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Sunday March 26th, 2023

Global finance trade forum goes ahead in Sri Lanka as security improves

ECONOMYNEXT – A global association of financial market professionals is going ahead with plans to hold their world congress in Sri Lanka in October as security had improved after Easter.

Sunday’s suicide bombings, its chief said.  Bruno Langfritz, chairman of Paris-based Association Cambiste Internationale (ACIFMA), the

Financial Markets Association, said the congress would help focus attention on Sri Lanka’s plans to become a financial hub in the region.

“When the Easter Sunday attacks took place, everyone called for cancelling of the congress,” he told a news conference held to announce the ACI Financial Markets Association World Congress from the 3rd to 5th October in Colombo. 

 “But it was not cancelled as we know that this can happen in any place in the world,” Langfritz said. “It happens in France, in Belgium, it can happen in Switzerland, where I’m from.”

The April attacks on churches and hotels by Islamist extremists killed over 250 people, including tourists.
Langfritz said he felt comfortable with security measures taken by Sri Lanka, including its hotels.

“I have experienced many security issues because I’ve been travelling a lot. I see how strict controls are now in front of hotels. It is much better than the ones in south east Asia. I feel safe.”

Shanaka Perera, president Sri Lanka Forex Association, which will host the event, said it will demonstrate that Sri Lanka is very much open for business in terms of conference tourism.

“Sri Lanka is striving to become a regional financial centre, through the port city financial centre which this conference will highlight,” he said.

About 200 foreign delegates are expected for the forum.

The October global congress by the ACI, which has over 8,000 international members, will bring together financial market professionals, regional regulators, policy makers, think tanks, investors and corporate.

The keynote address will be delivered by Governor of the Central Bank of Sri Lanka Indrajit Coomaraswamy.

Other speakers include Minister of Economic Reform and Public Distribution Harsha de Silva, 

Head of Capital Markets of PWC Martin Liebi, Associate Professor Faculty of Business & Economics of University of Hong Kong Tuan Q Phan, and Global Economist Standard Chartered Bank David Mann.
(COLOMBO, 24 July, 2019)

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Sri Lanka seeks to settle India ACU debt, credit lines over 5-years

ECONOMYNEXT – Sri Lanka has requested India to settle payments due to the country under the Asian Clearing Union mechanism and credit lines given in 2022 over 5 years, Indrajit Coomaraswamy, an advisor the island’s government said.

Sri Lanka is negotiating with India to settle the money over a 5-year period, Coomaraswamy, a former central bank governor told an online forum hosted by the Central Bank.

“Our request from the Indians is to settle it over five years,” he said. “That I think is still in the early stages of negotiation. The same with the one billion line of credit.”

Sri Lanka’s central bank owed the ACU 2.0 billion US dollars to the Asian Clearing Union according to a year end debt statement, issued by the Finance Ministry.

Sri Lanka owned India, 1,621 million dollars according to ACU data by year end, excluding interest.

India has given a 1 billion US dollar credit line to Sri Lanka as well a credit line for petroleum.

Sri Lanka in March 2024 has paid 121 million US dollar out of a 331 million US dollar IMF tranche to settle an Indian credit line.

Indian credits were given after the country defaulted in April 2022 as budget support/import when most other bilateral lenders halted giving money. (Colombo/Mar26/2023)

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Sri Lanka coconut auction prices up 1.16-pct

ECONOMYNEXT- Sri Lanka’s coconut auction prices went up by 1.16 percent from a week ago at an auction on Thursday, data showed.

The average price for 1,000 nuts grew to 83,219.45 from 82,260.58 a week earlier at the weekly auction conducted by Sri Lanka’s Coconut Development Authority on March 23.

The highest price was 92,500 rupees for 1,000 nuts up from the previous week’s 90,600 rupees, while the lowest was 76,500 also up from 70,000 rupees.

The auction offered 900,010 coconuts and 583,291 nuts were sold. (Colombo/Mar 26/2023)

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Sri Lanka in talks for billion dollar equivalent Indian rupee swap

ECONOMYNEXT – Sri Lanka is in talks with India for a billion US dollar equivalent Indian rupee central bank swap, to facilitate trade, Indrajit Coomaraswamy, ad advisor to the government said.

“The amount is still uncertain it could be up to the equivalent of a billion US dollars,” Coomaraswamy told an online forum hosted by Sri Lanka’s central bank.

The money will be used to facilate India Sri Lanka trade, he said.

India has been trying to popularize the use of Indian rupees for external trade and also encouraged Sri Lanka banks to set up Indian rupee VOSTRO accounts.

However the first step in popularizing a currency for external trade is to get domestic agents, especially exporters, to accept their own currency for trade, like in the case of the US or EU, analysts say.

India’s billion US dollar credit to Sri Lanka given during the 2022 crisis is settled in Indian rupees (transaction need).

However the Indian government itself has chosen to denominate it in US currency for debt purposes (future value).

In most South Asian nations, receivers of remittances are willing to accept domestic currencies, leading to active VOSTRO account transactions.

Sri Lanka is expected to repay a 400 million US dollar swap with the Reserve Bank of India next year under an International Monetary Fund backed program for external stability and debt re-structuring.

Central bank swap proceeds sold to banks, which are then sterilized with inflationary open market operations, can trigger forex shortages and currency crises, analysts warn.

Sri Lanka went to the International Monetary Fund after two years of inflationary monetary operations by the central bank’s issue department (money printed to suppress interest rates) triggered the biggest currency crisis in its history and external sovereign default.

Sri Lanka had gone to the IMF 16 times with similar external troubles except for the April 2003 extended fund facility under Central Bank Governor A S Jayewardene which was a purely reform-oriented program with the World Bank (PRGF/PRSP) program at a time when he was collecting reserves with deflationary monetary policy and perhaps the lowest inflation since the Bretton Woods collapsed. (Colombo/Mar26/2023)

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