An Echelon Media Company
Friday August 12th, 2022

Sri Lanka in last stages of making debt restructuring plan: President

ECONOMYEXT – Sri Lanka is in the final stages of a debt re-structuring plan prepared with international experts and which will be presented to the International Monetary Fund and negotiations will begin with creditor nations, President Ranil Wickremesinghe said.

Negotiations would begin with state creditors first.

“The finalization of the debt restructuring plan has commenced in collaboration with Lazard and Clifford Chance, who are international financial and legal experts,” President Wickremesinghe told in his inaugural address to a new session of parliament.

“We would submit this plan to the International Monetary Fund in the near future, and negotiate with the countries who provided loan assistance.

“Subsequently negotiations with private creditors would also begin to arrive at a consensus.”

He said an economic planning framework would be presented in an interim budget for the rest of the year and in the 2023 budget.

IMF discussions will continue in August.

“It is our expectation to conclude the staff level negotiations expeditiously and successfully,” he said.

“We are also looking at formulating necessary policies, rules and regulations, and programmes, to strengthen the export economy,”

“Our economic legacy is based on foreign trade. From the ancient times, Sri Lanka was known worldwide as a major economic hub located on the Maritime Silk Road (MSR), and was identified as the ‘Granary of the East’.

“Sri Lanka was the center that distributed rice from the entire region across the world.”

Sri Lanka however lost the ability engage in international trade after a central bank was set up in 1950 which printed money to suppress rates, created forex shortages and broke the currency peg and triggered trade and economic controls.

As domestic credit surged with liquidity injections and sterilized interventions the country lost reserves and ended up as a top customer of the IMF, repeatedly.

Sri Lanka went to the international bond markets with bullet repayments in 2005 and sovereign bond holdings ratcheted up sharply from 2015 under flexible inflation targeting with output gap targeting (printing money for stimulus).

In 2022 Sri Lanka defaulted for the first time. Soft-pegged Latin American nations, default repeatedly.

Sri Lanka is now in the worst currency crises in the history of the central bank with the rupee down to 360 to the US dollar from 200 at the beginning of the year.

Sri Lanka now has a budget deficit over 10 percent of GDP with taxes cut in 2019 for stimulus on top of money printing.

Wickremesinghe said Sri Lanka aimed to have a primary surplus in the budget by 2025.

National debt which had soared to 140 percent of GDP was expected to be brought down below 100 percent by 2032.

“If we build the country, the nation and the economy through the national economic policy, we would be able to become a fully developed country by the year 2048, when we celebrate the 100th anniversary of independence,” he said.

“When I draw long-term plans in this manner some ridicule me. Yes, I am not like other politicians. I have long term plans.

“My planning in not for my own betterment, but for the young generation of today. I clearly know that I would not eat the fruit of the tree that I plant. But tomorrow, our children of the future generations will enjoy the fruit.”

He made no mention of plans to tame the domestic operations of the central bank and bring back the monetary stability lost in 1950 through ‘independent monetary policy’ with a peg, now called flexible inflation targeting with a peg.

Sri Lanka is planning to institutionalize flexible inflation targeting and flexible exchange rate and extreme form of a reserve collecting peg with a high 6 percent inflation targe, from 2015 to 2019 through a new monetary law. (Colombo/Aug03/2022)

Leave a Comment

Your email address will not be published.

Leave a Comment

Leave a Comment

Your email address will not be published.

Sri Lanka cancels visa of Scotswoman who documented anti-govt protests

ECONOMYNEXT – Sri Lanka’s Department of Immigration and Emigration has cancelled the visa of Kayleigh Fraser, a Scotswoman who had been documenting the country’s anti-government protests on social media.

Immigration officers had approached Fraser at her home on August 02 and confiscated her passport.

“This is what will happen if you raise your voice against state violence in Sri Lanka,” Fraser wrote on Wednesday August 10, posting a letter ordering her to leave the country by August 15.

“I am proud to have been a part of this. I am proud to have met so many of you. I have… so many social enterprises I want to work on here that I know will benefit so many,” Fraser said on Instagram.

“Deporting me is a massive, massive mistake for this country. The love I have for it and its people appears to be a threat to the current rulers. Does that sound right to you?”

Fraser posted that she was not prepared for the financial cost of flights and relocation, and that all her funds were in Sri Lankan currency, and that banks were not allowing foreign transactions.

Police spokesperson Nihal Thalduwa had told a privately owned news organisation that Fraser was sharing “negative content” about Sri Lanka via her social media.

“It is not right for a foreign national to be in our country and share such mass negative content. She is not a media personnel either, to cover the protests and GotaGoGama,” he has said.

Fraser has been vocal about state sanctioned violence against protestors.

