SRI LANKA UPDATE | 06 – 12 OCTOBER 2023
The Economy:
Sri Lanka and the Exim Bank of China agree on key principles to restructure USD 4.2 billion in loans – The Treasury Secretary announced a landmark agreement on debt treatment in principle, with China, Sri Lanka’s single largest creditor. The agreement marks a significant turning point in Sri Lanka’s continuous initiatives to support its economic recovery. In the coming weeks, Sri Lanka and Exim Bank will actively work on formalizing and implementing the agreed parameters of the debt treatment. Sri Lanka also has another USD 535 million in loans from China Development Bank classified as bilateral debt and USD 2,185 million classified as commercial debt.
India extends new funding, inks G2G agreement to boost economy – The Indian Government reaffirms commitment to advance Sri Lanka’s development goals with the distribution of extra funding for nine ongoing projects supported by the Government of India. This cooperation which seeks to advance the progress of Sri Lanka’s dairy sector, is a result of President Ranil Wickremesinghe’s official visit to India and the provision of financing for the modernization of Sri Lanka’s livestock sector.
Workers’ remittances marginally decrease in September 2023 – When compared to August 2023, worker remittances to Sri Lanka decreased marginally in September 2023 with inflows at USD 499.2 million in August and USD 482.4 million in September. The total amount for January through September 2023, however increased to USD 4,345.1 million with a growth of 68.8 per cent compared to the same period last year.
Tourism earnings soar to 1.5 b by end of 3Q – The tourism industry posted a significant revenue of approximately USD 1.5 billion in the first nine months of 2023 with a substantial number 1.01 million arrivals. According to the most recent figures from the Central Bank of Sri Lanka (CBSL), tourism revenue showed a 67 per cent increase from the same period the previous year. Earnings for September totalled USD 152.2 million, a 28 per cent decrease from August. This decrease is due to September arrivals falling short of its monthly target. In a month-to-month comparison, despite July exceeding expectations with an income of USD 219 million making it the most lucrative month in history, both August and September fell short of its monthly arrivals target.
Politics & Policy:
Government issues Gazette lifting import restrictions, excluding vehicles – In an Extraordinary Gazette, the Government lifted all import restrictions with the exception of the importation of motor vehicles. The notification states that in order to ensure the efficient application of these rules, the Controller General of Imports and Exports would provide “Operational Instructions” to the Customs Director General, licensed banks and any other pertinent authorities. It further states that the Imports and Exports Controller General shall have the final say in any disputes relating to these regulations.
Government appoints international consultant to restructure Sri Lankan Airlines – The Minister of Ports, Shipping and Aviation announced that the Government has hired a renowned highly experienced international consultant to assist Sri Lankan Airlines’ restructuring efforts. To maintain transparency, the consultant’s appointment has been verified. He further stated that with active measures being taken to speed up the restructuring, predicted advantages should start to materialize by February 2024. The restructuring plan had recently received Cabinet approval and cooperative talks with the World Bank had also been held to accelerate the process.
President unveils 10-year blueprint for comprehensive development in Eastern Province – An ambitious 10-year plan launched by President Wickremesinghe focuses on developing Trincomalee and expanding agriculture and tourism in the Eastern Province. He emphasized strategies for utilizing the previously untapped agricultural capacity of the Mahaweli A and B zones in the Batticaloa region, which had been disregarded by Mahaweli initiatives. A comprehensive tourist strategy will cover Nilaweli and Panama, while the Mahaweli A and B regions will be the catalyst to establishing a contemporary agricultural sector.
Port City Colombo (PCC) to become a major economic hub in the region – The recently concluded Road Show in the UAE to promote the Port City Colombo attracted a number of foreign investors to the commercial and investment prospects. Former British Prime Minister David Cameron offered his sharp observations on the Port City Colombo and other special economic zones.
Malaysia to support Sri Lanka’s entry into Regional Comprehensive Economic Partnership (RCEP) – The Malaysian Minister of Foreign Affairs pledged to fully support Sri Lanka in its bid for entry into the RCEP. The Prime Minister of Sri Lanka stated that Sri Lanka’s participation in RCEP would improve the country’s economic connectivity within the larger South East Asian region. The Prime Minister reaffirmed the government’s alignment with ASEAN’s future vision for the Indo-Pacific region and they both placed specific emphasis on working together in regional organizations like the Indian Ocean Rim Association to advance trade and investment cooperation.
Disclaimer – This advisory is intended for circulation among JAAF stakeholders only. Please do not circulate or share on social media.
This Advisory, written for our partners interested in developments in Sri Lanka against the backdrop of the current crisis, is an update on the one issued last week. This document summaries developments covering significant political and economic events. The Advisory includes economic, political, social and governance perspectives. It draws on news reports, analyses, Government announcements and documents, and from other sources that we may be in contact with or have access to.
This Advisory was prepared by the Strategic Communications Unit of Adfactors PR Lanka. For inquiries, contact pumudika.amarasekara@adfactorspr.com