‘To obtain IMF assistance, govt. must address bribery and corruption on urgent basis’

By Hiran H.Senewiratne

The government should address the issues of bribery, corruption and mismanagement by way of new legislation without delay to obtain IMF assistance, Head of Sales at Softlogic Holdings Eardley Kern said.

“We are not purely dependent on IMF funds but the most important thing is IMF endorsement, which gives an indication to the external world that Sri Lanka is on the correct course when implementing proper governance issues. Therefore, it is strategically important for the government to meet those requirements, Kern told The Island Financial Review.

Kern added that since the stock market is an important barometer on the economy, IMF endorsement is absolutely necessary to attract foreign investors to the stock market. ‘Huge selling pressure and an exodus of foreign investors from the stock market will be inevitable if the government fails to implement good governance, he said.

Yesterday CSE investor sentiment slightly improved but both indices showed a downward trend. The All- Share Price Index went down by 120.9 points and S and P SL20 declined by 37.62 points. Turnover stood at Rs 854 million without any crossings.

In the retail market top seven companies that mainly contributed to the turnover were; JKH Rs 284 million (1.4 million shares traded), Capital Alliance Rs 85.7 million (1.2 million shares traded), Distilleries Rs 27.8 million (1 million shares traded), Expolanka Holdings Rs 22.8 million (172,000 shares traded), First Capital Holdings Rs 22.8 million (502,000 shares traded), Hayleys Fabrics Rs 19.9 million (451,000 shares traded) and Hayleys PLC Rs 19.6 million (218,000 shares traded). During the day 29.7 million share volumes changed hands in 11000 transactions.

Huge selling pressure was noted in primary dealer companies, including Capital Alliance and First Capital Holdings. The reason for the stock market to come down yesterday was because investors are expecting the Central Bank to implement a hawkish monetary policy stance and maintain the status quo.

It is said that Sri Lanka’s major creditors, such as Japan, India and France, are likely to reach broad agreement this month on debt reduction steps, including extending repayments, foreign media reported.

Sri Lanka has held multiple rounds of talks with bondholders and bilateral creditors, including Japan, China and India, on reworking its foreign debt after suspending repayments in May last year.

A group of Sri Lanka’s major creditors, including the United States, Japan and India, want to sign a memorandum of understanding with the country around the time of the International Monetary Fund and World Bank meetings later this month in Morocco. The only stumbling block is that China is foot- dragging due to geo-political issues, which has negatively impacted Sri Lanka and other countries, market analysts said.

Yesterday, the rupee opened at Rs 323.90/324.10 to the US dollar, after closing on the previous day at Rs 324.00/324.25 to the US dollar, dealers said.

Two bonds were actively trading. A bond maturing on 01.08.2026 was quoted stable at 15.60/75 percent on Tuesday. A bond maturing on 01.05.2028 was quoted at 14.50/80 percent after closing on Monday at 14.45/70 percent.