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Sunday September 24th, 2023

Sri Lanka bank deposits protected in any domestic debt optimization: CB Governor

ECONOMYNEXT – Sri Lanka’s public bank deposits and stability of the banking system will be safeguarded in any reorganization of domestic debt, Central Bank Governor Nandalal Weerasinghe said.

“There is speculation about the stability of public deposits and banking system stability,” Governor Weerasinghe told a public forum.

“In any kind of debt optimization, we will ensure and safeguard banking system stability as well as the protection of public deposits.”

A key objective of the central bank is maintaining financial sector stability, he said.

Sri Lanka has to at least extend the maturity of some domestic debt to meet International Monetary Fund annual financing ceiling in 2027-2032, which have to be brought down to about 13 percent from gross domestic product from the current 30 percent.

Sri Lanka banks have said they have received assurances on the effect of any debt re-structuring.

According to a Q and A released after a presentation to creditors all domestic bonds may be re-structured.

“The envisaged domestic debt optimization operation will involve (i) T-Bills held by the CBSL and (ii) T-Bonds (in the context of a voluntary exchange operation),” according to the statement.

“Only T-Bills held by the CBSL (equivalent to 62.4% of total outstanding T-Bills) will be considered for treatment to create some fiscal space – all other T-Bills are excluded from the envisaged operation.

“All T-Bonds may be considered for participation in a voluntary domestic debt optimization operation, provided that it can be designed to minimize impact on banks and preserve financial stability.

“The impact on the domestic financial sector is therefore being carefully assessed by the authorities.

“In particular, the process of voluntary debt optimization operation with respect to T-Bonds will be developed through consultations held by the Sri Lankan government and its advisors with major T-Bonds holders, aimed at gauging different options and understanding the constraints of each holder.”
(Colombo/May10/2023 – Updated (II)

Comments (3)

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  1. Rienzie Wannithantri says:

    With due respect to CB Governor, his clarification of domestic debts, “Is he not interested in irregularities ” Corruption prevailing at Peoples Bank ??
    Marginalizing Pensioners Living Abroad for highlighting same. Withholding (12) months Govt. Penson (June 22-May 23)

  2. Rienzie Wannithantri says:

    Sir, Bank stability you accrue is it to deprive Pensioners funds to be withheld as People’s Bank is depriving from pensioners.
    A Pensioner Living Abroad is deprived 12 months funds Rs.138.070.04 (6/22-5/23)

  3. Upali De Soyza says:

    Will there be a limit on T Bills (held by the CBSL) one will be allowed to hold and not subject to restructuring (haircut or extend the period),

    ex- say allowing to hold TB of LKR 50 million before any haircut or extend (delay maturing ). If extended will the CBSL continue with paying the existing rate % of the TBs already in place?

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Comments (3)

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Your email address will not be published. Required fields are marked *

  1. Rienzie Wannithantri says:

    With due respect to CB Governor, his clarification of domestic debts, “Is he not interested in irregularities ” Corruption prevailing at Peoples Bank ??
    Marginalizing Pensioners Living Abroad for highlighting same. Withholding (12) months Govt. Penson (June 22-May 23)

  2. Rienzie Wannithantri says:

    Sir, Bank stability you accrue is it to deprive Pensioners funds to be withheld as People’s Bank is depriving from pensioners.
    A Pensioner Living Abroad is deprived 12 months funds Rs.138.070.04 (6/22-5/23)

  3. Upali De Soyza says:

    Will there be a limit on T Bills (held by the CBSL) one will be allowed to hold and not subject to restructuring (haircut or extend the period),

    ex- say allowing to hold TB of LKR 50 million before any haircut or extend (delay maturing ). If extended will the CBSL continue with paying the existing rate % of the TBs already in place?

Sri Lanka India industrial zone around Trinco, maritime links mooted

ECONOMYNEXT – Sri Lanka’s Ports Minister Nimal Siripala de Silva had highlighted the desire of both the Governments to work closely to develop the industrial zone at Trincomalee, after accepting an invitation to participate in a maritime summit.

The Global Maritime India Summit (GMIS) will be held in India from October 17-19, 2023 at Mumbai where Sri Lanka has been invited at a partner country.

At a curtain raiser event on September 22, India’s High Commissioner in Colombo, Gopal Baglay had said both countries were working on enhancing sea connectivity according to a vision document launched during a recent visit of the President of Sri Lanka to India.

Minister de Silva will lead a delegation from Sri Lanka to the summit.

Secretary to the Ministry of Ports, Shipping and Waterways, Government of India, T K Ramachandran said the Global Maritime India Summit aims strengthen the Indian maritime economy by promoting global and regional partnerships and facilitating investments.

The event will give an opportunity to the Government of Sri Lanka to attracting greater investment from India in development of its maritime infrastructure, Ramachandran said.

It will also facilitate greater business to business interactions. (Colombo/Sept24/2023)

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Sri Lanka brings back import para tariff on milk

ECONOMYNEXT – Sri Lanka has brought back an import para tariff called the Ports and Airports Levy, to several grades of milk powder.

Milk powder has been removed from a list of PAL exemptions, making them liable for a 10 percent tax.

The PAL para tariffs are also a contentious issue in terms of export competitiveness, and the government has previously given undertakings that they will be eliminated.

Trade freedoms of the poor figure in an IMF/World bank reform program with the governments.

Milk is a protein rich food, in a country where children of poor families are facing stunting and malnutrition.

Economic nationalism is seen at high levels in food, with several businessmen are pushing for trade protection, amid an overall autarkist (self-sufficiency) ideology, going directly against policies followed in East Asia, which the same as hold up as examples.

Sri Lanka keeps dairy product prices up ostensibly to bring profits to a domestic dairy company and farmers.

Sri Lanka also keeps maize prices up, ostensibly to give profits to farmers and collectors. (Colombo/Sept22/2023)

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Sri Lanka govt warns liquor manufacturers: pay defaulted tax or lose licence

ECONOMYNEXT – Sri Lanka government which is struggling to raise the state revenue despite   higher taxes, has warned liquor manufacturers to pay defaulted taxes or lose their licence.

The government is now getting tough with past tax defaulters amid concerns over falling short of this year’s revenue target agreed with the International Monetary Fun (IMF).

“Liquor manufacturing firms owe us 660 crore rupees (6.6 billion rupees),” Siyambalapitiya told  reporters on Thursday (21).

“Most of this or around a third is the only excise tax amount to be paid. The rest is penalty. If a liquor manufacturer does not pay on time, we impose a penalty of 3 percent per month This means 36 percent (penalty) per annum,” he said.

“We have given them deadline to repay the basic excise taxes. If they don’t pay, we will cancel their licence.”

President Ranil Wickremesinghe’s government committed an ambitious revenue target among many other reforms to the International Monetary Fund (IMF) in return to a $3 billion loan package.

However, the revenue could face a short fall of 100 billion rupees, State Finance Minister Ranjith Siyambalapitiya has said.

A new Central Bank Act also has legally prevented the government of printing money at its discretion as  in the past.  (Colombo/September 24/2023)

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