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Thursday June 20th, 2024

Paris Club communicates on Sri Lanka debt re-structuring with IMF: report

ECONOMYNEXT – The Paris Club of Western lenders has informed the International Monetary Fund of their support for Sri Lanka debt re-structuring, a media report said, as the country seeks to re-structure its debt and get a bailout from the agency.

Bloomberg Newswires citing un-named sources said the Paris Club had communicated with the IMF.

There was no immediate official reaction from the IMF.

The IMF has so far only accepted the letter of debt re-structuring sent by India.

India sent a letter on without any wording on conditions relating to the actual treatment they are offering but agreed to re-structure debt in lines with a financing plan contained in a draft IMF agreement with Sri Lanka.

A letter from the Exim Bank of China to Sri Lanka which reportedly contained wrong wording such as the grace period they were prepared to offer.

Details have to be agreed after the IMF’s executive board approves a re-structuring plan.

Sri Lanka officials have said they were continuing to talk to China.

Paris Club, which has participated in debt re-structuring earlier was expected to provide debt assurance in line with IMF requirements as long as India and China, which was outside the group also did the same.

Negotiations with China had delayed IMF programs in several countries.

The US has said Paris Club was ready to support Sri Lanka but China has to also give assurances in line with requirement.

“We the United States is prepared to do its part,” US Under Secretary of State Victoria Nuland said during a visit to Sri Lanka.

“Paris Club partners are prepared to do their part.”

Paris Club and the International Monetary Fund is trying to get China, which is classified as an ad hoc participant in their deliberations to work more closely on debt workouts.

China is a large lender to several countries which are experiencing severe monetary instability at the moment.

Sri Lanka’s central bank has hike rates, reduced money printing and achieved external stability by December 2023.

However in January some domestic operations have been conducted in a bid to get interest rates down, which have been high due to a delay in unlocking foreign aid and fears of a domestic debt re-structuring.

Sovereign bond holders are also prepared to help Sri Lanka in line with a 4.5 percent external gross financing need ceiling by 2027, provided domestic debt rollovers were extended to match a ceiling of 8.5 percent, sources have said. (Colombo/Feb03/2023)

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  1. sacre blieu says:

    All the serious lenders will not send us any money as yet until the elections are held and the return to discipline and democracy are assured and put in place. We need a paradigm shift from all this muck and the political atmosphere tamed and brought back to true governance. The people have given pride of place and not the rogues and murderers who took all to be suckers and brought everyone to be idolatry posterior worshipers.

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  1. sacre blieu says:

    All the serious lenders will not send us any money as yet until the elections are held and the return to discipline and democracy are assured and put in place. We need a paradigm shift from all this muck and the political atmosphere tamed and brought back to true governance. The people have given pride of place and not the rogues and murderers who took all to be suckers and brought everyone to be idolatry posterior worshipers.

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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