May 02, Colombo (LNW): Negotiations regarding Sri Lanka’s debt restructuring with sovereign bondholders are currently awaiting clarity on the assessment of securities linked to economic performance within the International Monetary Fund’s (IMF) debt sustainability analysis framework, Economy Next reported citing sources familiar with the discussions.

Following the initial round of direct talks between Sri Lanka’s government and bondholders, it was revealed that the IMF had determined a March proposal presented by private investors, involving macro-linked bonds, to be inconsistent with its debt sustainability framework.

Subsequently, a new proposal submitted in April is pending assessment by the IMF to ascertain its alignment with the DSA framework.

The proposed macro-linked bond entails an initial higher haircut, with potential reductions contingent on the economy outperforming IMF projections.

Given the absence of precedent for applying a revised DSA methodology for Middle-Income Countries to such macro-linked bonds, efforts are underway to gain a comprehensive understanding of how the framework operates, according to report.

Sources cited by Economy Next indicate that representatives of the involved parties reconvened in April following the initial talks, suggesting a positive development in the negotiation process.

Typically, the IMF refrains from direct engagement with bondholders and interacts solely with governments, potentially placing bondholders at a disadvantage.

However, greater clarity regarding the application of the DSA framework to macro-linked bond proposals could facilitate expedited negotiations and enable the exchange of revised proposals.

In addition to the macro-linked bond proposal, bondholders have also suggested a governance-linked bond, a concept endorsed by Sri Lanka’s opposition.

While this represents a novel proposal, similar instruments, such as Environmental, Social, and Governance (ESG) bonds, have been issued based on alternative performance indicators.

Discussions in London involved advisors and key bondholders under non-disclosure agreements, preventing trading or altering positions during the negotiation process.

Enhanced understanding of how the debt sustainability analysis applies to macro-linked bonds would serve to streamline negotiations and contribute to expediting the resolution of the restructuring process, the report further claimed.

May 02, Colombo (LNW): The latest data released by the Central Bank reveals a notable surge in Sri Lanka’s export performance for March, with earnings reaching US $1,139 million, marking the highest figure since August 2022.

This growth trajectory underscores the resilience of the country’s exports, particularly in the textile and garment sector, which demonstrated renewed strength after a period of sluggishness.

Compared to the same period last year, March exports saw a significant uptick of 9.8 per cent, with a commendable 7.5 per cent increase from the previous month.

Despite facing challenges from the sustained appreciation of the rupee and relatively subdued growth conditions in Western markets, Sri Lanka’s export sector continues to forge ahead.

The appreciation of the rupee, surpassing 9.0 per cent year-to-date along with a 12 per cent increase last year against the dollar, has implications for both imports and domestic inflation.

While it contributes to softer inflation domestically, it poses a threat to exporters’ competitiveness abroad and diminishes their earnings upon conversion into rupees.

March’s export growth was broad-based, with textile and garment exports reaching US $444.9 million, marking a 6.6 per cent increase from the previous year and reaching the highest level since December 2022.

Petroleum product exports also surged, recording US $92.3 million, a robust growth of 134.6 per cent.

These sectors, along with industrial products, drove overall export growth by 11.7 per cent to US $912.2 million in March.

Additionally, food and beverage, tobacco, and rubber products exports recorded positive growth figures, further contributing to export performance.

On the import front, Sri Lanka imported goods worth US $1,507.7 million in March, reflecting a 4.0 per cent increase from the previous year and a 9.38 per cent rise from the previous month.

The surge in imports was primarily driven by fuel imports, which saw a notable increase of 18.2 per cent compared to the previous year.

Other import categories, including machinery and equipment, building materials, and food and beverage, also saw upticks, indicating increased spending on consumption and construction activities in an economy transitioning to normalcy.

While Sri Lanka recorded a trade deficit of US $369 million for March, reflecting a slight increase from the previous year, robust inflows from remittances, tourism, IT/BPO services, and freight services more than offset the deficit, providing stability to the economy amidst evolving trade dynamics.

