ECONOMYNEXT – Central Bank governor Nivard Cabraal said seeking International Monetary Fund (IMF) help to resolve a debt and forex crisis would lead to currency depreciation and sharply higher interest rates, trimming the public sector and privatization of state enterprises.
However several policy corrections, which are usually in IMF deals are already done, he said.
Sri Lanka has been downgraded to CCC by rating agencies indicating higher risk of default as the country printed money to keep rates in a “monetary stimulus” on top of “fiscal stimulus” and lost foreign reserves as the printed money was exchanged for dollar reserves to maintain the exchange rate.
Ministers of President Gotabaya Rajapaksa’s ruling SLPP coalition has discussed the possibility of the government seeking IMF assistance to resolve the external crisis as it became more difficult to import oil and other goods.
The party had come to power slamming the last administration for going to the IMF, which led to tax hikes.
“If we want, there is no problem going for the IMF. We had gone in 2009. So nobody should think that we hesitate or fear to go,” Cabraal said at a news briefing on Thursday.
“The IMF could tell us to depreciate the rupee, raise the interest rates by 30 percent, 40 percent, 50 percent further, reduce the number of government sector employees, reduce or curtail pension benefits, and sell various state assets.
“These are some conditions they include in their reform agenda.
“Our view is that we do not need that reform agenda at this juncture. Our view is that without going for that, we can pay back our creditors. Though we see some pressure during this time, we know that will ease in the time ahead.”
The last IMF program failed to impose sufficient controls on the central bank giving it enough room to print money under discretionary flexible inflation targeting and triggered a second currency crisis in 2018 within the program leading to an output shock.
It also failed to impose spending controls on the Treasury ‘under so-called revenue based fiscal consolidation’ sans ‘spending based consolidation’ leading to steep rise in government spending and an increase in state sector pension entitlements.
The currency fall which usually comes a under an IMF program leads to a fall in real wages, a consumption fall, higher unemployment and an economic slowdown – the inevitable consequence of monetary and fiscal excesses – which leads to unhappy voters if elections come before growth recovers.
Cabraal, however, said Sri Lanka itself has been already doing what the IMF might prescribe in a policy package.
“The issue is we need to face the debt problem,” Cabraal said. “The main reason for the debt problem is 6.9 billion US dollars had been borrowed as loans via sovereign bonds to this country from 2018 April to 2019 June. Those loans have put a lot of pressure on the country’s debt.”
“So we have decided to do away with that kind of borrowing and reduce them while using some other borrowing methods. That is what we are doing right now. This will be the same advice the IMF will give us. No other advice they will give.”
“Debt restructuring is basically you change from one instrument to another. This has been done with a deep thought and scientific manner. Since we are already doing it, we do not need external help to do that.”
He also said the government has already taken decisions to change maximum retail prices of commodities.
“In some instances, we have removed them which could be told by the IMF.”
The budget for 2022 had already frozen recruitment raised taxes on companies including turnover based taxes and there were no salary hike for state workers except for striking teachers.
However any IMF programme now is likely to require the float of the currency as a prior action to restore foreign exchange markets.
Cavinkare Lanka unveils Meera Facewash – unique combination of natural actives
FMCG Major’s latest product for the Sri Lankan market, Meera Facewash was unveiled in an official event at Colombo. Celebrating the young contemporary Sri Lankan woman, Meera facewash will be introduced in three different variants providing functional solutions to everyday skincare problems – Red Sandal (for soft skin), Neem & Tea Tree (for pimple clear skin) and Wild Turmeric (for clear skin).
Meera facewash is a range of formulation that is Soap-free, Sulphate free, Paraben free and is milder on the skin. It has a unique combination of Natural actives mentioned in ancient Ayurvedic textbooks. It includes a very special product which is Salicyclic acid- free acne treatment facewash. It helps to remove 99.9% of acne causing bacteria using prebiotic technology.
Meera facewash is aimed at modern young women of Sri Lanka who hold a strong belief in traditional practices & natural ingredients. Today young women are well read, understand the importance of healthy skin and have a holistic view of how healthy skin is beautiful skin. It comes out from the confidence of understanding scientific literature that supports these natural ingredients rather than following it naively.
Virtually connecting at the event, Arun Chacko, Business Head of Personal care category (Sri Lanka, Bangladesh & Nepal) said, “With the Launch of Meera Face Wash today, we add to the hugely successful Meera portfolio of shampoos. With this, we intend to enhance the Richness of Tradition that Meera as a brand has been offering to the Sri Lankan Populace over the years. We are sure that the variants, would endear to the needs of Sri Lanka. We promise to bring more such exciting products to cater to the consumers.”
