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Sri Lanka’s debt negotiations stall over GDP growth projections and repayment terms – Nishan de Mel
In a recent televised interview, Nishan de Mel, the Executive Director of Verité Research, stated that holders of Sri Lanka’s International Sovereign Bonds (ISBs) have expressed concerns about specific aspects of the debt sustainability analysis conducted by the country alongside the IMF. This disagreement is one of the key hurdles in reaching an accord with them, he said.
Dr. de Mel said holders of Sri Lanka’s ISBs disagree with the IMF’s and Sri Lanka’s GDP growth projections. They believe that the potential economic growth of the country has been underestimated, he added.
He said that bondholders believed Sri Lanka had underestimated its economic growth potential, and therefore, its capacity to repay debt. “If the GDP growth potential is higher, then we can pay more. The bondholders argue that if Sri Lanka’s economy grows more than the IMF’s projections, then we should agree to pay them more,” he said. He further noted that Sri Lanka has acknowledged this possibility and has provided the bondholders with estimates of higher repayments contingent on achieving greater than projected GDP growth.
According to Dr. de Mel, while Sri Lanka has agreed to higher repayments if GDP exceeds forecasts, it has sought the flexibility to pay less if growth falls short of IMF estimates. There is currently a disagreement regarding the discrepancy between the higher payments Sri Lanka is willing to make and the amount the bondholders expect, centered around this variance in growth projections, Dr. de Mel said..
“This is natural, and we don’t need to panic,” he said.
He also said there are many challenges of forecasting, noting that the results of GDP growth projections rely heavily on the underlying theories and hypotheses used. He mentioned that the IMF had developed its GDP
projections for Sri Lanka by examining other countries that have undergone debt restructuring processes.
“However, neither Sri Lanka nor the IMF has revealed how they came up with these figures. Also, there is no one way of calculating this. If we underestimate the GDP growth, it’s good for Sri Lanka. If GDP growth is overestimated, this benefits the bond holders,” he said.
It was unlikely that IMF would delay the next tranche of the three-billion-dollar financial package due to the delay in coming to an agreement with ISB holders, he said. The main reason why there would be a delay in issuing the third tranche was that Sri Lanka had not kept many promises it has made to the IMF, he said.
The Executive Director of Verité Research said his institution had come up with novel way of debt restructuring, called Governance-Linked Bond. “We will present this to the world during a conference in Paris next month. The basic design of a Governance-Linked Bond is to have a coupon (interest rate) reduction, which is triggered when specific governance actions are achieved by a certain date.
This structure makes the bond “index eligible” (an important feature for bond-holders), as opposed to the Value Recovery Instrument, which has also been mooted in current negotiations. The same structure was recently proposed by bond-holders in a GDP-Linked rather than a Governance-Linked Bond. A good set of criteria for the Governance-Linked Bond will be that they (a) improve the probability of sustainable recovery, (b) are easily observable and verifiable, (c) have a high level of public support.”
The U.S. Embassy in Colombo welcomed the U.S. Sports Envoys to Sri Lanka, former National Basketball Association (NBA) and Women’s National Basketball Association (WNBA) players Stephen Howard and Astou Ndiaye, from June 8 through 14.
The Public Diplomacy section of the U.S. Embassy said that it would launch a weeklong basketball program intended to harness the unifying power of sports, made possible through collaboration with Foundation of Goodness and IImpact Hoop Lab.
While in Sri Lanka, Howard and Ndiaye, both retired professional basketball players, will conduct a weeklong program, Hoops for Hope: Bridging Borders through Basketball. The Sports Envoys will lead basketball clinics and exhibition matches and engage in leadership sessions in Colombo and Southern Province for youth aged 14-18 from Northern, Uva, Eastern and Western Provinces, offering skills and leadership training both on and off the court. The U.S. Envoys will also share their expertise with the Sri Lanka Basketball Federation, national coaches, and players, furthering the development of basketball in the country. Beyond the clinics, they will collaborate with Sri Lankan schoolchildren to take part in a community service project in the Colombo area.
“We are so proud to welcome Stephen and Astou as our Sports Envoys to Sri Lanka, to build on the strong people-to-people connections between the United States and Sri Lanka,” said U.S. Ambassador Julie Chung. “The lessons that will be shared by our Sports Envoys – communication, teamwork, resilience, inclusion, and conflict resolution – are essential for leadership development, community building, equality, and peace. The U.S. Sports Envoy program is a testament to our belief that sports can be a powerful tool in promoting peace and unity.”
SJB Colombo District MP Mujibur Rahuman in parliament demanded to know from the government the reasons for CEB suspending the leave of all its employees until further notice from Thursday.
MP Rahuman said that the CEB has got an acting General Manager anew and the latter yesterday morning issued a circular suspending leave of all CEB employees with immediate effect until further notice.
“We demand that Minister Kanchana Wijesekera should explain this to the House. This circular was issued while this debate on the new Electricity Amendment Bill was pending. There are many who oppose this Bill. The Minister must tell parliament the reason for the urge to cancel the leave of CEB employees,” the MP said.However, Speaker Mahinda Yapa Abeywardena prevented Minister Wijesekera responding to the query and said that the matter raised by MP Rahuman was not relevant.
The Chartered Institute of Personnel Management (CIPM) successfully concluded the 8th Annual CIPM Symposium, which took place on 31st May 2024. Themed “Nurturing the Human Element—Redefining HRM in a Rapidly Changing World,” the symposium underscored the pivotal role of human resource management (HRM) in today’s dynamic global landscape. Since its inception in 1959, CIPM has been dedicated to advancing the HR profession through education, professional development, and advocacy, solidifying its position as Sri Lanka’s leading professional body for HRM.
Ken Vijayakumar, the President of the CIPM, graced the occasion as the chief guest. The symposium commenced with the welcome address by the Chairperson, Prof. Arosha Adikaram, followed by the Web Launch of the Symposium Proceedings and Abstract Book by the CIPM President. The event featured distinguished addresses, including a speech by Chief Guest Ken Vijayakumar, President of CIPM, and an address by Guest of Honor Shakthi Ranatunga, Chief Operating Officer of MAS Holdings Pvt. Ltd., Sri Lanka.
The symposium also featured an inspiring keynote address by Prof. Mario Fernando, Professor of Management and Director of the Centre for Cross Cultural Management (CCCM) at the University of Wollongong, Australia.
Vote of Thanks of the inauguration session was delivered by Dr. Dillanjani Weeratunga, Symposium Co-chair.
The symposium served as a comprehensive platform for researchers to present their findings across a wide range of critical topics in HRM. These included Cultural Diversity and Inclusion, Talent Development and Retention, Ethical Leadership and Corporate Social Responsibility, Adapting to Technological Advancements, Mental Health and Well-being at Work, Global Workforce Challenges, Employee Empowerment, and Reskilling and Upskilling.
The plenary session was led by Prof. Wasantha Rajapakse. Certificates were awarded to the best paper presenters during the valedictory session, followed by a vote of thanks delivered by Kamani Perera, Manager of Research and Development.
The annual symposium of CIPM was a truly inclusive event, attracting a diverse audience that spanned undergraduates, graduates, working professionals, research scholars and lecturers. This widespread interest highlights the symposium’s significance in the field of HRM, offering a unique opportunity for everyone to network and learn from scholarly brains.The CIPM International Research Symposium was sponsored by Hambantota International Port, Sri Lanka Institute of Information Technology (SLIIT), E B Creasy & Co. PLC, and Print Xcel Company.
US sports envoys to Lanka to champion youth development
Rahuman questions sudden cancellation of leave of CEB employees
