Business
Foreign debt restructuring: A breather for Sri Lanka to repair its low reserve buffers
By Sanath Nanayakkare
Sri Lanka is currently negotiating with foreign creditors to reduce the country’s high share of foreign currency debt liabilities because it would give Sri Lanka a breather and space to rebuild its reserve buffers, a press conference at the Central Bank revealed.
In this exercise, Sri Lanka is looking to build USD 10 billion worth of foreign reserves while keeping to a maximum forex debt service target of 4.5% of GDP in 2027-2032, Dr. Nandalal Weerasinghe, the Governor of the Central Bank of Sri Lanka (CBSL) said on August 24, 2023.
“We are negotiating to restructure our foreign debt because our forex reserves are not sufficient repay those loans as they are. The whole purpose of foreign debt restructuring is to avoid ending up in another economic crisis; otherwise there would have been no need for foreign debt restructuring,” the Governor explained.
He made these remarks during the Q&A session at the press conference held to enlighten on the newest monetary policy review of the Bank.
When our sister paper Divaina asked if the country could fall back into a crisis again by September- October 2023 when Sri Lanka begins to repay its suspended foreign loans, the Governor said that it is less likely to happen.
“Our core target post-foreign debt restructuring is to increase the foreign reserves. We are negotiating to restructure our foreign debt because our capacity and foreign exchange reserves are insufficient to make the debt repayments as they occur. Otherwise, there would have been no need for foreign debt restructuring,” he emphasized.
The Governor went on to say that a loan extension agreement with foreign creditors would help Sri Lanka to re-commence payments of the suspended foreign loans at a feasible level while accumulating foreign reserves.
“We hope to negotiate a maximum forex debt service target of 4.5% of GDP in 2027-2032 as the Finance Ministry has envisaged in its report ‘Debt service payments as a percentage of GDP’. Currently, this ratio is 9.4%. So we are asking to reduce it by a half. Thus if we can bring down foreign loan repayments of USD 6 billion down to USD 3 billion per annum, repaying that USD 3 billion won’t be unfeasible. Discussions are in progress to achieve this,” he said.
The Governor pointed out that Sri Lanka has consistently honoured repayment of loans obtained from the World Bank and the Asian Development Bank, and as foreign reserves position is getting better the country has started repaying loans taken from Bangladesh as well.
“Amid these positive developments, we are negotiating to extend the period of foreign debt in a manner the repayments are able to be sustained. That is why we are discussing a grace period, reduction of interest costs or a haircut in this regard. Once our foreign debt is restructured, new loans would flow in from the World Bank and the ADB, in addition to the assistance from the IMF. Further, Japan will start its projects and those loans will come in too. Receipts from Tourism and Exports with which we have managed so far are also there. So, in my view, re-commencing to pay foreign debt won’t have a big impact on the foreign reserves level as some have feared,” he said.
“This issue feared in some quarters is either without awareness or for some other reason would arise only if foreign reserves begin to dip after we have begun to repay foreign debt. The programme in 2027-2032 to manage our foreign currency debt liabilities at 4.5% of GDP should help us build our foreign reserves to 10 USD billion from its 3 billion. So, foreign debt restructuring will bring us two-fold relief. One is reducing the burden of foreign loan repayments and at the same time being able to accumulate our foreign reserves to make the economy stronger,” the Governor elucidated.
Restoring public debt sustainability is one of the key objectives of Sri Lanka’s IMF Program which requires policy actions and comprehensive debt treatment. There are several key pillars of Sri Lanka’s USD 3 bn IMF programme approved on 20 March 2023. They are namely: revenue-based fiscal consolidation, fiscal structural reforms, protect the poor and vulnerable, restore price stability and rebuild external buffers, safeguard financial system stability, growth-enhancing reforms, and last but not least, reducing corruption vulnerabilities.