All-time record prices for two estates
Halpewatte Uva Estate located in Bandarawela, which is renowned for producing high quality, light liquoring bright orthodox teas established an all-time record price of Rs.1,000 per kg on a liquoring BOPSP grade in the Uva Medium Category at the tea auction held on 18th January 2022. This invoice of tea was purchased by Shan Teas (Pvt) Ltd.Halpewatte Uva Estate is managed by Halpewatte Estate (Pvt) Ltd, and the teas were marketed and sold by John Keells PLC.
Venture Estate located in Bogawantalawa which is renowned for producing high quality orthodox teas over the past years, established an all-time record price, of Rs 1,060 per kg on a liquoring FBOPF1 grade in the Western High Grown Category at this week’s tea auction held on 18th January 2022. This line of tea was purchased by Inter Tea (Pvt) Ltd. Venture Estate is managed by Madulsima Plantations PLC and the teas were marketed and sold by John Keells PLC.
HNB-Indra Traders offer exclusive leasing solutions for unregistered vehicles, freezers and pre-owned vehicles
Sri Lanka’s leading private sector bank, HNB PLC, partnered with local automotive giant Indra Traders to provide customers with exclusive leasing solutions for unregistered and pre-owned vehicles and freezers.
Customers can make use of exciting benefits and discounts during the promotional period from January to December 2022. HNB Executive Director Chief Operating Officer Dilshan Rodrigo and Indra Traders Managing Director Rushanka Silva participated in the special ceremony to sign the MoU at HNB Towers.
“Given the import restrictions, the market for unregistered and pre-owned vehicles has grown exponentially. Each year we offer our loyal customers the very best deals in the market. As such, we have renewed our partnership with Indra traders, renowned for its incomparable service, to offer those looking for vehicles with access to exceptional after-sales services and great discounts,” HNB Executive Director and Chief Operating Officer Dilshan Rodrigo said.
HNB will offer the prevailing interest rate for structured leases and lease facilities with a 25% residual value market value under the partnership. Customers also have access to special discounts on automobile products, servicing, spare parts, tyres, and batteries via the Prestige Prime card, with the annual fee waived off the first year.
“We are delighted to partner with HNB once again to offer our mutual customer base exciting leasing solutions and great benefits. Our continued partnership with the Bank has proven to be very beneficial to our customers, and we hope they will make use of this opportunity once again to invest in their own set of wheels,” Indra Traders Managing Director Rushanka Silva said.
Indra Traders will provide customers looking to purchase unregistered cars, vans and freezers with free insurance from SLIC for the first year. HNB customers are also eligible for discounts of up to 10% for spare parts from Indra Motor Spares and labour charges from Indra Service Park for the first year.
Customers investing in a new or unregistered passenger vehicles are eligible to have their vehicles outfitted with a free entertainment system and reverse camera. Indra Traders will also offer customers a two-year warranty for engines and gearboxes and a three-year warranty for hybrid batteries.
Notably, the company will provide free labour for services up to one year and a maximum of six services for pre-owned vehicles. A six-month warranty will also be offered for the engines and gearboxes of these vehicles.
Established in 1975, Indra Traders has diversified to various business segments in the automobile industry. A supplier of high-quality motor vehicles and related vehicles, Indra Traders today stands as not only a supplier of high-quality vehicles but also a transport solutions provider.
With 254 customer centres across the country, HNB is one of Sri Lanka’s largest, most technologically-innovative banks, having won local and global recognition for its efforts to drive forward a new paradigm in digital banking. HNB has a national rating of AA- (lka) by Fitch Ratings (Lanka) Ltd. The Bank was also ranked among the World Top 1,000 Banks list compiled by the prestigious UK-based Banker Magazine for five consecutive years. HNB was also declared Best Sub-Custodian Bank in Sri Lanka at the Global Finance Awards 2020.
Now, CEB plans to ‘rationalise’ tariff
Ranil calls on MPs to think anew to find solutions to problems engulfing country
Chandrika says Sirisena should be thrown out of SLFP
‘Dates have the highest sugar content to fight Coronavirus’
Sunday Island 27 December – Headlines
#Sundayisland Sunday Island- 31 January- Headlines
News2 days ago
MP denies trying to help fugitive through BIA
Features6 days ago
Features6 days ago
A nation caught in the 20-Trap
News3 days ago
Lankan private investor gets licence to provide aircraft line maintenance services at BIA
Sports6 days ago
Mendis to open in Zimbabwe ODIs
Sports2 days ago
Four batsmen strategy backfire as Sri Lanka lose to Zimbabwe
News6 days ago
Easter Sunday carnage cannot be blamed on Muslim extremists alone – Cardinal
News4 days ago
NGO to move SC against acquittal and discharge of first accused