By: Staff Writer

Colombo (LNW): Sri Lanka is emerging from its crippling economic crisis through stabilization efforts of President Ranil Wickremasinghe’s government with foreign aid likely pouring in to the country from donor countries and International Monetary agencies

With few far reaching policy choices the President is looking at India and Japan with his latest visit to the country of the rising sun with the aim of attracting investment, banking on an IMF US $ 2.9 billion bailout package to facilitate access to bilateral and multilateral financial support to get the economy back on track.

The IMF’s four-year US$2.9 billion program provides limited provision of liquidity. What matters is the program’s ability to catalyze other official lenders, private investors and creditor’s confidence in coming to the assistance of debt ridden island nation

Sri Lanka’s president has said that the International Monetary Fund (IMF) has approved its request for a $2.9bn bailout and the country’s presidency claimed that the economic program will enable it to access up to $7bn in overall funding.

The IMF’s board confirmed it has signed off on the loan, which clears the way for the release of funds and kicks off a four-year program designed to shore up the country’s economy.

The decision will allow an immediate disbursement of about $333mn, the IMF said, and will spur financial support from other partners, potentially helping Sri Lanka emerge from its worst financial crisis in decades.

But IMF Managing Director Kristalina Georgieva warned that Colombo must continue pursuing tax reform and greater social safety nets for the poor – and rein in the corruption that has been partly blamed for the crisis

But the standard IMF policy prescription that demands stringent financial discipline means that adjustment costs will be front-loaded, preventing the government from spending its way out of recession. Accordingly, taxes are being hiked and expenditures are being cut to stabilize the economy. .

The Country’s economic growth slowed to an annualized and seasonally adjusted forecast to contract by 3 percent in 2023 as it continues to grapple with the challenge of debt restructuring and balance of payments difficulties.

The increase in gross domestic product — the broadest measure of economic activity — was far below economists’ expectations of minus 2 percent and represents a more moderate pace compared to last year ,according to data released by the Finance Ministry.

In the absence of large debt service payments, the authorities have been able to manage the outflows (mainly the import bill) with inflows such as exports, tourism and remittances since the second half of 2022, leading to balance of payment surpluses (please see the latest Sri Lanka Development Update for more details).

These surpluses helped an accumulation of official reserves (US$700 million by January 2023, excluding the currency swap with China), and an improvement in net foreign assets in the banking system (US$-4.3 billion in January 2023, up from US$-6.4 billion in April 2022).

In addition, the lack of demand for imports from the real sectors and increasing expectations of an approval of the IMF program, contributed to a rise in foreign exchange liquidity, including through the unwinding of speculative Dollar holdings.

The above factors have led to an appreciation of the LKR against the US Dollar from February 27, 2023, somewhat easing inflationary pressures.

The good news now is that the Sri Lankan economy is showing signs of stabilizing. A return to growth in Sri Lanka is expected next year—the latest International Monetary Fund (IMF) forecast released in April 2023 suggests a less severe economic contraction of -3.1 percent in 2023 and growth of 1.5 percent in 2024.

Year-on-year inflation fell to 35.3 percent in April 2023. But negative growth in 2022-2023 means job losses across the economy, a doubling of income poverty to 25 percent of the population (at US$3.65 per capital, 2017 PPP) and child malnutrition as many families are switching to less nutritious diets.

Responding to crisis-hit Sri Lanka’s urgent request for external financing pending an IMF Programme, India mobilized the largest bilateral aid package in its history.

This aid was motivated by the unfolding humanitarian crisis affecting the Sri Lankan people, worries about a flood of refugees across the Palk Strait, and political pressure from South India. Indian aid of about US$4 billion during the first half of 2022 flowed to Sri Lanka through credit lines, loans, and grants.

India’s aid to Sri Lanka in 2022 far exceeds bilateral aid to Sri Lanka by other development partners and has cemented its reputation as a key emerging donor. India also undertook quiet diplomacy for Sri Lanka’s IMF Programme and just extended a US$1billion credit line to Sri Lanka until March 2024.

TEHRAN (Tasnim) – The capacity of hydroelectric power plants in Iran exceeds 13,000 megawatts, the Iranian energy minister said, revealing salient progress in the final stage of construction of a 120-megawatt power plant by the Iranian experts in Sri Lanka.

In a meeting with Sri Lanka’s State Minister of Irrigation Shasheendra Rajapaksa on Sunday, Ali Akbar Mehrabian pointed to the amicable historical relations between the two countries and expressed hope that the power plants being built by expert Iranian engineers in Sri Lanka will be inaugurated in the  near future.

Emphasizing the revival and development of economic, political and cultural ties between Tehran and Colombo, Iran’s energy minister further pointed out that the two countries have many potentials to strengthen their bilateral ties in all fields.

He termed establishing a joint economic, political and cultural Cooperation commission for realizing the aforementioned objective “effective and constructive”.

Launch of the commission will help boost trade and economic activities between the two countries optimally, Mehrabian emphasized.

Elsewhere in his remarks, he highlighted the capabilities and potentials of Iranian companies in implementing projects in the water and electricity fields.

He also referred to the significance of the multipurpose and giant project of “Uma Oya” being built by expert Iranian manpower in Sri Lanka and added that the progress of this successful project by Iranian engineers is the result of the fruitful experience of cooperation between the two countries.

