Connect with us

Business

Sri Lanka foreign currency debt obligations due between now and 2026 amount to about US$ 29bn

Published

on

External liquidity pressures have eased somewhat in recent months

Planned IMF SDR allocation would also add US$780 million to reserves

Authorities have yet to specify foreign-currency debt-servicing plans for the medium term

Sri Lanka’s ‘CCC’ rating reflects a challenging foreign-currency sovereign external debt repayment burden over the medium term, low foreign-exchange reserves and high and rising government debt that give rise to sustainability risks, Fitch Ratings said on Monday.

External liquidity pressures have eased somewhat in recent months following bilateral loan disbursements, and our expectation of a forthcoming IMF special drawing rights (SDR) allocation. Nevertheless, Sri Lanka’s medium-term debt service challenges are substantial and pose risks to the sovereign’s debt repayment capacity, in Fitch’s view. A total of about USD 29 billion in foreign-currency debt obligations are due between now and 2026, against foreign-exchange reserves of USD4.5 billion as of end-April 2021, Fitch said.

The report further said: The authorities have recently secured project financing through various multilateral and bilateral channels, including the Asian Development Bank (AAA/Stable), Asian Infrastructure Investment Bank (AAA/Stable), China Development Bank (A+/Stable) and The Export-Import Bank of Korea (AA-/Stable), as well as swap facilities under the South Asian Association for Regional Cooperation (SAARC) currency framework and the People’s Bank of China, equivalent to USD400 million and USD1.5 billion, respectively. The planned IMF SDR allocation would also add USD780 million to reserves. These resources should enable Sri Lanka to meet its remaining debt maturities through the rest of this year, including a USD1 billion International Sovereign Bond maturing in July. However, the authorities have yet to specify their plans for meeting the country’s foreign-currency debt-servicing needs for 2022 and the medium term. They have consistently indicated that they do not plan to seek programme financing from the IMF.

We project foreign-exchange reserves to remain at about USD 4.5 billion by end-2021 before declining to USD3.9 billion by end-2022. Under our baseline, the current account deficit is likely to widen to 2.8% in 2021 and narrow to 2.1% of GDP in 2022. Our forecasts assume remittances will remain resilient in 2021-2022 and tourism is likely to recover only from 2022.

Sri Lanka’s economy contracted by 3.6% in 2020 as a result of the Covid-19 pandemic. We project growth of 3.8% in 2021, down from an earlier forecast of 4.9%, in light of a recent surge in virus cases. We expect the economy to grow by 3.9% in 2022. There remains a high degree of uncertainty associated with our forecasts in light of the evolution of new Covid-19 cases in the country. The authorities plan to inoculate 60% of the population by end-2021, but this target could be hampered by vaccine supply shortages.

Travel and tourism, an important driver of the economy, have been hit hard and the outlook for recovery remains uncertain, particularly given the recent surge in virus cases. The direct contribution of tourism to pre-pandemic GDP was about 4%, but the indirect contribution was much higher. Tourist arrivals in the first five months of 2021 were 97% lower than the same period last year.

The general government deficit widened to 11.1% of GDP in 2020, from 9.6% in 2019, as the economic contraction led to a sharp fall in fiscal revenue. We expect the deficit to remain elevated in 2021 and 2022 at 11.1% and 10.4%, respectively. Our deficit projections are wider than those presented by the government under its growth-oriented strategy of 9.4% and 7.5%, respectively. Under our forecasts, the revenue-to-GDP ratio in 2021 would rise to 10.9% in 2021 and 11.1% in 2022, compared with the authorities’ projections of 11.9% and 13.0%, respectively.

The government’s fiscal consolidation strategy is based on a planned acceleration in GDP growth, underpinned by tax cuts, as opposed to direct revenue-raising or expenditure measures, albeit supported by planned improvements in tax administration. The interest-to-revenue ratio remains high, at around 71% as of 2020, well above the ‘CCC’ median of 13%. The government expects to achieve primary surpluses from 2023, supported by annual GDP growth of 6%, which appear optimistic in our view as we anticipate growth that is closer to 4%, still above the pace in the immediate pre-pandemic period.

General government debt reached 101% of GDP by end-2020, broadly in line with our forecast at our last review in November. Our baseline forecasts suggest this ratio will rise further to 108% by 2022. Fitch does not think the government will meet its 2025 targets of reducing government debt to 70% of GDP and narrowing the fiscal deficit to 4% of GDP.



Business

MN Group becomes the Best Business of the Year at Pinnacals Awards

Published

on

The MN Group won the Best Business of the Year Award at the Pinnacals Sri Lanka award ceremony at the Waters Edge Hotel, Battaramulla. Managing Director of MN Group of Companies (www.mngroup.lk), Roshan Wewage accepted the award on behalf of the organization. MN Group of Companies has previously won many awards including Lanka Business Awards (LBA) and Shramabimani.

Customers can obtain any construction related service from MN Group at a reasonable price. The company is also willing to finish half completed houses and commercial buildings at agreeable terms. MN Group understands that the tough economic circumstances have placed great pressure on the people and the company is committed to understanding their needs and to provide a warm and professional service. Roshan Wewage invited those who need to renovate their buildings to reach out to them.

