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Thursday June 20th, 2024

Sri Lanka’s SJB no longer enamoured of IMF, promises new govt in three moons

ECONOMYNEXT – Sri Lanka’s main opposition party the Samagi Jana Balawegaya, which appears keen to distance itself from its initial enthusiasm for a deal with the International Monetary Fund (IMF), is promising an SJB-led government in “three full moons”.

“Remember, in three Poya days’ time, this government will go home. We will definitely form an SJB government in three [full moons] and create a strong force that can kick this government out,” said SJB legislator Chaminda Wijesiri speaking at a press conference on Monday May 08.

Meanwhile, fellow SJB MP Kabir Hashim speaking at an event in Monaragala on Sunday alluded to a unique vision his party possesses with regard to macroeconomic development that doesn’t necessarily include the IMF.

Hashim said that when Sri Lanka was heading towards its ongoing currency crisis early last year, the SJB had presented to the government a common minimum programme it could follow.

“[We said to the government], if you’re talking to the IMF, talk to them according to our roadmap and negotiate with the IMF under our own conditions without agreeing to theirs. But this was not accepted,” he said.

The MP said that the SJB is looking at Asian examples like Malaysia that were able to find a solution to their own economic woes without going to the IMF “because they had developed economic strategies unique to them”.

The SJB has drawn up a strategy of its own for a new economic development programme for Sri Lanka by looking at models adopted by regional success stories and incorporating only what’s most suitable for the country, to be implemented within a social market economic system, said Hashim.

If the SJB were to form a government tomorrow, he said, the party would have already conceived a programme that has the ingredients to generate employment, increase exports and earn dollars, he added.

The SJB’s position with regard to the IMF programme, Sri Lanka’s 17th so far, has been less than consistent. The party, which was among the first to call for a deal with the iInternational lender at the onset of the island nation’s worst currency crisis in decades, abstained from voting for the now-finalised agreement in a vote taken in parliament on April 28 this year.

The SJB’s own common minimum programme released in August last year said Sri Lanka must engage the IMF and restructure its debt.

“Deep, extensive economy-wide changes are needed to come out of the crisis: we must address our solvency issues through reforms that allow debt sustainability. Designing and implementing an IMF-assisted extended fund facility (EFF) programme would be the best place to start,” the document said.

A more recent version of this blueprint released at an SJB economic summit held in February this year, said Sri Lanka must continue to engage the IMF and expedite the debt restructuring process with creditor assurances.

Presenting the document at the February event, SJB MP Harsha de Silva said that, unlike others (in a clear dig at the anti-IMF rival opposition party the Janatha Vimukthi Peramuna), the SJB supports engaging with the IMF.

Sri Lanka main opposition SJB unveils economic policy document ahead of local polls

While the SJB hasn’t quite had a drastic departure from its original pro-IMF stance, the party has been increasingly vocal of late about the socioeconomic impact of the deal.

SJB leader Sajith Premadasa earlier this year reportedly said a future SJB government would not be obligated to honour deals made by the incumbent government headed by President Ranil Wickremesinghe. MP de Silva explained later that what his party leader had meant was that Sri Lanka must negotiate terms favourable to the country when dealing with the IMF. (Colombo/May08/2023)

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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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