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Tuesday April 16th, 2024

Sri Lanka gets fresh China assurances to go to IMF Board

ECONOMYNEXT – Sri Lanka has received fresh financial assurances from China on debt re-structuring on the parameters required by the International Monetary Fund, sources with knowledge of the matter said.

China earlier sent a letter to Sri Lanka saying they are giving a moratorium till the end of the year but did not mention the parameters of an IMF debt sustainability analysis.

The new letter received last week had the required parameters, official sources said.

President Ranil Wickremesinghe last week had a discussion with IMF Managing Director Kristalina Georgieva which was ‘decisive’, his office said in a statement last week.

The IMF had also lobbied China to give revised financial assurances in line with gross financing ceilings set in a debt sustainability analysis.

Sri Lanka is expected to submit a letter of intent with an updated memorandum of economic and financial policies to the IMF for Board approval, sources said.

Sri Lanka defaulted on its debt after printing money until the central bank ran out of all  its reserves to operate too-low policy rates to keep the external sector in balance.

Sri Lanka had completed all required prior actions mentioned in a staff level agreement struck with the IMF last year, Central Bank Governor Nandalal Weerasinghe said last week after hiking policy rates 100 basis points.

The rate hike came as rupee appreciated in deflationary monetary policy, amid high market rates and private sector de-leveraging, after a surrender rule that kept the rupee down was relaxed.
IMF usually does not usually give any money until an impossible trinity regime central bank (soft-pegged or now flexible exchange rate) ends the money and exchange policy conflict that trigger forex shortages.

If not, the IMF money will be busted up in ‘reserves for imports’, effectively reserves for refinanced private sector credit which drives unsustainable imports.

Sri Lanka has gone to the IMF 16 times after triggering monetary instability with impossible trinity regimes, but this time the country depleted reserves and defaulted on its external debt. (Colombo/Mar07/2023)

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IMF urged Sri Lanka to preserve “hard earned gains” after economic crisis: State FinMin

ECONOMYNEXT – The International Monetary Fund has urged Sri Lanka to preserve the hard earned gains after an unprecedented economic crisis under the global lender’s programme, State Finance Minister Shehan Semasinghe said.

The Sri Lankan delegation led by Shehan Semasinghe met Kenji Okamura, the Deputy Managjng Director of the IMF on the first day of the IMF and  World Bank Spring meeting.

“Mr. Okamura commended the Sri Lankan authorities on strong programme implementation and excellent reform progress. He emphasised the need to preserve the hard earned gains Sri Lanka has experienced since the beginning of the IMF programme and continue strong ownership,” the State Minister said in his X (Twitter) platform.

He said the Sri Lankan delegation including Central Bank Governor Nandalal Weerasinghe and Secretary to the Treasury Mahinda Siriwardana explained the recent socio-economic developments to Okamura.

He also affirmed the IMF top official on the authorities’ commitment to ensuring continuity and consistency of macroeconomic policies and reforms undertaken under the programme. (Colombo/April 16/2024)

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Sri Lanka State FinMin meets BCIU in US; discusses post-crisis investment prospects 

ECONOMYNEXT – Sri Lanka’s State Finance Minister Shehan Semasinghe met Business Council for International Understanding( BCIU) in Washington on the sideline of the IMF/World Bank Spring Meetings late on Monday and discussed investment prospects in the island nation which is gradually recovering from an unprecedented economic crisis.
“Our discussion centered on the potential that Sri Lanka offers for international investors. Explored various sectors, including education, tourism, renewable energy, agriculture and technology, where strategic investments can drive sustainable economic growth and development,” Semasinghe said in his X (Twitter) platform. 
“We reviewed the current macro-economic landscape of Sri Lanka, including recent reforms that have transformed to results. Glad to concluded the forum by marking constructive dialogue and a shared commitment to support the economic development of Sri Lanka.” 
“We thank participants, stakeholders holders and global partners for the significant interest shown in unlocking the full potential of the Sri Lankan economy and fostering greater international understanding and cooperation.” (Colombo/April 16/2024) 
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India allows Sri Lanka to import 10,000MT of onions

ECONOMYNEXT – India has relaxed an export ban allowing 10,000 metric tonnes of onions to be shipped to Sri Lanka, the Indian High Commission in Colombo said.

“The exemption for Sri Lanka reiterated India’s Neighbourhood First policy, adding to the Sinhala and Tamil New Year festivities here,” the statement said.

Onion prices went up in Sri Lanka after India and Pakistan banned exports.

The Directorate General of Foreign Trade has issued a notice allowing National Co-operative Exports Limited to ship 10,000 MT of onions.

The UAE has also been allowed to import 10,000MT of onions on top of 24,400MT already permitted.

A large Indian and South Asian expat community lives in the UAE. (Colombo/Apr15/2024)

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