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SL clinches deal with IMF for 4-year EFF of $ 2.9 billion subject to debt restructuring and prior actions

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By Hiran H.Senewiratne

The International Monetary Fund said it had reached a deal with Sri Lanka for a 4-year 2.9 billion US dollar extended fund facility subject to debt restructuring and prior actions.Under the program the Sri Lankan budget will have to generate a primary surplus (debt before interest) of 2.3 per cent by 2024. The 2022 expected primary deficit is 4 per cent of GDP, the IMF senior mission led by Peter Breuer said.

“These reforms include making personal income tax more progressive and broadening the tax base for corporate income tax and VAT. The program aims to reach a primary surplus of 2.3 per cent of GDP by 2024, Breuer said at a media conference at the Central Bank head office in Colombo yesterday. Breuer together with Masahiro Nozaki and other members of the IMF delegation visited Sri Lanka from August 24 to September 1 to continue discussions on IMF support for Sri Lanka and the local authorities’ comprehensive economic reform program.

Breuer added: ‘The 2022 primary deficit was projected by the government at -4.0 per cent of GDP. Sri Lanka will also have to negotiate with creditors to restructure debt.

“The agreement is subject to the approval by the IMF management and the Executive Board in the period ahead, contingent on the implementation by the authorities of prior actions and on receiving financing assurances from Sri Lanka’s official creditors and making a good faith effort to reach a collaborative agreement with private creditors.

“Debt relief from Sri Lanka’s creditors and additional financing from multilateral partners will be required to help ensure debt sustainability and to close financing gaps.

“The Central Bank will also have to stop printing money (monetary financing) and bring down inflation.’’

The full IMF statement is reproduced below:

“The Sri Lankan authorities and the IMF team have reached staff-level agreement to support the authorities’ economic adjustment and reform policies with a new 48-month Extended Fund Facility (EFF) with a requested access of about SDR 2.2 billion (equivalent to US$2.9 billion).

“The new EFF arrangement will support Sri Lanka’s program to restore macroeconomic stability and debt sustainability, while safeguarding financial stability, reducing corruption vulnerabilities and unlocking Sri Lanka’s growth potential.

“The agreement is subject to the approval by IMF management and the Executive Board in the period ahead, contingent on the implementation by the authorities of prior actions, and on receiving financing assurances from Sri Lanka’s official creditors and making a good faith effort to reach a collaborative agreement with private creditors. Debt relief from Sri Lanka’s creditors and additional financing from multilateral partners will be required to help ensure debt sustainability and close financing gaps.

“Sri Lanka has been facing an acute crisis. Vulnerabilities have grown owing to inadequate external buffers and an unsustainable public debt dynamic. The April debt moratorium led to Sri Lanka defaulting on its external obligations, and a critically low level of foreign reserves has hampered the import of essential goods, including fuel, further impeding economic activity. The economy is expected to contract by 8.7 per cent in 2022 and inflation recently exceeded 60 per cent. The impact has been disproportionately borne by the poor and vulnerable.

“Against this backdrop, the authorities’ program, supported by the Fund, would aim to stabilize the economy, protect the livelihoods of the Sri Lankan people, and prepare the ground for economic recovery and promoting sustainable and inclusive growth.

Key elements of the program are:

Raising fiscal revenue to support fiscal consolidation. Starting from one of the lowest revenue levels in the world, the program will implement major tax reforms. These reforms include making personal income tax more progressive and broadening the tax base for corporate income tax and VAT. The program aims to reach a primary surplus of 2.3 per cent of GDP by 2024.

Introducing cost-recovery based pricing for fuel and electricity to minimize fiscal risks arising from state-owned enterprises. The team welcomed the authorities’ already announced substantial revenue measures and energy pricing reforms;

Mitigating the impact of the current crisis on the poor and vulnerable by raising social spending, and improving the coverage and targeting of social safety net programs;

Restoring price stability through data-driven monetary policy action, fiscal consolidation, phasing out monetary financing, and stronger Central Bank autonomy that allow pursuing a flexible inflation targeting regime. A new Central Bank Act is a cornerstone of this strategy;

Rebuilding foreign reserves through restoring a market-determined and flexible exchange rate, supported by the comprehensive policy package under the program;

Safeguarding financial stability by ensuring a healthy and adequately capitalized banking system, and by upgrading financial sector safety nets and regulatory standards with a revised Banking Act; and Reducing corruption vulnerabilities through improving fiscal transparency and public financial management, introducing a stronger anti-corruption legal framework, and conducting an in-depth governance diagnostic, supported by IMF technical assistance.

The IMF team held meetings with President and Finance Minister Ranil Wickremesinghe, Prime Minister Dinesh Gunawardena, Central Bank of Sri Lanka Governor Dr. P. Nandalal Weerasinghe, Secretary to the Treasury K M Mahinda Siriwardana, and other senior government and CBSL officials. It also met with parliamentarians, representatives from the private sector, civil society organizations and development partners.



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‘Expolanka Holdings steadfast in posting stabilized Q3 results’

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Expolanka Holdings PLC recorded a steady 9-month performance as at December 31, 2022 amid declines in the overall global markets. Reflecting the underlying strength of its business and success in pursuing a consolidated strategy, the combined 9-month performance delivered a strong endorsement in overcoming challenges in the macro environment with Year-to-date Revenue of Rs. 491Bn, Gross Profit Rs. 85.9Bn and Net Profit Rs. 32Bn. International business continued to generate above 95% in contribution, demonstrating the robust earning potential of the company, an Expolanka Holdings press release said.

