors brought credit to the country, and was recognised by them and appreciated, and even earned the praise of the Minister, R.G.Senanayake, who was among the many devoted Ministers and honest to the last cent. His wife served him as his private secretary and hardly claimed anything in return. It all ended on a disgraceful note, with the continued interference of political appointees who passed substandard rubber, and were allowed to get away with it. They have always been a friend to us and have been a friend indeed. Today, our parliament and most commanding posts have become a den of thieves, with the government being illicitly appointed and issuing illegal orders.

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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