Business

Sri Lanka needs ‘bridge financing’ to last next six months, says Indrajit Coomaraswamy

Published

4 years ago

2022/04/4

by Sanath Nanayakkare

Sri Lanka needs to take steps on getting to a framework programme with the IMF, restructure its external debt and bring some bridge financing to last for next six months until negotiations with the IMF on external debt is completed,”former central bank governor Dr. Indrajit Coomaraswamy said recently, at a forum hosted by CT CLSA.

“IMF won’t be able to transact with Sri Lanka until we fix the unsustainable situation in the country,” he said.

Dr. Coomaraswamy highlighted the fact that IMF may include fiscal consolidation in a programme of debt restructuring for Sri Lanka.

CT CLSA, a leading capital market service provider that offers investment banking, stockbroking and wealth management services , conducted the forum on the timely topic ‘ The IMF and the Order of Priorities for Reforms.”

Elaborating on the topic, he said, “In fact, we have a solvency problem on our external debt. Trying to treat it as a cash flow problem and addresing it with short-term measures may create a bigger problem. However, we are beginning to see light at the end of the tunnel due to the policy measures taken by the government recently. Now having approached the IMF, and the government considering some external debt restructuring; we are shifting to the right path, but this is going to be tough.”

“Interest rates are about to rise. As per previous levels where inflation was high, 91-day treasury bill yield was 16%, SLFR was 12% and SDFR was 10.5%. According to former deputy governor of the central bank, Dr. W. A. Wijewardena, the interest rates are expected to double from the current levels.”

Responding to a question on the upward movement of the exchange rate, he said, “I think we could have taken measures to reduce the imbalance between demand and supply of foreign exchange before letting the exchange rate float.”

Referring to domestic debt, Dr. Coomaraswamy said,”We should not suggest or ever take into consideration to restructure our domestic debt. If we restructure the domestic debt, it will lead to serious undermining of the stability of the financial system. Such a situation may not help Sri Lanka in meeting its commitments with external creditors.”

“In fact, the crisis was two years in the making from the time the government cut taxes after the presidential election The country’s banking system is highly exposed to sovereign debt because in recent years, the banking system provided for bridging the budget deficit of the country. And therefore, if there is any restructuring of domestic debt, the impact of such a move could spill over to the balance sheets of the banks and would likely create a crisis in the financial sector. And some of the banks would be affected in the event of external debt restructuring. However, this effect could be managed through regulatory programmes of the central bank. The only way to solve this problem on a sustainable basis is to create a primary surplus in the budget,” he emphasised.

“All creditors of Sri Lanka would seek equality of treatment, and therefore, multilateral debt; namely, World Bank, ADB and the little bit of IMF debt should not be restructured. If it were to be restructured, those institutions could stop their operations in Sri Lanka, and even their financing in the pipeline may not be disbursed.”

“Bilateral debt, mainly OECD which is West + Japan are part of the Paris Club. As China and India are not part of the Paris Club, one of the possibilities for us is to see whether we are eligible for B20 framework earmarked for low-income countries. [B20 proposes to consider the issue of public debt management within the international financial architecture reform].

Dr. Dushni Weerakoon, the Executive Director of the Institute of Policy Studies of Sri Lanka (IPS) was also a panelist at the CT CLSA forum.

When she was asked how Sri Lanka should put the reforms in a particular order to be implemented, she said,”We no longer can afford sequential reforms. What is most critical for Sri Lanka in terms of its economic outlook is to gain some sense of macro stability as a first priority.”

“We are currently witnessing a clear shift in policy. We have to work on several fronts simultaneously with well-coordinated action on three fronts; namely, monetary policy front, exchange rate front and fiscal front. We have entered a monetary policy tightening cycle. The moves of the central bank led to a market-driven exchange rate. But the fiscal side is missing. As long as this is neglected the progress made on monetary and exchange rate fronts will not bring stability. This will put pressure on other two fronts.”

“There is slowness on fiscal adjustment maybe because it’s difficult to do it. Fiscal adjustment will require to raise taxes on the revenue side, and the spending side will require to freeze expenditures. Clear communication of these reforms to the general public is important as these changes should not create more social unrest. The way to do this could be that greater sacrifices would have to be made by those who have greater ability to pay taxes. The richer segment of the Sri Lankan population may have to bear a larger burden of the tax adjustments”.

“On the expenditure side, government spending may have to be frozen and public sector wages and salaries may also have to undergo changes. In such a context, there will be the need to try as much as possible to provide social safety nets for needy segments. It could be provided by implementing a cash transfer programme to reduce the potential social unrest.”

“The other reforms include State Owned Enterprise (SOE) reforms, labor market reforms and banking sector reforms,” she said.

When asked about the possible scenario of debt restructuring with debt to equity swaps, she said,” The possible cost of that is; you will face a prolonged negotiating process with the threat of legal action on the country. Unlike in the past, now our creditor landscape is huge. Our creditors are mostly based in the U.S., and then we have bilateral debt providers such as China and India. we will have to bring all these stakeholders to a common ground and ensure equality of treatment.”