The Delegation of German Industry and Commerce in Sri Lanka (AHK Sri Lanka) proudly facilitated the first-ever Sri Lankan delegation’s participation at Drupa 2024, the world’s largest trade fair for the printing industry and technology. Held after an eight-year hiatus, Drupa 2024 was a landmark event, marking significant advancements and opportunities in the global printing industry.
AHK Sri Lanka played a pivotal role in organising and supporting the delegation, which comprised 17 members from the Sri Lanka Association for Printers (SLAP), representing eight companies from the commercial, newspaper, stationery printing, and packaging industries. This pioneering effort by AHK Sri Lanka not only showcased the diverse capabilities of Sri Lanka’s printing sector but also facilitated vital bilateral discussions with key stakeholders from the German printing industry.
Business
Unveiling Ayugiri: Browns Hotels & Resorts sets the stage for a new era in luxury Ayurveda Wellness
In a captivating reimagining of luxury wellness tourism, Browns Hotels & Resorts proudly unveiled the exquisite Ayugiri Ayurveda Wellness Resort Sigiriya. This momentous occasion, celebrated amidst a vibrant and serene grand opening on the 6th of June, heralds a new chapter in the Ayurveda wellness tourism landscape in Sri Lanka. Nestled amidst 54 acres of unspoiled natural splendour, Ayugiri features 22 exclusive suites and stands out as the only luxury Ayurveda wellness resort in the country offering plunge pools in every room, rendering it truly one-of-a-kind.
The grand opening of Ayugiri Ayurveda Wellness Resort was an enchanting event, where guests were captivated by the melodies of flutists and violinists resonating through Sigiriya’s lush landscapes. As traditional drummers and dancers infused the air with vibrant energy, Browns Hotels & Resorts’ CEO, Eksath Wijeratne, Kotaro Katsuki, Acting Ambassador for the Embassy of Japan and General Manager, Buwaneka Bandara, unveiled the resort’s new logo, marking a significant moment witnessed by distinguished guests from the French Embassy, Ayurveda and wellness enthusiasts along with officials from the Sigiriya area, LOLC Holdings and Browns Group.
“Our strategic expansion into wellness tourism with Ayugiri Ayurveda Wellness Resort Sigiriya symbolises a significant milestone for Browns Hotels & Resorts. Wellness tourism has consistently outperformed the overall tourism industry for over a decade, reflecting a growing global interest in travel that goes beyond leisure to offer rejuvenation and holistic well-being. By integrating the timeless wisdom of Ayurveda with modern luxury, we aim to set a new standard in luxury wellness tourism in Sri Lanka. Whether your goal is prevention, healing, or a deeper connection to inner harmony, Ayugiri offers a sanctuary for holistic well-being” stated Eksath Wijeratne.
Ayugiri encapsulates the essence of life, inspired by the lotus flower held by the graceful queens of the infamous Sigiriya frescoes. Just as the lotus emerges from the murky depths, untainted and serene,
Ayugiri invites guests on a journey of purity and rejuvenation, harmonised with a balance of mind, body and spirit, the essence of nature, echoes of culture and the wisdom of ancient Ayurvedic healing.
HNB General Insurance, one of Sri Lanka’s leading general insurance providers, has been honored as the Best General Bancassurance Provider in Sri Lanka 2024 by the prestigious Global Banking and Finance Review – UK.
The esteemed accolade underscores HNB General Insurance’s unwavering commitment to excellence and its outstanding performance in the field of bancassurance. Through dedication and hard work, the HNB General Insurance team has continuously endeavored to deliver innovative insurance solutions, cultivate strong relationships with banking partners, and provide unparalleled service to customers nationwide. This recognition is a testament to the team’s dedication and relentless pursuit of excellence in the bancassurance business.
“We are honored to receive this prestigious award, which reflects our team’s tireless efforts and dedication to delivering value-added insurance solutions and exceptional service through our bancassurance partnerships,” said Sithumina Jayasundara, CEO of HNB General Insurance. “This recognition reaffirms our position as a trusted insurance provider in Sri Lanka and motivates us to continue striving for excellence in serving our customers and communities.”
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