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Wednesday December 6th, 2023

Sri Lanka does not need to go on bended knees to outside agency over debt: Cabraal

ECONOMYNEXT – Sri Lanka does not need to go on bended knees to an outside agency to solve the country’s debt problems, Central Bank Governor Nivard Cabraal said, amid concerns over debt repayments.

There was nothing wrong with changing the debt profile on one’s own, Cabraal told a business forum organized by the Ceylon Chamber of Commerce.

He said a private business when faced with excessive debt will try to extend the maturities, negotiate with lenders to reduce interest rates and reduce foreign debt and increase domestic debt.

Cabraal said Sri Lanka was also doing the same thing the reduce vulnerabilities in the debt profile.

“We are now on that path to debt sustainability,” Cabraal said. “We are changing our debt profile.”

He said Sri Lanka was moving away from only borrowings to non-debt creating inflows.

Sri Lanka was also reducing exposure to commercial debt and going for a government credit line, he said.

Attempts were also being made to improve remittance through a ‘carrot and stick’ approach.

A large share of Sri Lanka’s remittances has shifted out of banks after money was printed and exchange and trade controls were imposed, creating a parallel market for dollars.

It is now being partly filled with unofficial remittances.

Sri Lanka’s soft peg with the US dollar frequently comes under pressure due to monetary stimulus involving aggressive open market operations to short term rates down.

He was speaking amid calls for a new International Monetary Fund program.

IMF was set up mainly by US new dealers who built the Bretton Woods system of soft-pegs which collapsed in 1971 amid US money printing and sterilized gold sales.

Sri Lanka’s central bank has so far gone to the IMF 16 times. Since the IMF does not wean countries away from soft-pegs they keep going back.

The latest re-incarnation of the soft-peg is the ‘flexible exchange rate’. Sri Lanka has a Latin America style central bank set up by a US money doctor.

Similar central banks get into severe external troubles when the US Fed tightens by trying to sterilize the balance of payments. (Colombo/Dec06/2021)

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Sri Lanka rupee closes stronger at 327.40/90 to the US dollar

ECONOMYNEXT – Sri Lanka’s rupee closed at 327.40/90 to the US dollar on Tuesday, from 328.10/30 the previous day, dealers said.

Bond yields were stable.

A bond maturing on 01.06.2025 closed at 13.60/70 percent from 13.70/14.00 percent.

A bond maturing on 01.08.2026 closed at 13.90/14.00 percent from 13.90/14.10 percent.

A bond maturing on 15.01.2027 closed at 14.00/15 percent from 14.00/14.10 percent.

A bond maturing on 01.07.2028 closed at 14.10/20 percent from 14.20/35 percent.

A bond maturing on 15.05.2030 closed at 14.20/35 percent, from 14.25/45 percent.

A bond maturing on 01.07.2032 closed at 14.10/35 percent, from 14.05/40 percent. (Colombo/Dec5/2023)

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Sri Lanka stocks close down as investor sentiment dips

ECONOMYNEXT – The Colombo Stock Exchange closed down on Tuesday, CSE data showed.

The All Share Price Index was down 0.40 percent, or 43.50 points, at 10,700.09.

The S&P SL20 index was up 0.43 percent, or 13.32 points, at 3,054.41.

Turnover was at 711 million. The capital goods sector contributed 172 million, the food, beverage and tobacco sector contributed 140 million, and banks 113 million of this.

Top positive contributors to the ASPI in the day were John Keells Holdings Plc (up at 193.00), Richard Pieris And Company Plc (up at 19.80), and Nation Lanka Finance Plc, (up at 0.40).

Negative contributors were Commercial Bank of Ceylon Plc (down at 89.70), Sampath Bank Plc (down at 71.00), and Central Finance Company Plc, (down at 106.00). (Colombo/Dec5/2023).

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Sri Lanka plans to reduce number of school grades from 13 to 12

ECONOMYNEXT – The Ministry of Education proposes to reduce the number of school grades from 13 to 12, according to a government information department statement.

“Every child will be given the opportunity to finish school in 17 years through the proposed new education reforms,” education officials were quoted as saying after a discussion on budget allocations.

Under the proposed system, pre-school education will be at the age of 4 years, the primary section between grades 1-5, junior section between grades 6-8, and senior section between grades 9-12.

The General Certificate of Education Ordinary Level Exam (GCE O/L) is proposed to be conducted in grade 10, and the Advanced Level Examination in grade 12.

It has also been decided to reduce the number of mandatory subjects at the GCE O/L Exam from 9 to 7.

Three new subjects, information and communication technology (ICT), technical and professional skills, and religion and values will be made mandatory and included in those 7 subjects. (Colombo/Dec5/2023)

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