“Another risk is that we need to know that the bonds issued by Sri Lanka has clauses where the majority of the bond holders can buy the minority. If not, there could be a hold off problem where we may have to face legal consequences.”

“The recent debt restructuring of Ecuador and Argentina only had restructuring of interest rate adjustments and maturity extensions and did not receive a haircut,” she pointed out.

Sri Lanka for the first time in 63 years achieved a Rs. 21.9 billion surplus in the primary balance of the fiscal account during the first 10 months of 2017. The country recorded a primary surplus of 0.6 percent of GDP in 2018, the second year running. Dr. Indrajit Coomaraswamy was the governor of the central bank at that time.

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Business

The government is taking steps to streamline trade facilitation, customs processes, investment approvals, and improving export facilities – Prime Minister

Published

15 hours ago

2025/12/13

Priyan

Prime Minister Dr. Harini Amarasuriya stated that the government is taking steps to strengthen local exporters by making trade facilitation, customs procedures, and investment approvals more efficient, and by improving export services.

The Prime Minister made these remarks while addressing the 27th Presidential Export Awards 2024/25 ceremony organized by the Ministry of Industries and Industrial Development together with the Export Development Board.

At this ceremony, which was held to recognize the best exporters of Sri Lanka for the financial year 2024/2025, a total of 107 awards including 15 overall awards and 92 sectoral awards for products and services were presented. Merit awards were also presented to eligible sectors based on applicants’ performance and their contribution to national economic development. Awardees were selected on several criteria such as export market diversification, job creation, growth in export revenue, repatriation of export income, environmental sustainability, institutional social responsibility, and value addition.

Institutions that demonstrated outstanding performance in the export sector were presented with the prestigious Presidential Export Awards for the year under the patronage of Prime Minister Dr. Harini Amarasuriya and Minister of Industries and Industrial Development, Mr. Sunil Hadunnetti.

Further expressing her views, the Prime Minister stated:

“The Presidential Awards Ceremony for exporters reminds us that Sri Lanka’s progress depends not merely on policies or administration, but on the ability to produce, to create value, and to compete internationally.

Over the past year, we faced numerous challenges. As a result, global markets and supply chains were disrupted. Economic uncertainty prevailed. We faced natural disasters. Despite this, many exporters had to adjust to these changes, reorganize production processes, diversify customers, and adopt digital technologies in order to remain competitive in the market.

The impact of the Ditwah cyclone also affected several industries within the export sector. Production facilities, storage facilities, and transportation routes in affected areas were damaged. Production chains and delivery schedules were disrupted.

Under such a difficult situation, some exporters experienced significant setbacks while trying to meet international export demands.

The government is taking steps to support exporters by assessing the damages they suffered due to the emergency situation, restoring their operations, and helping them recover. The government is also working to strengthen resilience against future natural disasters and to rebuild affected areas in a way that minimizes the risk of similar situations arising again.

Sri Lanka is currently undergoing a new economic transformation. For many years, instability, policy inconsistencies, and administrative inefficiencies hindered the progress of the country. This weakened investor confidence and made it difficult for businesses to plan ahead.

However, the present government is committed to governance based on stability, transparency, and accountability. This is not a short-term approach. It is a long-term process to ensure that the country does not fall back into uncertainty.

For this purpose, the government is implementing strong fiscal management, predictable policies, clear and simplified regulations, anti-corruption measures, major institutional reforms, measures that allow businesses to plan ahead, instill investor confidence, minimize unnecessary barriers, and support the development of the private sector.

For a long time, we relied heavily on international loans to sustain national expenditures. However, this is not leading a path toward a stable future. Our progress depends on our ability to earn through trade, innovation, and global engagement.

Your ability to take Sri Lankan expertise and creativity to the world is a strength for the entire nation. The government is ready to extend the necessary support to achieve this.

We understand that issues such as policy inconsistencies, delays that increase operational costs, limited access to competitive financing, gaps in infrastructure and technology, weaknesses in trade facilitation, and slow progress in expanding market access have impacted you. I would like to assure you that the government is directly addressing these challenges.

The focus of the government has drawn to build efficient, transparent, and predictable systems, streamlining trade facilitation, customs processes, and investment approvals, improving export facilities, and minimizing the gap between local businesses and global markets.”

This event was attended by Ministers Kumara Jayakody, Ramalingam Chandrasekaran, Sunil Kumara Gamage; Deputy Ministers Chathuranga Abesingha, Eranga Weerarathna, Arun Hemachandra, Nishantha Jayaweera, Muditha Hansaka Wijayamuni; Governor of the Central Bank Nandalal Weerasinghe; Secretary to the Ministry of Industries and Industrial Development Tilaka Jayasundara; Chairman of the Export Development Board Mangala Wijesinghe, along with ambassadors, foreign delegates, exporters, and a large gathering.