News of Fraser’s deportation has caused a small riot on social media, with many protestors voicing out their support for the foreigner who documented and showed support next to them.

Seemingly indiscriminate arrests of protestors aided by an ongoing State of Emergency have both angered and frightened Sri Lankan protestors, and many active protestors have gone into hiding to evade arrest.

Some protestors said they were “taking a break” or “distancing themselves” due to continued harassment.

However, the authorities maintain that all arrests are in accordance with the law. The government has pointed to acts of retaliatory mob violence on May 09 and the forced occupation of government buildings by protestors on July 09.

“They are calling us terrorists for holding placards. This was such a peaceful protest, the only terrorism carried out was by the government against the people,” said an active protestor, who preferred not to be named.

Fraser wrote that Sri Lankans should not forget that they got to the streets for a system change.

“Live in such a way that your children will thank you for the world they inherit,” she said.

“It’s not over till it’s over. I have an unbelievable amount of high profile people fighting this order for me to leave.”(Colombo/Aug11/2022)

 

 

Continue Reading

Sri Lanka to acquire 35,000MT of petrol; unloading on Aug 12

ECONOMYNEXT-  Sri Lanka to receive a cargo of 35,000 metric tonns of petrol on Thursday August 11 with unloading scheduled for Friday, Minister of Power & Energy Kanchana Wijesekara said.

Wijesekara tweeted that the ship will arrive at the Colombo port Thursday night, and that the payment for the cargo had been completed with the support of the Central Bank by Wednesday.

The minister had said earlier on Wednesday that a separate cargo of crude oil is also expected on Saturday August 13, and from August 19 onwards, locally produced fuel is expected to be released to the market from the Sapugaskanda refinery.

Meanwhile, in an earlier report, Lanka IOC, a local unit of the Indian Oil Corporation (OIC), said a vessel carrying 30,000 metric tons of fuel for LIOC is scheduled to arrive between August 10 and 15.

Related: Three shipments of fuel to arrive in Sri Lanka by mid, end July, August: Lanka IOC

Meanwhile, Wijesekara said that 5.7 million people have signed up for the QR-code facilitated National Fuel Pass.

From July 21 up to now, Wijesekara said, a total of 54.9 million litres of fuel had been sold through 1,053 CPC fuel stations while 207 LIOC stations have sold 11.26 million litres of fuel. (Colombo/Aug11/2022)

Continue Reading

MPs nominated to Sri Lanka’s parliamentary committee on public finance

The sun sets over the Parliament at Shri Jayewardenepura

ECONOMYNEXT – Sri Lanka’s parliament has appointed members to its Committee on Public Finance, Speaker Mahinda Yapa Abeywardena said.

According to his announcement made in parliament on Wednesday August 10, in terms of the provisions of the Standing Order 121 of Parliament, MPs Bandula Gunawardana,  Vidura Wickramanayaka,  Nalin Fernando,  Anura Priyadharshana Yapa,  Vijitha Herath,  Duminda Dissanayake,  Shehan Semasinghe,  Premitha Bandara Tennakoon and Harsha de Silva have been appointed.

Indika Anuruddha Herath,  Siripala Gamalath, Seetha Arambepola, Suren Raghavan,  M A Sumanthiran,   Kavinda Heshan Jayawardhana,  Mujibur Rahuman,  Harshana Rajakaruna,  Chaminda Wijesiri,  Isuru Dodangoda,  Anupa Pasqual and  (Prof) Ranjith Bandara also have been appointed to serve as members in the Committee on Public Finance.

President Ranil Wickremesinghe tabled a proposed framework during his time as Prime Minister under President Gotabaya Rajapaksa for sectoral oversight committees in parliament with the objective of increased bipartisan parliamentary involvement in governance and policy-making.

Wickremesinghe told parliament on July 06 that under such a system, the entire parliament irrespective of party difference will participate in governance.

On July 06, he said he had approached former Speaker of Parliament Karu Jayauriya to formulate a proposal on activating the sectoral oversight committees.

Sectoral Oversight Committees shall function for the duration of Parliament and conduct its inquiries notwithstanding any adjournment or prorogation of Parliament, according to the parliament website.

The Committee of Selection shall determine the subjects and functions to be allocated to each Sectoral Oversight Committee.

The Sectoral Oversight Committees shall have the power to examine any Bill, any subsidiary legislation including Regulation, Resolution, Treaty, Report or any other matter relating to subjects and functions within their jurisdiction.

The Parliament, any Committee or a Minister may refer any matter to a Sectoral Oversight Committee having jurisdiction over the subject or function for its consideration and report. (Colombo/Aug11/2022)

 

Continue Reading