Source: Tasnim News

Colombo (LNW): The Sri Lanka State Engineering Corporation (SLSEC) has decided to sell land at Peliyagoda to pay salaries, arrears of salaries and Employees’ Provident Fund (EPF) contributions for its employees and the National Machinery and Equipment Authority, in the backdrop where the Construction Sector suffered a serious set back amidst the country’s worst economic meltdown.

With the set back, the SLSEC and its affiliates had lost their income, and the Corporation Chairman Ratnasiri Kalupaha said a Cabinet paper seeking approval to sell the aforementioned land for Rs. 10 billion had already been drafted.

Accordingly, the land of more than 17 acres adjacent to the Peliyagoda Fish Market will be sold for Rs. 10 billion, to settle the employees’ salaries, the Corporation Chief noted.

Protests have been escalating at the National Machinery and Equipment Authority, as its employees had been paid only Rs. 7,000 each as salaries in May, and the employees of the SLSEC had been paid only a part of their paycheque in May.

Corporation Chief Kalupahana disclosed that 1,100 employees who opted to retire alone should be paid Rs. 2,600 million.

Colombo (LNW): Former Foreign Minister Rohitha Bogollagama has been appointed as Sri Lanka’s new High Commissioner to the United Kingdom with effect from August 01, 2023, confirming LNW’s previous report.

Previous report:

1. Acting Minister of Finance Shehan Semasinghe says the process of domestic debt optimization is not finalized yet: also says the govt has made progress in engaging with its bilateral creditors on debt restructuring efforts: previously, CB Governor Nandalal Weerasinghe had repeatedly insisted that there would be no domestic debt restructuring.
   
2. Former CB Governor and State Minister Ajith Nivard Cabraal says the Real Economy has been severely affected from 2Q2022 onwards after the reckless debt default, the unprecedented policy interest rate increase, and by allowing the LKR to depreciate beyond Rs.299 per USD: CB data shows that massive economic
   contractions of 8.4%, 11.8% and 12.4% in 2Q, 3Q, and 4Q of 2022, and a contraction of 11.5% in 1Q2023 have occurred.
   
3. LKR crashes by a massive Rs.21.72 or 7.3% in just over 1 week from Rs.297.94 on 06.06.2023 to Rs.319.66 by 16.06.2023: as predicted by several analysts, this currency depreciation triggers the expected exodus of “hot-money” from T-Bill & Bond investments, which record a decrease of around USD 28.9 mn (or 4.5%) in the same week.
   
4. President Ranil Wickremasinghe to participate in the Global Leaders’ Summit for a New Global Financing Pact in Paris on June 22 & 23: President accompanied by a high-level delegation that includes his Chief of Staff Sagala Ratnayake: summit to focus on multiple crises such as climate change, bio-diversity loss, ongoing impacts of COVID-19, etc.
   
5. Police begin probes on the mysterious deaths of 2 undergraduates from the North who had been found hanging in their respective hostels at 2 different universities.
   
6. National Child Protection Authority to seek Cabinet approval to amend the Penal Code in relation to cruelty towards children.
   
7. The Epidemiology Unit states a total of 45,606 Dengue cases have been reported so far in 2023: highest number of 10,111 from Gampaha district: 67 high-risk MOH areas identified: 27 fatalities reported since January 2023.
   
8. Transport Minister Dr. Bandula Gunawardana says a bus transport service without conductors will be introduced from July 1st: with the new mechanism, SLTB expects to end the pilfering of revenue by conductors: pilot project will be to run SLTB buses on all expressways without conductors from July 1st.
   
9. Minister of Energy Kanchana Wijesekara says there is no shortage of Petrol 95 stocks or any other petroleum products with CPC & LIOC: insists that adequate stocks are available with fuel stations and all orders placed will be distributed: asserts the next cargo of 9,000 MT of Petrol 95 is due to arrive on June 22.
   
10. Indian submarine ‘Vagir’ which is of the latest indigenous Kalvari-class, to undertake an operational visit at Colombo from 19-22 June 2023: the submarine visit is to commemorate the 9th “International Day of Yoga” under the theme of ‘Global Ocean Ring’ which is a unique initiative of performing Yoga on selected ports across the world.

By: Isuru Parakrama

Colombo (LNW): Minister of Power and Energy Kanchana Wijesekara said there is no shortage of Petrol 95 stocks or any other petroleum products with the Ceylon Petroleum Corporation and the Lanka Indian Oil Company.

In a tweet, the Minister noted that daily requirement of Petrol 95 is about 80-100 metric tonnes islandwide, and there are adequate stocks available with fuel stations and all orders placed will be distributed.

The next cargo of 9000 metric tonnes of Petrol 95 is due to arrive on the 22nd of June, he added, reminding that there are no deliveries on Sundays.

Stock Details as at 2023/06/18 08:30 hrs 

For All CPSTL/CPC Plants

Diesel – 103,087

Sup. Diesel – 2,977

92 Pet – 53,632

95 Pet – 601

JET A1 – 37,316

(All figures in MT)

There is no shortage of Petrol 95 stocks or any other petroleum products with CPC & LIOC. Daily requirement of Petrol 95 is about 80-100 MT islandwide. There’s adequate stocks available with fuel stations & all orders placed will be distributed. The next cargo of 9000 MT of… pic.twitter.com/RAl9qOQ2Zc

— Kanchana Wijesekera (@kanchana_wij) June 18, 2023