• Says bridging finance was forthcoming from China and India

 There was absolutely no necessity for the hurried, inexplicable and highly suspicious “debt default” of April 12, 2022 which was announced without any formal approval, former Central Bank Governor Ajith Nivard Cabraal said in a statement. He said with the bridging finance that was forthcoming from China and India as well as the issue of “Green bonds” and expected inflows from other sources, Sri Lanka would have been able to tide over the challenging period until the existing sources of “non-debt” inflows could have been strengthened, and new “non-debt” inflows introduced.

“Many business chambers have been vociferously asking for higher Government revenue while some chamber leaders had even specifically called for Sri Lanka’s forex debt to be defaulted. Many also clamoured for an IMF programme which generally leads to a depreciated currency, higher interest rates, price increases in public utilities, sale of government assets, and the removal of subsidies. Almost the entirety of the above “wish-list” has now been fulfilled by the government, probably as “pre-conditions” for the impending IMF programme, and therefore, the business chamber leaders should be happy, although it is doubtful whether their member entrepreneurs are pleased with these measures. In any event, whatever may be their preferences, as a result of these recent measures, several outcomes have occurred. Personal and business incomes have reduced drastically. Interest rates have risen to over 36%. Inflation has surpassed 70%.  To make matters worse, a recent news report stated that the IMF is pressing for a “more effective debt resolution mechanism & common framework, with equal treatment to all creditors”. 

Daily Mirror

Premier diversified blue-chip John Keells Holdings PLC (JKH) urged the Government to ensure proper balance between economic stability and growth as it shores up efforts to boost tax revenue.

This clarion call has been made by the Head of JKH following its Group’ announcement of looking for gaming operators to operate at its flagship project ‘Cinnamon Life’ with the government formalizing the process of issuing licences and monitoring of casino operations in Sri Lanka.

“With the regularizing of gaming, the Group will proceed with finalizing arrangements with prospective gaming, operators to operate at ‘Cinnamon Life’,” JKH Chairman Krishan Balendra said.

The call for judicious balance is whilst recognizing positive progress made by the Government thus far in implementing the reforms and initiatives needed for fiscal consolidation to help overcome the financial crisis.

“We urge the authorities to give due consideration to ensuring tax measures are implemented with a view to striking a balance between economic stability and growth, which can, in turn, affect revenue targets if the base levels of activity are impacted significantly,” JKH Chairperson Krishan Balendra said in his review accompanying the company’s 2Q interim results released this week.

“While revenue enhancing measures are required, Government expenditure should also be optimised to drive economic recovery in a sustained manner,” he emphasized.

JKH Chief noted that the severe pressures on the domestic macro-economy as a result of external pressures have now eased somewhat and will be a positive heading into the ensuing quarter.

“While many fiscal tax consolidation measures have been announced and partly implemented, the impact of these measures on consumer disposable incomes and spending is yet to be fully seen,” he added.

Balendra said JKH is optimistic that Sri Lanka is on a path to recovery, and appreciated the authorities undertaking difficult, yet necessary, corrective measures to revive the economy to overcome the worst economic crisis faced by the country.

Group revenue rose 40% to Rs.69.06 billion in FY232Q whilst Earnings Before Interest Expense, Tax, Depreciation and Amortization (EBITDA) improved by 45% to Rs. 9.29 billion during the quarter under review demonstrating the strong underlying cash operational performance of the Group.

Group profit before tax PBT declined by 10% to Rs. 2.56 billion mainly on account of the second quarter of the previous year including revenue and profit recognition from the handover of the residential apartment units at ‘Cinnamon Life’, and the higher finance expenses due to the significant increase in interest rates on working capital facilities, particularly in the Leisure and Retail industry groups.

Sri Lanka, racked by civil unrest and economic disruptions for much of the year, has resumed free-trade agreement talks with China over the past two months amid new social stability within the island nation.

These talks have been going on not at a high level, but at an official level,” official sources said, adding that the government authorities are in a hurry because they would like to see more goods get access to the Chinese market and get the Chinese consent for debt restructuring.

President Ranil Wickremesinghe says he is hopeful that negotiations on the Sri Lanka-China Free Trade Agreement would recommence in near future to further boost the economic ties between the two nations.

He made this remark virtually addressing the opening ceremony of the 5th China International Import Expo (CIIE), the world’s first and biggest import-themed expo yesterday evening (Nov. 04).

Speaking further, President Wickremesinghe remarked that the CIIE has provided a new and innovative stage for developing countries to enter the Chinese market. “I remember it was during the first forum of the BRI (Belt and Road Initiative) back in 2017 that the CIIE was first unveiled.”

Since then, the CIIE has been both an important step in trade liberalization as well as a vital tool in strengthening economic corporation around the world, President Wickremesinghe pointed out.

Noting that Sri Lanka has been participating in the CIIE since its inception, President Wickremesinghe said, expressed gratitude for allowing Sri Lankan businesses to benefit greatly through the participation, and providing the opportunity for Sri Lankan industries to establish a foothold in the Chinese market”

Meanwhile, Chinese President Xi Jinping and other state leaders also delivered virtual addresses at this event.

President Xi said China would work with all countries and parties to share the opportunities in its vast market. “We will step up efforts to cultivate a robust domestic market, upgrade trade in goods, develop new mechanisms for trade in services, and import more quality products.”

He also assured to make efforts to establish pilot zones for Silk Road e-commerce cooperation and build national demonstration zones for innovative development of trade in services, in order to encourage innovation in trade and promote high-quality Belt and Road cooperation