May 02, Colombo (LNW): The government is contemplating the potential removal of the recently reintroduced Minimum Room Rate (MRR) for hotels in Colombo city within the next two months, pending an evaluation of its effectiveness.

This consideration aligns with statements made by Tourism Minister Harin Fernando, indicating a possible review of the policy in the near future, Sri Lanka Tourism Development Authority (SLTDA) Chairman Priyantha Fernando emphasised.

The MRR was reinstated in September 2023 in response to appeals from hoteliers.

Under the gazetted rates, five-star hotels are set at US $100, four-star at US $75, three-star at US $50, two-star at US $35, and one-star at US $20.

However, the reintroduction of the MRR has sparked debate within the industry, with the Hotels Association of Sri Lanka (THASL) expressing support while the Sri Lanka Association of Inbound Tour Operators (SLAITO) has voiced reservations.

Fernando highlighted that the need to reintroduce the MRR stemmed from perceived unfair practices by destination management companies (DMCs), which charged customers higher rates without proportionately benefiting hoteliers.

Whilst other regions like Kandy have also shown interest in similar MRR regulations, Fernando stressed the importance of allowing market forces to determine future prices based on the foundation laid by the MRR.

He further emphasised the potential benefits to industry stakeholders and the broader economy.

Currently, two lawsuits are in progress against the SLTDA and Tourism Ministry regarding the MRR.

Fernando noted the need to carefully consider the impact of revoking the MRR, given ongoing litigation and potential repercussions for DMCs.

The government remains vigilant, weighing various factors to make informed decisions regarding the future of the MRR policy.

By: Staff Writer

May 01, Colombo (LNW): US$1 billion plus integrated resort development in central Colombo is set to be launched by Melco Resorts & Entertainment Limited (“Melco”) in partnership with John Keells Holdings PLC (“John Keells”), the largest listed conglomerate on the Colombo Stock Exchange,

As part of the partnership, the integrated resort, which had previously been branded “Cinnamon Life Integrated Resort”, will be rebranded as “City of Dreams Sri Lanka”.

City of Dreams Sri Lanka will be the first integrated resort in Sri Lanka and South Asia and is expected to revolutionize luxury hospitality, entertainment, and leisure in Sri Lanka, presenting an extraordinary architecture and design and a collection of iconic and unparalleled offerings including 800 hotel rooms, retail, food & beverage outlets, MICE facilities, and much more.

Additionally, a wholly-owned local subsidiary of Melco has been awarded a 20-year casino license by the Government of Sri Lanka. Melco will fit-out and operate the gaming area at City of Dreams 

Sri Lanka, and Melco will manage the top 5 floors of the hotel under its Nuwa brand of ultra high-end luxury rooms, which represents 113 of the 800 total hotel rooms at City of Dreams Sri Lanka.

Melco and John Keells have agreed all key commercial arrangements and expect fit-out of the casino area to begin shortly. The estimated initial investment in the casino is expected to be approximately US$125 million.

The non-gaming facilities of the integrated resort, including the 687 key Cinnamon Life hotel managed by John Keells, is in the final stages of completion and is expected to commence operations in the third quarter of 2024, while we expect to commence casino operations in mid-2025.

There is potential for further expansion of the gaming facilities, subject to performance and market conditions.

Mr. Lawrence Ho, Chairman and Chief Executive Officer of Melco, said, “We are thrilled to be part of this landmark development in Sri Lanka and to be in partnership with John Keells. We believe Sri Lanka has immense potential and this opportunity complements our existing portfolio of properties.

 Furthermore, City of Dreams Sri Lanka is expected to serve as a catalyst for stimulating tourism demand and promoting economic growth in Sri Lanka, drawing inspiration from the successful examples set by similar integrated resorts in other jurisdictions.We will continue to work closely with our esteemed partners and the Sri Lankan Government to ensure the success of this venture, and we expect to make a significant and positive impact on the local community and economy, John Keells officials said. 

By: Staff Writer

May 01, Colombo (LNW): The government is now compelled to transform the public sector employees into smart workers with the aim of unlocking the nation’s full potential and drive sustainable economic growth, former finance minister Ravi Karunanyake revealed. 

