News
Sri Lanka’s debt negotiations stall over GDP growth projections and repayment terms – Nishan de Mel
In a recent televised interview, Nishan de Mel, the Executive Director of Verité Research, stated that holders of Sri Lanka’s International Sovereign Bonds (ISBs) have expressed concerns about specific aspects of the debt sustainability analysis conducted by the country alongside the IMF. This disagreement is one of the key hurdles in reaching an accord with them, he said.
Dr. de Mel said holders of Sri Lanka’s ISBs disagree with the IMF’s and Sri Lanka’s GDP growth projections. They believe that the potential economic growth of the country has been underestimated, he added.
He said that bondholders believed Sri Lanka had underestimated its economic growth potential, and therefore, its capacity to repay debt. “If the GDP growth potential is higher, then we can pay more. The bondholders argue that if Sri Lanka’s economy grows more than the IMF’s projections, then we should agree to pay them more,” he said. He further noted that Sri Lanka has acknowledged this possibility and has provided the bondholders with estimates of higher repayments contingent on achieving greater than projected GDP growth.
According to Dr. de Mel, while Sri Lanka has agreed to higher repayments if GDP exceeds forecasts, it has sought the flexibility to pay less if growth falls short of IMF estimates. There is currently a disagreement regarding the discrepancy between the higher payments Sri Lanka is willing to make and the amount the bondholders expect, centered around this variance in growth projections, Dr. de Mel said..
“This is natural, and we don’t need to panic,” he said.
He also said there are many challenges of forecasting, noting that the results of GDP growth projections rely heavily on the underlying theories and hypotheses used. He mentioned that the IMF had developed its GDP
projections for Sri Lanka by examining other countries that have undergone debt restructuring processes.
“However, neither Sri Lanka nor the IMF has revealed how they came up with these figures. Also, there is no one way of calculating this. If we underestimate the GDP growth, it’s good for Sri Lanka. If GDP growth is overestimated, this benefits the bond holders,” he said.
It was unlikely that IMF would delay the next tranche of the three-billion-dollar financial package due to the delay in coming to an agreement with ISB holders, he said. The main reason why there would be a delay in issuing the third tranche was that Sri Lanka had not kept many promises it has made to the IMF, he said.
The Executive Director of Verité Research said his institution had come up with novel way of debt restructuring, called Governance-Linked Bond. “We will present this to the world during a conference in Paris next month. The basic design of a Governance-Linked Bond is to have a coupon (interest rate) reduction, which is triggered when specific governance actions are achieved by a certain date.
This structure makes the bond “index eligible” (an important feature for bond-holders), as opposed to the Value Recovery Instrument, which has also been mooted in current negotiations. The same structure was recently proposed by bond-holders in a GDP-Linked rather than a Governance-Linked Bond. A good set of criteria for the Governance-Linked Bond will be that they (a) improve the probability of sustainable recovery, (b) are easily observable and verifiable, (c) have a high level of public support.”
News
Sun directly overhead Galle, Angulugaha, Imaduwa, Telijjawila, Yatiyana and Tangalle about 12.08 noon today (07)
The sun is going to be directly over the latitudes of Sri Lanka from 28th of August to 07th of September due to its apparent southward relative motion.
The nearest places of Sri Lanka over which the sun is overhead today (07) are Galle, Angulugaha, Imaduwa, Telijjawila, Yatiyana and Tangalle about 12.08 noon.
By Norman Palihawadane
The CID recently found that former SLPP Deputy Minister Premalal Jayasekara, better known as ‘Choka Malli’, had left for Thailand when the Supreme Court imposed an overseas travel ban on him last Friday.
The CID discovered that Jayasekara had left Sri Lanka on August 31, while authorities were taking steps to enforce the travel restriction imposed by the Supreme Court. The Department has subsequently informed the Attorney General’s Department of the development.
The Supreme Court last Friday ordered Jayasekara, and two other men, to appear before court on October 21, and imposed a ban on their overseas travel.
The orders were made as the Supreme Court considered an appeal challenging the acquittal of the three men in connection with the 2015 murder of Shantha Dodangoda, also known as D.G. Sunil Perera.
The appeal was filed by Dodangoda’s wife against a decision of the Court of Appeal to acquit and release Jayasekara and the two other accused, who had previously been convicted and sentenced to death by the Ratnapura High Court.
Dodangoda was killed in a shooting in Kahawatta town, in the early hours of January 5, 2015, while a group of people were putting up decorations for an election rally in support of then common Opposition presidential candidate Maithripala Sirisena.
Two others, Karunadasa Weerasinghe and Mohamed Ilfan, were seriously injured in the shooting.
Following the incident, the Ratnapura High Court convicted Jayasekara, former Chairman of the Kahawatta Pradeshiya Sabha Wajira Darshana de Silva, and former Sabaragamuwa Provincial Council member Nilanta Jayakody, sentencing all three to death.
The Court of Appeal subsequently acquitted the three men and ordered their release.
The victim’s wife later challenged the acquittal before the Supreme Court.
The appeal was taken up before a Supreme Court bench, comprising Justice Preethi Padman Surasena and Justices Achala Wengappuli and Gihan Kulatunga.
During the proceedings, Deputy Solicitor General Janaka Bandara requested that the court impose overseas travel restrictions on Jayasekara and the other respondents.
The Supreme Court subsequently ordered all three to appear before the court on October 21 and imposed travel bans on them.
President’s Counsel Nalin Ladduwahetty, President’s Counsel U.R. de Silva and President’s Counsel Anuja Premaratne appeared for the respondents. President’s Counsel Saliya Peiris represented the aggrieved party.
Police sources said that the discovery that Jayasekara had already left for Thailand, on August 31, has raised concerns over the timing and enforcement of the travel ban.
Sources said that the CID had notified the Attorney General’s Department and was taking further action in relation to the development.
By Pradeep Prasanna Samarakoon
The number of deaths from dengue fever in Sri Lanka has risen to 73 this year, with 96,228 cases reported across the country so far, according to the Dengue Control Unit.
The latest figures indicate that dengue continues to pose a significant public health concern, with 737 new cases recorded during the first four days of September alone.
Dengue infections peaked in July, when 29,964 cases were reported, according to the latest data. June recorded the second-highest monthly total, with 21,533 cases, while 10,155 cases were reported in August.
Earlier in the year, 8,590 cases were recorded in May and 7,866 cases in January.The Western Province remains the worst-affected area, accounting for more than half of all dengue cases reported nationwide. A total of 50,851 cases have been recorded in the province, representing 52.84% of the country’s total.
The Southern Province has recorded 13,950 cases, followed by the Central Province with 8,818 cases and Sabaragamuwa Province with 7,925 cases.
Sun directly overhead Galle, Angulugaha, Imaduwa, Telijjawila, Yatiyana and Tangalle about 12.08 noon today (07)
Showers above 50 mm are likely at some places in the Uva and Eastern provinces.
Harshitha’s composed knock seals Sri Lanka’s semi-final berth
‘Choka Malli’ slips out of country before travel ban
Dengue death toll rises to 73
Ranil accuses govt. of undermining democracy
‘Dates have the highest sugar content to fight Coronavirus’
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