Business
Govt urged to take pragmatic view on debt management
by Sanath Nanayakkare
If Sri Lanka has the right policy mix to effectively carry on with its debt rollover and to maintain a surplus in its current account, the country can demonstrate that it has entered a path of debt sustainability boosting confidence of the financial markets, Nishan de Mel, Economist- Verite Research said recently.
De Mel, an economist with extensive academic, policy, and private sector experience said so while speaking at a webinar organised by the Veemansa Initiative.
The webinar revolved round the topic ‘External debt situation in Sri Lanka: Are we heading for a resolution or crisis?, where Governor of the Central Bank Professor W. D Lakshman delivered the keynote speech at the virtual forum.
Speaking further de Mel said: ‘I beg to differ with the Governor that Sri Lanka doesn’t need assistance in this regard and can do this alone- if I heard that right. I understand the concerns that an IMF programme will involve conditions impeding our growth drivers. But we need to get our policy mix right and then we can show that we are effectively managing the debt rollover risk backed with a surplus in the current account. That will boost the financial markets’ confidence in our reserves. I think this is something we shouldn’t reject on ideological terms. We need to look pragmatically at how we can attract bridge-financing as well as reducing the cost of our debt. There may be an alternative approach, but we really need to look at the feasibility of managing our foreign debt stock in a way that it could move on a downward trajectory going forward”.
“We should not deplete our foreign reserves too quickly in the process of switching to domestic borrowings from foreign borrowings. We shouldn’t run the risk of markets losing confidence in the Sri Lanka rupee and its exchange rate in a scenario of depreciation affecting our ability to manage our debt stock. Low interest rates are important for Sri Lanka’s debt dynamics. The Central Bank has seized the opportunity arising from the pandemic to introduce a low interest regime. With low interest rates and a positive growth rate the government’s local debt stock could be well managed. Private credit growth is going to be the main driver in pushing interest rates upwards, so it has to be watched. If we keep our inflation and depreciation rates matched, we won’t have a very high level of risk perception. Then on the foreign debt side also Sri Lanka has a path of sustaining its debt,” he said.
Meanwhile, a First Capital research report issued on February 26, 2021 showed: Foreign reserves dipped by US$ 0.8 bn during the month of January 2021 to US$ 4.8 bn from US$
5.6bn in December 2020. Private credit increased by Rs. 25 bn in Jan 2021. Foreign activity showed net outflow of Rs. 3.1 bn in government securities over the past 2 months.
Business
Smart measures to combat corruption urgently needed: Dr. Rohan Pethiyagoda
By Ifham Nizam
The government should adopt smarter preventative measures to combat corruption and protect public resources, urged Dr. Rohan Pethiyagoda, a well-respected authority on governance and corruption.
He stressed the importance of proactive reforms in governance and procurement systems, advocating for greater transparency and fairness in public sector dealings.
In thought-provoking comments made while delivering the prestigious S R Kottegoda Oration recently Pethiyagoda, known for his insightful critiques of governance, laid bare the complex, multifaceted nature of corruption that hampers the nation’s progress, stressing the urgent need for systemic reforms to address the issue.
He explained the deep-rooted issues of systemic corruption in Sri Lanka, particularly within the country’s infrastructure projects and regulatory frameworks.
Pethiyagoda began by examining the nature of corruption, which he argued extends far beyond bribery to include monopolistic practices, procurement irregularities and inefficiencies caused by bureaucratic mismanagement.
Pethiyagoda added: ‘A prime example is the longstanding contract between Sri Lankan Airlines and Airbus, a deal that effectively locked the national carrier into an arrangement with limited competition, notably from Boeing. Despite evidence of bribery and the subsequent four-billion-dollar fine levied by the European Union, the Sri Lankan government failed to secure any restitution from the scandal.
‘There are also the dangers posed by monopolies and regulatory malpractices. A case of corruption is the recent agreement with VFS Global—a private company handling electronic travel authorizations. There was an exorbitant fee structure in the deal. As a result, funds meant for Sri Lanka were being siphoned off overseas, further draining the nation’s resources.