[Prime Minister’s Media Division]

Business

India unveils future of South Asia’s construction industry

Published

17 hours ago

2025/12/13

Thilina Walpola

Dignitaries at the launch of EXCON 2025

South Asia’s largest construction equipment exhibition began December 9 in Bangalore, India showcasing a broad range of next-generation machinery and technologies. Equipment and tools demonstrated improved productivity, advanced controls, energy-efficiency, telematics integration, IoT-enabled monitoring and predictive maintenance. These innovations support better project outcomes across roads, highways, rail, and metro. Sea ports. Airports, mining and development.

The event stands as a platform for collaboration, knowledge exchange and business engagement. It brings together stakeholders who are shaping India’s transition towards infrastructure that is smarter, greener and aligned with global standards.

“India continues to strengthen its position as one of the world’s most dynamic growth engines supported by decisive policy direction and a renewed national focus on infrastructure” said Rajiv Memani President Confederation of Indian Industry (CII) at the inauguration of EXCON 13th edition held at Bangalore International Exhibition Centre, Bengaluru. Memani further stated that as investment expands across transportation, logistics, urban development and manufacturing, EXCON 2025 becomes a vital platform to showcase how industry and innovation are shaping this momentum.

Speaking at the inauguration R Mukundan President designate CII and Chairman EXCON 2025 noted that ‘’India is on a historic growth trajectory aiming to become a $30 trillion economy by 2047 under the Viksit Bharat vision and Infrastructure will be the backbone of this transformation with INR 11.21 lakh crore allocated for Financial Year 2025/26. Projects such as Bharatmala, high-speed rail and Smart Cities under PM Gati Shakti are driving connectivity and urban development.” He said Excon supports this by bringing innovators, policymakers and industry leaders together to introduce automation, IoT, AI-driven machinery and green technologies to improve execution and competitiveness. He added, “Every edition sets benchmarks and will continue to empower stakeholders and drive modernisation.”

“EXCON 2025 stands as a testament to India’s growing engineering excellence and global aspirations. As we embrace new technologies and sustainable practices, the Indian construction industry is poised shape the infrastructure landscape of tomorrow” said Deepak Shetty, President ICEMA and CEO/MD JCB India Ltd.

“The exhibition brings together Industry leaders, policy makers and innovators of South Asia to highlight the crucial role of advanced technologies, manufacturing strength and green practices in shaping the national growth as we move in to a new era of infrastructure” said Chandrajith Banerjee, Director General, CII.

Over one million business visitors are expected during this period. Over 1250 exhibitors display a wide range of construction equipment from across the world with 7 country pavilions from China, France, Germany, Italy, South Korea, Turkey and the United Kingdome. They showcase a wide spectrum of global construction technologies and equipment solutions. The presence of these pavilions reinforces EXCON’s role as a bridge between global innovation and South India infrastructure goals.

OTR Lanka and Laugfs Corporation (Rubber) Ltd took part as trade partners from Sri Lanka.

Event was sponsored by well reputed brands such as; AJAX, BKT, CATERPILLAR, conmar, JCB, KOBELCO, KOMATSU, MRCRUSHING IT, PUZZOLONA, RMX, SANY, SCHWING Stetter, TATA HITACHI, VENUS, ACE, Apollo, ARX, Bobcat, EMERALD, HAIL STONE. HYUNDAI, MAHAVEER DISTRIBUTORS, Parker, VELVEX, walavoil, wipro and WIRTGEN GROUP.

by Claude Gunasekera

Business

CHEC South Asia & Southeast Asia completes emergency clearing of A5 Highway

Published

17 hours ago

2025/12/13

Thilina Walpola

China Harbour Engineering Company Ltd South Asia & Southeast Asia, working in close coordination with the Sri Lanka Army, the Road Development Authority (RDA), local authorities and surrounding communities, has recently completed the emergency clearing of the A5 highway, restoring a vital transportation link that had been severely obstructed by landslides and debris in the aftermath of Cyclone ‘Ditwah’. The work was carried out from 04th December to 10th December over a continuous seven-day period.

The A5 highway, a key route for community connectivity, emergency service access and the transport of essential supplies, became impassable after the cyclone triggered extensive damage across multiple regions. Responding to urgent requests from relevant authorities, China Harbour South Asia & Southeast Asia mobilised its specialised rescue teams, heavy machinery and technical expertise to accelerate the clearance process and support national recovery operations. China Harbour has been working in Sri Lanka since 1998, marking 27 years of partnership with the country. The company noted that it has also actively participated in rescue and relief efforts during major national disasters such as tsunamis, bomb attacks and the COVID-19 pandemic, underscoring its longstanding commitment to Sri Lanka during moments of crisis.

A coordinated ground operation involving rescue personnel, 24 land-clearing machines and 36 trained workers was deployed to the affected areas. Working through unstable terrain and challenging weather conditions, the team removed large volumes of earth, fallen trees, rocks and damaged structures, allowing authorities to safely reopen the highway for public use.

The restoration of the A5 highway forms an important component of the company’s broader relief efforts following Cyclone ‘Ditwah’. These efforts included early rescue deployments, the distribution of emergency supplies and coordinated financial support through the Chinese Chamber of Commerce in Sri Lanka (CCCSL), reaffirming China Harbour South Asia & Southeast Asia’s commitment to supporting the country during times of national need.