Displaying items by tag: Japan commends Sri Lanka’s economic advancements following crisis

Strategically placed SL's economic recovery is essential for stability in the Indo-Pacific region, Japanese Foreign Minister Yoko Kamikawa said Saturday, urging Colombo to swiftly restructure its foreign debt. After talks with her SL counterpart, Ali Sabry, Kamikawa said that Colombo should secure agreements with bilateral lenders and international sovereign bondholders to unlock suspended foreign funding The International Monetary Fund says that achieving the IMF-supported program’s objectives is a key priority to give Sri Lanka a chance to emerge from one of the worst crises in its history. A statement from an IMF spokesperson said that Sri Lanka’s path remains on knife edge. China assured its fullest support and cooperation to conclude the debt restructuring process in Sri Lanka, State Minister of Finance Shehan Semasinghe said. He said he had a productive meeting with the Vice Minister of Finance of China, Liao Min during the ADB annual meeting in Tbilisi, Georgia. Foreign debt restructuring is vital to ensure the continuation of the IMF programme, financial stability and growth. Furthermore, the repayment conditions of the foreign debt have to be less onerous for the country to repay its debt obligations. The reduction of the foreign debt and a longer repayment period are imperative. In the current foreign reserve position of US$ 3.5 billion, a foreign debt repayment of US$ 4 billion that was mentioned earlier is not feasible. This is so even if foreign reserves increase to US$ 5 billion by the end of the year. Therefore, a more favourable restructuring of the foreign debt is of utmost importance. Highlights in Parliament inaccuracies in variables used to determine proposed haircut for bondholders, urging for revision to ensure fair outcome Asserts need for economic policies that prioritise domestic industries, sustainable growth, rather than blindly following IMF directives Proposes abolishing 30% tax on export companies under SJB Govt. to empower local entrepreneurs, facilitate greater access to global markets Advocates for reforms that consider impact on households, while also addressing concerns about mounting debt burden Main Opposition SJB MP Dr. Harsha de Silva yesterday in Parliament delivered a stern warning regarding the proposed external debt restructuring plan, emphasising the potential pitfalls and urging against signing the agreement in its current form. Speaking out against the restructuring proposal put forth in April, he highlighted critical flaws in the plan. De Silva pointed out that the proposed haircut for bondholders, set to be implemented in first quarter of 2028 is fundamentally flawed and based on incorrect variables, whilst cautioning against measuring GDP in dollars, arguing that such an approach is erroneous and would lead to unfavourable outcomes. “Signing the proposed agreement without addressing these flaws would be a grave mistake. It would amount to a betrayal of the country’s interests,” he asserted. MP Dr. de Silva who is also Chairman of parliamentary oversight body the Committee on Public Finance (COPF) stressed the need for substantial changes to the variables governing the debt restructuring plan, advocating for a haircut of at least 30% for bondholders. He warned against succumbing to all the directives of the International Monetary Fund (IMF), stressing the importance of charting an independent course for economic recovery. He warned the Government not to dance to the whims and fancies of advisors Clifford Chance and Lazard. “In this agreement, we must prioritise policies that boost domestic industries particularly those Dollar generating firms and foster sustainable growth,” he added. Proposing significant reforms, Dr. de Silva outlined plans under a SJB Government to abolish the 30% tax on merchandise export companies, thereby providing local entrepreneurs with greater access to global markets. He underscored the importance of connecting with diverse economies including India which has seen rapid economic growth. economy collapsed,” he claimed, underscoring the need for careful economic management. Addressing recent claims about loans, Dr. de Silva clarified that the $ 12 billion borrowed in 2019 was primarily used to service interest payments on debt acquired during the Mahinda Rajapaksa regime in 2014. SJB MP also cautioned that reforms must be implemented judiciously, taking into account their impact on households and vulnerable populations. He also addressed concerns about the mounting debt burden, clarifying that loans acquired in the previous year were primarily used to service interest payments on debts accrued during the previous administration.