Sri Lanka bonds flat, concern that Mangala may change
ECONOMYNEXT – Sri Lanka bond yields were flat and the rupee was steady, but stock were weaker though there were concerns that Finance Minister Mangala Samaraweera who had the confidence of the private sector, may change, dealers and analysts said.
Stocks were trading marginally lower after one hour of trading Friday.
"Mangala Samaraweera and Indrajit Coomaraswamy had managed to bring back confidence," a dealer said.
"There is some confidence that what is promised will happen. He is also not corrupt. But if Mangala (Samaraweera) is changed things will become uncertain again. It is not only investors but even importers are concerned."
Sri Lanka’s business environment is highly uncertain for all businesses due to a parliament which has been made subservient to a midnight gazette, where taxes are changed while citizen’s sleep.
Samaraweera however presented a budget without the unco-ordinated actions seen in 2015 and 2016. The appointment of State Minister of Finance as Eran Wickramaratne had also helped.
Sri Lanka’s coalition administration is set to announce several changes to the cabinet, after a bondscam by the central bank which is under Prime Minister Ranil Wickremesinghe hit the credibility of ‘good governance’. There has been suggestions that the finance ministry be re-structured to include banks and the central bank, official sources said, though it is not yet clear, whether Samaraweea will lead it. Media is likey to be split from the ministry.
Unlike in well-governed countries where the Prime Minister does not have a key portfolio and plays a ‘class monitor’ role, Sri Lanka’s Prime Minister got caught in the scandal due to his having a key ministry.
A Cabinet Committee on Economic Management had also been blamed for delaying projects, with the Prime Minister again seen to be micro-managing the government instead of delegating and managing through exception reporting.
Not giving adequate responsibilities to young leaders who helped bring the administration to power and giving posts to favourites who either take questionable decisions or cannot defend policy publicly had contributed to embarrassing the administration, critics say.
Coomaraswamy (appointed by President Maithripala Sirisena) is widely recognized as the best appointment made by the current administration.
Over the last few days the forex market has been floating, with no money printed in Treasury bill markets to put pressure on the rupee.
However at the moment the credit is also weak and in the absence of major capital ouflows the rupee is likely to be steady, analysts say. (Colombo/Feb23/2018)