Economy

Sri Lanka gets backing from Japan, bi-lateral lender envoys for debt talks

Thursday September 22, 2022 7:10 pm

ECONOMYNEXT – Sri Lanka’s debt re-structuring efforts were backed back Japan, France and other countries at an ambassador’s forum with President Ranil Wickremesinghe, an official said.

“Several missions, including Japan and France, extended their country’s support towards Sri Lanka and its debt restructuring efforts,” Dinouk Colombage, Director International Affairs for President Wickremesinghe said.

President Wickremesinghe had updated ambassadors of 23 Paris Club and non-Paris Club countries on the current economic crisis in the country.

He had promised transparency and equity in seeking debt re-structuring, the Presidents media office said.

Sri Lanka will meet all external creditors in an online forum Friday presenting to them an update on current economic conditions and an discussions with the International Monetary Fund.

Sri Lanka ran into a severe currency crisis in 2022 and defaulted on its foreign debt, after borrowing large volumes of commercial debt through two currency crises from 2015 to 2018, in the course of operating flexible inflation targeting with stimulus.

Government spending also ratcheted up from 17 to around 20 percent after spending based consolidation was abandoned under a politically naive strategy called revenue based fiscal consolidation. In 2020 tax cuts were added to monetary stimulus to target and output gap.

Sri Lanka has already hiked rates to slow private credit and raised taxes and energy utility prices to reduce public domestic credit to reduce outflows and stabilize the currency in the course of striking a staff level agreement with the International Monetary Fund

Sri Lanka needs creditor assurances to get 2.9 billion US dollars from the IMF and also unlock credit from others.

Sixteen Colombo-based Missions and six missions based in New Delhi participated virtually. (Colombo/Sept22/2022)

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Debt Restructuring

India extends under utilized $1 bln credit facility to Sri Lanka by one year

Tuesday May 30, 2023 2:22 pm

ECONOMYNEXT – India has extended a $1 billion credit facility to Sri Lanka by another year after the loan that was given to help the crisis-hit island nation to continue import of essentials was not fully utilized in the 12 month period originally agreed, officials said.

Sri Lanka faced with a looming sovereign default signed the credit facility in March 2022 for one year through March 2024. However, the full $1 billion had not been utilized yet.

The Facility has been used for urgent procurement of fuel, medicines, food items and industrial raw materials, as per the requirements and priorities of Sri Lanka.

“The initial agreement was signed in 2022 March and out of the 1000 million US dollars allocated materials were imported for $576.75 mil,” Shehan Semasinghe, State Finance Minister said in his official twitter platform.

“The agreement is extended for the remaining $423.25 mil. We will prioritize the import of essential medicines till March 2024.”

Indian High Commission in Colombo said the State Bank of India (SBI) has extended the tenure of the $1 billion Credit Facility provided to Sri Lanka in response to a request from the Government of Sri Lanka. (Colombo/May 30/2023)

Debt Restructuring

Sri Lanka President cleared to discuss cancelled LRT after soured Japan relations

Tuesday May 30, 2023 12:57 pm

ECONOMYNEXT – Sri Lanka’s Cabinet of Ministers approved a proposal by President Ranil Wickremesinghe discuss resuming a Japan funded. Light Rail Transit (LRT) project cabinet spokesman said, as the island nation is in the process of mending ties with Tokyo.

However, any such deals are likely to take place after the debt restructuring and Sri Lanka starts to repay its foreign loans to come out of default, analysts say.

Former President Gotabaya Rajapaksa unilaterally cancelled the 1.5 billion US dollar LRT and East Container Terminal (ECT) projects in 2021. Japan agreed to fund the LRT project while it was one of the tripartite members of the ECT project along with India and Sri Lanka.

The abrupt cancellation hit the diplomatic ties between the two countries and Sri Lankan government officials have said Japan had given the project to Sri Lanka at a very lower financing cost.

President Wickremesinghe returned from Japan late last week after having met top officials of the Japanese government including its prime minister.

“In recent history, due to the stopping of several agreements and proposals suddenly, President Wickremesinghe went to Japan after creating the background to clear some of the worries we have,” Cabinet Spokesman Bandula Gunawardena told the weekly media briefing.

“Before he went, he got the approval from the cabinet to resume the discussion on the light railway project. He got the approval from the cabinet to get parliament approval for bilateral agreements signed or any other investments project. Any change or cancellation of a project could be done only with the approval of the parliament.”

Japan has backed Sri Lanka under Wickremesinghe’s presidency after the island nation declared sovereign debt default. (Colombo/May 30/2023)

Legal

Sri Lanka to tighten grip on television with broadcast law

Tuesday May 30, 2023 12:52 pm

ECONOMYNEXT – Sri Lanka has formulated a broadcast authority law to regulate electronic media which will be made public soon, Cabinet spokesman Minister Bandula Gunawardana said.

“The draft prepared by a cabinet subcommittee under Justice Minister Wijedasa Rajapaksa has discussed with various parties will be given to all media institutions and broadcast media,” Gunawardana said.

“We do not have to hide or force anyone. A legal framework that can be acceptable to all for all sectors.”

“In a week or two Minister Wijedasa will discuss with state and private stakeholders.”

At the moment Sri Lanka has issued frequencies without conforming to an “international procedures”, he said.

In Sri Lanka television frequencies are issued under a state television act.

Successive administrations in Sri Lanka has since around 1980 mis-used state television duopoly which including for conducting elections according to critics.

Private television as well a raio emerged around the 1990s and has since over shadowed state media.

There have been calls by ruling party politicians from time to time to control private media. There is now calls to control social media.

At a Committee on Public Accounts meeting of the Department of Government Information, ruling coalition legislators called for regulation of television content. (Colombo/May30/2023)