Pethiyagoda also scrutinized the country’s procurement systems, particularly pointing out how tenders are often rigged through fixed specifications that favor certain companies. “In technical specifications, minor adjustments can disqualify major manufacturers, essentially ensuring that only the bribing companies win the contract, he explained.
A particularly startling example he raised was the controversial wind power deal awarded to the Adani Group of India. According to Pethiyagoda, the Sri Lankan government paid an inflated price for wind power, which would lead to an additional cost of USD 1.35 billion over 20 years, compared to a much more affordable local tender.
“The government creates regulatory barriers that fuel corruption, he added. “Take the National Medicines Regulatory Authority (NMRA), for example. Delays in approving medical equipment parts not only waste resources but cause unnecessary suffering and even deaths.”
Pethiyagoda contended that the failure to tackle corruption lies not only with individual politicians but with the country’s broken systems. He stressed that while political leadership may strive for integrity, these efforts are insufficient unless systemic reforms are introduced. “Corruption cannot be tackled with crime and punishment alone,” he said. “We need to proactively identify and stop corruption before it even occurs.”
Drawing from his own experiences, Pethiyagoda recounted a personal incident during his tenure as a youthful director of biomedical engineering at the Ministry of Health in Sri Lanka. He shared a disturbing example of how radiographers at the National Cancer Institute had misused cobalt radiation therapy machines to irradiate gemstones instead of treating patients, which led to innocent people being misled. Despite a prosecution, the case ultimately fell apart due to legal loopholes, highlighting how corruption in Sri Lanka often slips through the cracks of the legal system.
Business
Ideal Motors confident Mahindra’s ‘premium’ SUVs will be well received
Mahindra & Mahindra Ltd., a global leader in the automotive industry, recently unveiled its SUV range and the all-new “Twin Peaks” visual identity at the Colombo Motor Show.
Representing a dynamic and adventurous spirit, the new logo reflects Mahindra’s focus on crafting premium SUVs that resonate with customers seeking both luxury and authenticity.
Nalin Welgama, Chairman, Ideal Motors, said, “We are delighted that Mahindra unveiled its new visual identity and flagship SUVs at the Colombo Motor Show. These SUVs showcase contemporary design, cutting edge technology and luxury features. I am sure these vehicles will be well received by Sri Lankan customers”.
“The market launch and commencement of sales are contingent upon the government’s timeline for lifting import restrictions. The pricing details will be announced closer to the market launch, considering the duties, taxes, and exchange rates applicable at the time”, company sources said.
Meanwhile, Mahindra reaffirmed its commitment to its Small Commercial Vehicle portfolio, emphasising that the City Pikup will continue to be on sale under its existing brand identity with the “Road Ahead” logo.
Business
Strengthening Sri Lanka’s retail future through loyalty and innovation
Dialog Axiata PLC, Sri Lanka’s #1 connectivity provider, has joined hands with the Sri Lanka Retailers’ Association (SLRA) to transform the retail landscape. This collaboration reflects the shared vision of both organisations to enhance the retail experience and foster deeper connections between retailers and their customers.
Dialog Star Points, Sri Lanka’s largest and globally recognised loyalty program with over 10 million customers, serves as the cornerstone of this partnership. The platform enables retailers to reward their loyal customers, helping businesses strengthen relationships and boost customer engagement and retention. The WOW SuperApp further complements this partnership by seamlessly integrating digital and in-store experiences, offering retailers and consumers a unified platform that simplifies shopping and drives digital transformation.
Commenting on the collaboration, Sandra De Zoysa, Group Chief Customer Officer of Dialog Axiata PLC, said, “Our collaboration with the Sri Lanka Retailers’ Association represents a significant step forward in elevating the retail experience in Sri Lanka. By combining Dialog’s technological expertise with the retail insights of the SLRA, we are paving the way for a more innovative, customer-focused future for the retail sector.”
Charitha Subasinghe, President of the Sri Lanka Retailers’ Association, added, “We believe that this coalition marks a transformative moment for Sri Lanka’s retail sector. By harnessing Dialog Axiata’s technological prowess, we aim to create a more engaging and efficient shopping experience that meets the needs of today’s consumers while driving growth for retailers across the nation.”
This alliance represents a pivotal step in building a resilient retail ecosystem that benefits retailers, consumers, and service providers across Sri Lanka.
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