By:Staff WriterColombo (LNW):Sri Lanka is now gearing up to adopt a new path towards a competitive, open, green, and digital economy that is socially just, especially focused on the export market, and built for the benefit of today’s youth and children.
To achieve this goal, the country must break away from the old political system and embrace change.
Sri Lankan fiscal and monetary authorities have just started discussions with the bilateral creditors on debt restructuring of US$ 7.1 billion out of the total $25.9 billion owed to external creditors.
It is now holding debt restructuring talks with Paris Club members together with India, while discussing with China separately.
Three baseline restructuring scenarios” with six-year maturity extension for all of them and nominal haircuts ranging from 15 per cent to 30 per cent, with higher coupons corresponding to lower haircuts have already been proposed reliable official sources said.
Each of the three baseline scenarios also implies roughly equal net present value relief of 23-28 per cent at the IMF’s preferred 5 per cent discount rate.
Sri Lanka indebted $7.1 billion to bilateral creditors, according to official government data, with $3 billion owed to China, $2.4 billion to the Paris Club and $1.6 billion to India
In a latest progressive move, the government has decided to appoint five youth representatives to both the Selection Committees and Monitoring Committees of the Parliament, which will be completed by May.
Additionally, the government will present the Jana Sabha draft bill to the Parliament, following former Speaker Karu Jayasuriya’s proposal.
To make this objectives a reality everyone should be united and work together towards building a new, competitive, and sustainable economy that is inclusive and just for all communities in Sri Lanka.
As the government strive towards this common goal, the opposition parties in parliament should extend the support to ruling party’s progressive measures without jumping up against every proposals frequently barking at each and everything making use of parliamentary privileges wasting valuable time of the legislature.
The uncertain political situation and heightened fiscal, external, and financial sector imbalances pose significant impact for the outlook.
Growth prospects depend on debt restructuring and growth enhancing structural reforms. At the same time, fiscal consolidation will likely dampen these prospects, with the fiscal deficit expected to gradually fall over the medium-term.
Inflation is projected to come down from a high base as monetization of fiscal deficits is reined in. The current account deficit is expected to decline due to import compression, despite decelerating exports as result of weak global demand.
Additional resources will be needed in 2023 and beyond to close the external financing gap
As per the latest economic indicator report of the Central Bank Headline inflation, as measured by the year-on-year (Y-o-Y) change in the Colombo Consumer Price Index (CCPI, 2021=100) decreased to 35.3% in April 2023 from 50.3% in March 2023.
The lower level of realized inflation compared to the projections made, was mainly due to higher than expected price decreases observed in Volatile Food and Non-Food items
At the time of changing administration, the inflation rate was at 70 percent. By the end of last month, it had decreased to 50 percent and nw35 percent while the government aims to bring it down to single digits by the end of this year.
The foreign reserves, which were previously zero, now stand at US$1.3 million, and commodity prices are decreasing.
The cost of living is still way too high, but the rate of inflation appears to have been declining. But Consumer prices were soaring at unbearable levels. At almost any other point in the past 40 years, that would be alarmingly high.
But the inflation seems to be a significant cool down to 35.3% in April 2023 from 50.3% in March 2023. It’s also the lowest inflation rate in nearly a year. If this trend continues, it could significantly lower the risk of a recession.
The No. 1 headache, the cost of living for consumers for much of this year has eased considerably as the fuel and gas prices have now been slashed bringing expectations among the people of impending the ease of skyrocketing of essential commodity prices.
Fuel prices of the CPC revised with effect from midnight on Sunday 30 in April. A litre of 92 Octane Petrol reduced by Rs.7 to Rs.333, 95 Octane Petrol reduced by Rs.10 to Rs.365, Diesel by Rs.15 to Rs.310 and Super Diesel by Rs.135 to Rs.330
Price of a Litro LP Gas 12.5kg cylinder reduced by Rs.100 with effect from midnight on Wednesday 03 and the new price will be Rs.3,638.5kg cylinder reduced by Rs.40 and the new price Rs.1,462;2.3kg cylinder reduced by Rs.19 and the new price will be Rs.681.
‘Several inherent weaknesses’ and ‘policy lapses’ of the previous regime have triggered the severe economic problems that engulfed Sri Lanka, the country’s central bank said in its annual report released recently.