The delivery of public services is impaired by inadequate systems, low skills and limited competencies, and often interrupted by strike action of employees forcing the people to blame the government. 

Salaries for the month of April have been paid with the increased public employee allowance of Rs 10,000 outlined in the 2024 budget proposal.

This was not the first time that they received a salary increase despite the private sector works much better than the state sector even without any salary hike as they get adequate payment for their work done.

With the introduction of smart worker concept these employee will definitely receive high salaries or wages with the improvement of productivity in their institutions.  

In comparison to the private sector, public institutions have specific needs, often not operating as a typical business entity.

They require intelligent automation solutions that can support their particular strategic and organizational needs, which, in turn, can form the basis of continued digital expansion.

While there are many different kinds of intelligent automation and artificial intelligence solutions, undertaking tasks within nearly every function, it is essential to consider them as “smart  workers”; able to simplify and automate time-consuming manual processes.

Mr Karunanayake said that the main aim of this initiative is to eliminate official bureaucracy which has become a stumbling block for the country’ economic development and good governance.    

It will also ensure an efficient and productive public service without waste and corruption, he said adding that 90 percent of the government’s administrative issues could be solved via smart worker initiative, he added.

In the past public service in Sri Lanka was manned by persons with high degree of professionalism. They had the ability to assist the country’s leadership to set standards in managing human, financial and material resources to achieve effective good governance

The present public sector is tainted with mismanagement of the public interest and the present 1.5 million state work force or one public servant for every 14 Sri Lankans, has no concern for worker productivity as the whole sector is highly politicized.

President Ranil Wickremasinghe in his2024 Budget speech outlined plans for a “new growth model based on a digitalised social market economy.

 The plan also included effectiveness, equitability and green growth as key aspects of this new model with the aim of achieving a US $ 15 billion digital economy by 2030.

Successive governments have made various digital economy related Budget proposals allocating around Rs. 70 billion for digitalisation efforts over the past  eight-year period.

But most of them were implementing in snail phase as the public sector was not ready to quickly accustom to new systems, Mr Karunnayake said adding that this lethargic attitude and their corrupted mind set should be changed for the betterment of the country soon.       

Many such digitization projects are still relevant but most of them have either completely halted and some of them are still in progress without proper monitoring and evaluation for effectiveness.

President Ranil Wickremasinghe has as unveiled a comprehensive national digital strategy for Sri Lanka titled “Digital Sri Lanka 2030” along with an implementation plan which will address all these issues, he claimed.

The vision for 2030 is to have a digitally empowered Sri Lanka for innovation, inclusion and sustainable growth with smart public sector work force he added.

By: Staff Writer

May 01, Colombo (LNW): The International Monetary Fund (IMF) wants Sri Lanka to work on governance issues and to also stick to the IMF supported program.

Krishna Srinivasan, IMF Director of the Asia and Pacific Department noted that Sri Lankans faced a very difficult challenge when they embarked on the IMF program.

“And so far, what we’ve seen is performance under the program has been pretty good, and that is reflected in the outcomes.

 For example, GDP growth has been better than it had been forecast. You see some bottoming out, some green shoots, as I would say. Inflation is coming down quite sharply from 70 percent to, you know, well below. — what’s the number now? I forget the right number, but it’s coming down very sharply.

 Reserves are building up. So overall, the country is doing well under the program, and the reform measures your country has taken are pretty significant,” he told reporters Tuesday.

However, he noted that the road ahead is not easy and there are many more things to be done.

They’ve also moved on issues like governance and reducing corruption and so on, which as are part of the government’s program.

But going forward, the challenges remain. You have to stick to this program so that you can make a durable exit, and the economy comes out of the crisis on a durable basis, comes out of the crisis.

So it’s important to make sure that you work on the fiscal adjustment package, on governance issues which are part of the program,” he said.

Srinivasan said that if the Government continues with adhering to the program there will be much better results down the road.

He noted the fact that growth has come back stronger than expected, and inflation is lower than many people expected are very good signs that the program is delivering.