The release adds: ‘However, declines in international trade moderated Q3 FY 2022 earnings, recording a Revenue of Rs. 94.2Bn, Gross Profit of Rs. 20.6Bn and a Profit after Tax of Rs. 3.0Bn.

‘Contributing to company earnings was the logistics sector which navigated the challenging macro-economic environment and adopted longer-term strategies concentrating on business fundamentals. For Q3, the sector posted a Revenue of Rs. 92Bn, Gross Profit of Rs. 19.9Bn and Profit after Tax of Rs. 2.7Bn delivering a YTD Profit after tax of Rs. 30.1Bn.

‘Impacting revenues were a reduction in operating volumes across Air Freight and Ocean Freight products due to the overall slowdown in global trade volumes on grounds of high inventory levels, inflationary fears and the global energy crisis. The Air Freight business encountered a relatively larger impact due to challenging market conditions resulting in weakening demand and reduced volumes.

‘Focusing on increased customer penetration, developing partner networks and enhanced competencies, the company was successful in gaining cumulative progress in the Ocean Freight product.

‘The North American trade lane continues to remain the critical business driver for Expolanka, while the European and Intra-Asia companies remained resilient.

‘Reinforcing growth and sustaining improved margins was also due to the company’s focus on strengthening customer relationships, attracting selective new customers and engaging in proactive procurement strategies.

‘Key EFL origins also delivered strong results, reflecting the success of the infrastructure investments made into these markets.

‘The Group’s stabilized 9-month performance was also aided by the continued resurgence in the leisure sector. In Q3 the sector delivered a Revenue of Rs. 725Mn, Gross profit of Rs. 578Mn and Profit after tax of Rs. 202Mn by strengthening its market position focusing on efficient procurement and operational excellence.’

‘Recording a revenue of Rs. 1.6Bn and a Profit after Tax of Rs. 41Mn, the Group’s investment sector remained steady making progress across its business portfolios.

‘Despite the global macro environment remaining uncertain and challenging in the future, Expolanka aims to forge ahead, unwavering in its approach to deliver on earmarked strategic initiatives building on its strong performance. The company stands persistent towards generating accelerated growth and innovation while remaining true to its core values by reaffirming its long-term commitment and challenging the status quo to seize opportunities in the market that would predominantly secure its position as a market leader.’

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Sanasa Life Introduces “Pinsaru Vandana” – A Premium Insurance Policy for Buddhist Clergy

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Helping to elevate and protect the Buddha Sasana, Sanasa Life Insurance has introduced a very special and tailored insurance policy for Buddhist Monks. The “Pinsaru Vandana” insurance policy provides a specialized insurance scheme addressing the special needs of Buddhist Monks. An auspicious inauguration ceremony was held, in the presence of several senior members of the Buddhist Clergy on the 17th of January 2023, at the Sri Sambudhdhatva Jayanthi Mandiraya in Colombo. A total of 300 Buddhist Monks were in attendance at the event, and gave their blessings for this special insurance scheme. A group of dignitaries, including Wishawa Prasadini, Dr. P. A. Kirivandeniya and Piriwena Director, Venerable Watinapaha Somarathana Thero, were also present and played key roles during the event.

“Pinsaru Vandana” is an insurance scheme that provides relief and protection for junior monks, in the event of the death, serious illness or incapacitation of their patron/senior monk. In such an unfortunate event, junior monks can often become destitute and or marginalized. Thus, “Pinsaru Vandana” will help to protect these young monks as they pursue their journey and mission of elevating and sustaining the Buddha Sasana.

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Technocity hosts ‘Together We Win’ training programme in Thailand

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The team at the ‘Together We Win’ training programme in Thailand

The Technocity Pvt. Ltd., the leading Sri Lankan IT Distribution Company, recently held a three-day ‘Together We Win’ training programme at the Rembrandt Hotel in Bangkok, Thailand.

The event, in partnership with HP, invited The Technocity’s top 10 Partners for training in gratitude for the continuous support they have shown towards helping the company develop its business.

The event featured esteemed speakers, including Gehan Thangappan (Business Head, The Technocity), Manish Gawri (Hp Inc., Notebook), T Natarajan (Hp Inc., Print) and M. Kalim (Sales Manager, The Technocity).

The sessions covered various pertinent topics while the invitees viewed a series of product videos during the training to further understand the complexities of the products.

Addressing the invitees, Gehan Thangappan said, “We started small, as all new businesses do, but we’ve grown beyond our borders. This is all thanks to our valued partners and customers who have helped us achieve newer and higher ground. Grateful as we are, we also look forward to providing our diverse clientele with the best products and top-notch service as always.”

The Technocity also conducted a F2F discussion with the partners, briefing them on the way forward and announcing the channel incentive schemes in place targeting Ink Tank Printers. Prior to the conclusion of the event, the attending partners partook in a quiz segment and were treated to exciting giveaways.

“We are very happy with the success of this programme. The training had a very good impact, especially as it was held out of the country and it motivated partners. It was also significant for us as it was the first event we had held overseas after Covid,” Thangappan added.

The Technocity Pvt Ltd is one of the leading distributors in Sri Lanka for IT products and services. In the nearly three decades since its establishment, The Technocity has grown to become one of the most trusted names in the industry. The company is also the first local distributor for HP in Sri Lanka and boasts a portfolio of representation for notable brands like Asus, Lenovo, MSI, Logitech and Viewsonic.

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