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Thursday June 20th, 2024

Sri Lanka on right path to emerge from bankruptcy by 2026: President

ECONOMYNEXT – Sri Lanka is on the right path with improvements seen in a several sectors, and monetary stability returning, President Ranil Wickremesinghe said in an address to a new session of parliament.

Sri Lanka’s economy is estimated to have shrunk 8 percent in 2022 after the worst currency crisis triggered by the island’s flexible inflation targeting central bank which saw the rupee collapsed from 200 to 360 to the US dollar.

External stability has been restored and forex shortages have eased after the agency stopped trying to control interest rates with printed money (inflationary policy) and some food prices have started to fall with the credit system externally anchored at 360/370 to the US dollar.

“Due to the measures taken, we have been successful in reducing this burden gradually,” President Wickremesinghe said.

“Now there is stability in the economy. People are comfortable. We have been able to safely guide Mother Sri Lanka a long way across a challenging course. It was not an easy journey. However, it is not yet over.”

Sri Lanka had to engage in reforms to make the country grow. A deal with the International Monetary Fund is still in abeyance until China gives debt assurances acceptable to the agency. India and Paris Club nations, the other major creditors have already given assurances.


Sri Lanka talking to China to get similar assurance with other creditors: President

Sri Lanka has also raised taxes to pay the public service which had been bloated with unemployed graduates under a policy articulated by the Janatha Vimukthi Peramuna which was embraced by successive Rajapaksa regimes.

President Wickremesinghe has also tried to control expenditure departing from the IMF’s earlier policy of expanding the state by revenue based fiscal consolidation and abandoning cost cutting.

He said the banking system has to be fixed.

“We committed to securing the financial system that was on the verge of collapse,” he said.

“Government expenditure was controlled. Measures were taken to increase tax revenue.”

He said state workers could be given some money by the end of 2023, if the economy improves.

“We are now moving from a negative economy towards a positive one. By the end of 2023, we can achieve economic growth,” he said.

“When I first addressed this Parliament as the President, the inflation of the country was 70 percent. Due to the measures we have implemented, it was reduced to 54 percent in January 2023. We will strive to make it a single digit by the end of 2023.”

Greece which suffered debt crisis took 13 years to recover, he said.

“During that period, they received aid from the IMF three times,” President Wickremesinghe said.

“However, if we continue according to this plan, we can rise out of bankruptcy by 2026.

“As I have been continuously appealing, if all the parties in this Parliament join the process to build the country, we would be able to extricate from this crisis even earlier.” (Colombo/Feb09/2023)

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Sri Lanka shares debt management experience at global forum

ECONOMYNEXT – Sri Lanka has shared its experiences at a forum on debt management to “provide lessons for others”, State Minister of Finance Shehan Semasinghe has said.

Semasinghe spoke on “The Role of Debt Management in Navigating Crises” at the 14th Debt Management Facility (DMF) Stakeholders’ Forum, in Livingstone, Zambia.

“I shared the experiences of Sri Lanka which can provide valuable lessons for others and explored the critical elements of capacity building and sound institutional practices in managing debt, particularly in the context of economic challenges,” Semasinghe said on X (twitter).

“Sri Lanka’s experience demonstrates that effective debt management is not just about managing numbers but also about building robust institutions and capacities.”

The journey underscores the importance of transparent, accountable governance and the need for international support and cooperation in times of crisis, he said.

“Sri Lanka prioritized addressing gaps in public debt management by drafting a consolidated Public Debt Management Act, ensuring clarity and legal robustness and establishing a centralized Public Debt Management Office with operational autonomy.

“The role of debt management in navigating crises is multifaceted and critical. Further, by investing in capacity building, adhering to sound institutional practices, and strategically managing debt restructuring and liability operations, countries can better withstand economic shocks and pave the way for sustainable recovery.”

Developing countries face severe debt distress as they are more vulnerable to external shocks, Semasinghe said, and “managing global debt requires coordinated international efforts on debt restructuring where necessary, timely fiscal policy adaptation and help sustainable economic growth.”

The state minister also pointed out the financial impact of climate change was an emerging challenge, as countries need investment to mitigate and adapt to climate impacts, “especially through non-debt creating inflows, which would require private capital mobilization.” (Colombo/Jun20/2024)

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Sri Lanka rupee closes stronger at 305.10/30 to US dollar

ECONOMYNEXT – Sri Lanka’s rupee closed stronger ahead of the long weekend at 305.10/30 to the US dollar on Thursday, up from 305.40/55 to the US dollar Wednesday, dealers said, while some bond yields edged up.

A bond maturing on 15.12.2026 closed at 10.45/80 percent, up from 10.35/75 percent.

A bond maturing on 01.07.2028 closed at 11.20/45 percent.

A bond maturing on 15.09.2029 closed at 12.00/15 percent, up from 11.95/12.35 percent.

A bond maturing on 01.12.2031 closed at 12.05/25 percent.

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Sri Lanka stocks close up, JKH trade pushes turnover

ECONOMYNEXT – The Colombo Stock Exchange closed up on Thursday, data on its site showed.

The broader All Share Index closed up 0.19 percent, or 23.11 points, at 12,249; while the more liquid S&P SL20 Index closed up 0.15 percent, or 5.33 points, at 3,610.

Turnover was 2 billion. Nearly half of this (Rs980mn) came from a crossing on John Keells Holdings Plc. The share closed down at 202.00.

“There were several crossings today which pushed turnover,” market participants said.

“Institutions and high net-worth activity drove the market, while the retail investors we feel are still about uncertain and adopting a wait-and-see approach.”

Melstacorp Plc was among the companies that saw active volumes (Rs194mn) in the day. The share closed up at 87.10.

Top contributors to the index included TeeJay Lanka Plc (up at 41.70), Sampath Bank Plc (up at 79.50), Hatton National Bank Plc (down at 201.00). Hayleys Plc (up at 105.00) and its subsidiary Hayleys Fabric Plc (up at 46.60) were also positive contributors. (Colombo/Jun20/2024)

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