Wednesday, July 24, 2024
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Business confidence at 12-month high with Sri Lanka’s bilateral debt relief deal

By: Staff Writer

July 01, Colombo (LNW): Sri Lanka overcomes the bankruptcy following the finalisation of  agreements with bilateral  creditors and bondholders debt restructure in the offing  to coincide with the disbursement of the third tranche of the IMF’s Extended Fund Facility (EFF) of US$ 337 million.

At the same time, President Ranil Wickremesinghe has advocated for the modernisation of the legal system to facilitate the effective implementation of the government’s economic reforms aimed at driving growth.

The Asian Development Bank’s (ADB) annual flagship economic publication, the Asian Development Outlook (ADO) – April 2024, pro­jects moderate growth for Sri Lanka. It forecasts a growth rate of 1.9 percent in 2024 and 2.5 percent in 2025, following two consecutive years of contraction.

However, the ADB cautions that there could be a downturn in the country’s economic prospects due to uncertainties surrounding the upcoming elections.

In this backdrop, LMD reports that business confidence has spiked for a fourth consecutive month and breached the 100 mark, to a 12-month high.

LMD adds: “The LMD-PepperCube Business Confidence Index (BCI) has shown steady but tepid growth, reaching the 101 point threshold in May (vs. 96 in April).”

“This marks the barometer’s return to above 100 after a year, following its post-aragalaya peak of 108 in April 2023 when ironically, the IMF’s Extended Fund Facility (EFF) was approved. Despite this improvement however, the index remains below its all-time average of 122,” the magazine explains.

PepperCube Consultants observes that optimism about the economy has held since April while the corporate sector’s outlook for sustaining business volumes improved in June.

It adds that businesses seem to be preparing themselves for the unpredictable political climate ahead as the nation approaches a crucial Presidential Election.

A spokesperson for the magazine states: “The reality is that the corporate community is already contending with the effects of political instability and interference. And they as the top two concerns, followed closely by high taxes.”

In addition, PepperCube observes: “The economy, politics and the political culture continue to be the most pressing national issues as the corporate community braces itself for the upcoming election.”

Media Services, LMD’s publisher, says the latest edition of the magazine will be released shortly. Its digital version has been shared on the publisher’s social media platforms (the full BCI report will be uploaded on its website – www.LMD.lk).

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