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Tuesday April 16th, 2024

INTERVIEW – Sri Lanka likely to see over $7 bln in four years after IMF deal – minister

ECONOMYNEXT – Sri Lanka is likely to see $7 billion inflows in multilateral and bilateral fundings within 48 months once the island nation unlocks the International Monetary Fund (IMF) deal for a $2.9 billion loan, State Finance Minister Shehan Semasinghe said.

Sri Lanka is on a recovery path from its unprecedented economic crisis with the island nation having secured essentials including fuel, cooking gas, and medicines.

However, that recovery has been slow as the country’s government revenue is far below its state spending due to a bloated state sector and heavy repayment schedule.

The sovereign debt default declared by the authorities has helped the country to have a breathing space from repayment of staggering debts, but the country will have to start repaying such debts after the debt restructuring is finalized following the IMF loan.

“There will be faster improvements in the economy where we are expecting around a little over $7 billion within the 48 months where we are in the (IMF) program,” Semesinghe told EconomyNext in an interview.

“That is only from the financial institutions and other bilateral negotiations we have done. However, we see a lot of investment prospects in Sri Lanka and investments will prosper. We can see a lot of people who are interested in investing in Sri Lanka are looking forward to opportunities.”

The sovereign default has shut the door for Sri Lanka from borrowing bilateral, multilateral, and commercial loans.

The IMF Executive Board is expected to approve the $2.9 billion loan to Sri Lanka on March 20 as all the creditors including China have given assurances for debt restructuring assurances in line with the IMF parameters.

“We’re confident that we will get the approvals. It’s vital to us,” the minister said.

I think we must put our fiscal system in place. What we have communicated to the entire world is that we have put our house in order.”

“So, we have to march forward. We have passed the most difficult times. But even 2023 will be quite critical for us, because that will be the year which is based on recovery.”

But that recovery has not been easy for President Ranil Wickremesinghe’s government which includes unlikely nationalist-minded leftists to liberals.

The government has already raised taxes, fuel, and electricity prices, and allowed the rupee to somewhat reflect market exchange rates despite many such moves that faced protests and labour agitations.

“From 2024 onwards, we will be on a good path. I think the short term pains that people are going through right now will come to an end,” Semasinghe said. (Colombo/March15/2023)

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  1. sacre blieu says:

    Hardly any right-thinking investor will not send their money here due to a loss of confidence in governance and deep fraud, bribery and corruption. Also, the appointment of the president is illegal thereby making the government illegal, including the issuing of orders. The naked manipulation of elections when it is entrenched in the constitution, is equally illegal. While this is going on the breakdown of law and order is getting worse. The [police are now a problem and not a solution.

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  1. sacre blieu says:

    Hardly any right-thinking investor will not send their money here due to a loss of confidence in governance and deep fraud, bribery and corruption. Also, the appointment of the president is illegal thereby making the government illegal, including the issuing of orders. The naked manipulation of elections when it is entrenched in the constitution, is equally illegal. While this is going on the breakdown of law and order is getting worse. The [police are now a problem and not a solution.

Sri Lanka State FinMin meets BCIU in US; discusses post-crisis investment prospects 

ECONOMYNEXT – Sri Lanka’s State Finance Minister Shehan Semasinghe met Business Council for International Understanding( BCIU) in Washington on the sideline of the IMF/World Bank Spring Meetings late on Monday and discussed investment prospects in the island nation which is gradually recovering from an unprecedented economic crisis.
“Our discussion centered on the potential that Sri Lanka offers for international investors. Explored various sectors, including education, tourism, renewable energy, agriculture and technology, where strategic investments can drive sustainable economic growth and development,” Semasinghe said in his X (Twitter) platform. 
“We reviewed the current macro-economic landscape of Sri Lanka, including recent reforms that have transformed to results. Glad to concluded the forum by marking constructive dialogue and a shared commitment to support the economic development of Sri Lanka.” 
“We thank participants, stakeholders holders and global partners for the significant interest shown in unlocking the full potential of the Sri Lankan economy and fostering greater international understanding and cooperation.” (Colombo/April 16/2024) 
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India allows Sri Lanka to import 10,000MT of onions

ECONOMYNEXT – India has relaxed an export ban allowing 10,000 metric tonnes of onions to be shipped to Sri Lanka, the Indian High Commission in Colombo said.

“The exemption for Sri Lanka reiterated India’s Neighbourhood First policy, adding to the Sinhala and Tamil New Year festivities here,” the statement said.

Onion prices went up in Sri Lanka after India and Pakistan banned exports.

The Directorate General of Foreign Trade has issued a notice allowing National Co-operative Exports Limited to ship 10,000 MT of onions.

The UAE has also been allowed to import 10,000MT of onions on top of 24,400MT already permitted.

A large Indian and South Asian expat community lives in the UAE. (Colombo/Apr15/2024)

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Iran President to visit Sr Lanka amid rising tension, inaugurate Uma Oya project

ECONOMYNEXT – Iranian President Ebrahim Raisi will arrive in Sri Lanka on April 24 on a one-day official visit to inaugurate Tehran-assisted $529 million worth Uma Oya multipurpose development project with 120MW hydro power generation capacity, official sources said.

The announcement on President Raisi’s visit comes two days after Iran launched explosive drones and fired missiles at Israel in its first direct attack on Israeli territory, a retaliatory strike that raised the threat of a wider regional conflict.

“The President is visiting to inaugurate the Omaoya project. He will be on a one-day visit,” an official at Iran embassy in Colombo told EconomyNext.

A Sri Lankan Foreign Ministry official confirmed the move.

This is the first time an Iranian President coming to Sri Lanka Iranian after then President Mahmoud Ahmadinejad’s visit in April 2008.

The Omaoya project was originally scheduled to be completed in 2015, but had been delayed several times due to unexpected issued faced during the project cycle and funding issue after the United States imposed economic sanctions on Iran and economic crisis in Sri Lanka.

The project was started in 2010 and the funding was to be received as loan grant from the Iranian government. However, Iran was able to provide $50 million before the sanctions. Sri Lanka has to bear the cost after the sanctions.

The project includes storing water in two reservoirs with dams before being brought through a 23 km tunnel to two turbines located underground and generating hydro power with a capacity of 120 megawatts and added to the national grid.

After power generation, the water is expected to be brought to three reservoirs while supplying water to 20,000 acres of old and new paddy fields in both the Yala and Maha cultivating seasons.

The Memorandum of Understanding (MOU) for the construction was signed between the two countries in 2007 while Sri Lanka’s Cabinet approved the execution of the contract agreement between the Executing Agency, Sri Lanka’s Ministry of Irrigation and Water Management (MOIWM) of the GOSL and Iran’s FARAB Energy and Water Projects (FC).

When commencing the project on March 15, 2010, the scheduled date of completion of the project was on March 15, 2015. But the schedule completion date was extended to December 31, 2020 due to the unexpected water ingress into the head race tunnel and followed by social impacts.

The trade between the both countries suffered after the US sanctions. However, Sri Lanka inked a deal in December 2021 with Iran to set off export of tea to Iran against a legacy oil credit owed by state-run Ceylon Petroleum Corporation to the National Iranian Oil Company.

Sri Lanka owes $251 million for crude imported before the US imposed sanctions on Iran. (Colombo/April 15/2024)

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