Continue Reading

Business

Dilmah Adjudged Best Corporate Citizen for the Third Consecutive Year

Published

on

Dilmah was awarded ‘Best Corporate Citizen Sustainability’ in the category of Businesses with Less than Rs. 15 Billion Annual Turnover, for the third consecutive year at the Best Corporate Citizen Sustainability (BCCS) Awards organized by the Ceylon Chamber of Commerce; recognizing that Dilmah has successfully achieved a sustainable balance between social, environmental, and economic performanc, a company news release said.

Evaluated by an independent & expert panel of judges, the awards are Sri Lanka’s most prestigious, scrutinizing and recognizing ethical and sustainable businesses. Dilmah was honoured as one of ten ‘Best Corporate Citizens’ of Sri Lanka, won the Award in the Environment Beyond Business Category, and was lauded for continuous commitment to the environment surpassing the realms of business.

“The annual BCCS Awards is the premier corporate citizenship award, highlights sustainability champions in the national corporate arena. The awards promote corporate citizen sustainability ownership and initiatives that deliver social and environmental benefits while pursuing profits. This recognition validates Dilmah’s emphasis on delivering social and environmental impact by sharing earnings through the work of the MJF Charitable Foundation and Dilmah Conservation,” the release said.

“In 1988, Merrill J. Fernando founded Dilmah, a family business, to serve humanity with kindness to people and nature, while sharing his passion for taste and goodness in tea. Over the years Dilmah has delivered over Rs. 7 billion for humanitarian benefit through the work of its charitable arm MJF Foundation and environmental arm Dilmah Conservation.

“Ensuring economic, social, and environmental sustainability exists at the heart of its operations and is integrated to every operational aspect of the business, Dilmah’s purpose is further extended through the work of the Merrill J. Fernando Charitable Foundation (MJF Foundation) and Dilmah Conservation (DC) by driving life-impacting initiatives.

“The MJF Foundation works directly with estate workers and underprivileged communities to uplift lives and empower them to pay-it-forward to their communities. Some of its core initiatives are the countrywide MJF centres, small-medium enterprises with over 2,000 small entrepreneurs, ‘Empower’ Culinary & Hospitality School, and ‘disABILITY’ teletherapy app.

“The sustainable development of people goes hand-in-hand with the planet. Dilmah Tea is a carbon neutral product manufactured at a carbon neutral facility. Further, Dilmah has pledged to achieve zero-emissions for its manufacturing process by 2030 through science-based targets. Dilmah Conservation functions under three main categories: environmental sustainability, biodiversity conservation, and education and awareness. As such, Dilmah Conservation initiatives range from butterfly to elephant conservation, climate research, adaptation and mitigation, rewilding tea gardens, conserving mangrove forests, and promoting nature-based entrepreneurship through seaweed cultivation and empowering agro-entrepreneurs.”

Winning the Best Corporate Citizen Sustainability Award 2022 is considered a top honour in the Sri Lankan corporate field. Each year, submissions are evaluated by an eminent panel of local experts, thought leaders, and academics. Dilmah considers receiving the Best Corporate Citizen Sustainability Award 2022 an important milestone in its journey as a truly sustainable brand with a purpose beyond profit.

Across the shores, Dilmah has been recognized for its attempt to take Ayurvedic wellness and goodness to the world with the help of tea. The Arana Range of Herbal Infusion Teas was voted the Product of the Year 2022 in Australia. Meanwhile, Dilmah on its 7th Consecutive Year was awarded Most Trusted Brand in New Zealand in 2022.

Continue Reading

Business

DSI Tyres bags two awards at SLIM Brand Excellence 2022

Published

on

Sri Lanka’s premium tyre brand, DSI Tyres won two prestigious awards at the SLIM Brand Excellence Awards 2022, held recently in Colombo. DSI Tyres, who has already made a mark in the international markets too, won the Silver Award under the Product Brand of the Year category and the Bronze Award under the Local Brand of the Year category. These mark another important milestone in the company’s journey spanning three decades. DSI Tyres has also remained within the top three brands in Sri Lanka for three consecutive years, a significant achievement in a very competitive arena.

DSI Tyres’ role as a leading local tyre manufacturing company that continues to promote its brand in an eco-friendly manner through the use of state-of-the-art technology and continuous research and development which enables them to identify customer needs in a timely manner is the key reason behind its continuous achievements. DSI Tyres has been able to place its products optimally among the local and international customers using the latest marketing strategies. The company also places great emphasis on sustainability and has been able to expand its local and international market share maintaining continuous customer loyalty even at the most difficult periods. DSI tyres are becoming increasingly popular in the online sphere as well, due to the facilitation of online orders at the convenience of customers as well as the use of attractive digital marketing. “DSI Tyres has a special place in the people’s hearts.

We have won the people’s trust and it is the highest award we can receive. It is a great privilege for us to receive these awards, which a mark of appreciation for the work we do to maintain customer loyalty,” Managing Director of DSI Tyres Kavinda Rajapaksa said. SLIM Brand Excellence Awards is the Sri Lanka’s premier celebration of Sri Lankan brands that rewards the outstanding efforts of marketers. This gala event for this year was held at Grand Monarch Hotel, Colombo. The Chairman of DSI Tyres, Ranatunga Rajapaksa received the two awards on behalf of the company. Previously, DSI Tyres had won SLIM Turnaround Brand of the Year, Product Brand of the Year, Local Brand of the Year and many SLIM DIGIs awards.

Continue Reading

Trending