SRI LANKA UPDATE | 13 – 19 OCTOBER 2023
The Economy:
Next tranche of IMF EFF close, currently bondholder terms being weighed – According to the State Minister of Finance, Sri Lanka is nearing a crucial staff-level agreement with the IMF to receive funds and is also evaluating debt restructuring arrangements from international holders of its dollar bonds. The Minister told Bloomberg there are discussions about improving revenue generation methods and is optimistic that a staff level agreement will be reached soon. Sri Lanka has pushed for agreement on terms for restructuring debt owing to China, India, the Paris Club and foreign investors.
Experts urge IMF to insist on governance reforms in Sri Lanka and reset debt targets – Experts speaking at a closed-door event hosted in conjunction with the IMF Annual Meetings in Morocco stated the IMF must insist on governance improvements in Sri Lanka, highlighting that the current IMF programme could set Sri Lanka up for another default. There is a necessity for a re- evaluation of the IMF’s strategy towards Sri Lanka, particularly on external debt restructuring targets, by contrasting the various sustainability models and targets set for nations like Zambia.
Manufacturing sector suffers setback in September – In September 2023, the Purchasing Managers Indices (PMI) reported an index value of 45.7, indicating a decline in manufacturing activity. The decrease in New Orders and Production was mainly driven by the manufacture of food & beverages and textiles & wearing apparel sectors. Many manufacturers highlighted the challenging business conditions due to the lacklustre consumer demand and the increased availability of imported goods in the market at competitive prices.
USD 1.56 billion Cooperation Agreement signed for Phase 2 of Colombo Port City – The Port City Economic Commission, China Harbour Engineering Company, Browns Investments and Hunan Construction Investment Group inked the Cooperation Framework Agreement for USD 1.56 billion for Phase 2 of the Colombo Port City project. The Agreement covers the development of the Marina Project, Marina Hotel Project and the Colombo International Financial Centre Mixed Development Project. The investment infused into the International Financial Center is envisaged at USD 500 million.
Sri Lanka to introduce pension scheme for the self-employed – The Government would change the Sri Lanka Social Security Board Act to add a contributing pension programme for independent contractors. The State Minister for Social Empowerment presented the proposal to change the Act and create the programme in coordination with the Labour Ministry.
Politics & Policy:
Online Safety Bill to be amended – The Attorney General notified the Supreme Court that the Government had decided to change a number of provisions in the Online Safety Bill. When petitions contesting the legislation were taken up in court, the Additional Solicitor General, speaking on behalf of the Attorney General, informed the Supreme Court that the pertinent revisions are consequently scheduled to be offered to the Parliament at the Committee Stage.
The Online Safety Bill, which was published in the Government Gazette on September 18, aims to stifle the funding and other support of the communication of false statements as well as other related issues. It also prohibits the use of online accounts, both real and fake, for the use of prohibited activities.
President appoints Commission to recommend changes to election laws – President Ranil Wickremesinghe has established a Commission of inquiry to analyse rules and laws governing elections and provide recommendations for improvements. The Commission has the responsibility of reviewing all current election rules and regulations and formulating suggestions appropriate for the time. Increasing the representation of women and young people, introducing electronic voting utilizing current technology to replace paper ballots and providing facilities for Sri Lankans living abroad are some of the factors that need special consideration.
Vietnam attaches importance to fostering traditional relations with Sri Lanka – President Vo Van Thuong informed President Wickremesinghe that in order to elevate bilateral relations, Vietnam places a high priority on preserving its longstanding friendship and comprehensive collaboration with Sri Lanka. During a meeting he had with President Wickremesinghe on the sidelines of the third Belt and Road Forum in Beijing, the two Presidents noted the recent improvements in Vietnam and Sri Lanka’s cooperative relations, particularly in the areas of education and training, religion and people-to-people exchanges.
Sri Lanka announces plans to establish a SL-Japan Free Trade Zone – A Japan-Sri Lanka Free Trade Zone would be established in the country, according to the Minister of State for Investment Promotion. A total of USD 1.6 billion in investments have already been made, and another USD 1.6 billion in investments are currently being planned. The Government intends to offer investors 28 project land plots, comprising 44 for public usage and 74 for commercial use. The Japanese- Sri Lankan Business Council and Japanese businesspeople interested in establishing free trade zones in Sri Lanka are also supporting efforts to construct a Japan-Sri Lanka Free Trade Zone in the Bingiriya and Iranavila regions.
Asian Development Bank (ADB) pledges support for new projects in Sri Lanka in next 5 years –
The ADB underlined satisfaction and commitment to support Sri Lanka’s visionary projects, recognising the country’s commendable and quick economic recovery following the crisis last year. The ADB Board has highlighted a favourable response to suggested initiatives concentrating on digitalization and information technology, improving public transit, human resource development and education, water management and promoting SMEs. They also complimented the government’s efforts to support vulnerable segments in society with social security.
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