Central Bank of Sri Lanka Ministry of Finance, Economic Stabilization & National Policies Investor Presentation – 23 September 2022
From Aubrey Joakim re: Central Bank of Sri Lanka Ministry of Finance, Economic Stabilization & National Policies Investor Presentation – 23 September 2022
A presentation was made to creditors – both local and overseas – by the Governor of the Central Bank and the Secretary to the Treasury. I urge you all to have a look at it. It is attached to this email or you can access it via thefollowing link:
https://www.treasury.gov.lk/api/file/3816b192-2bd9-4587-9c69-53e54a3394de
I am sure for those of you who have some economic and/or financial acumen you will get a good understanding of the situation. this is the first time that I have seen the real details and extent of the debt both foreign and local. Page 16 & 17 provide the staggering picture of a total debt of USD of 80.5 Billion.
The presentation was made in order to pressure the debtors to grant relief such that a sustainable debt position can be reached in order to unlock the tentative USD 2.9 Billion IMF grant.- which is merely 4% of the current debt level. Remember, the IMF grant is NOT a means of relieving the country’s debt burden at all. It is only a bit of a kick along to get the economy going. Ultimately the country MUST self- generate funds to settle the borrowings. In my opinion that will take a very long time. Two decades is an understatement, taking into consideration that the existing debt is also accumulating interest.
Also in my opinion the presentation has been sugar-coated in order to influence the creditors. Slides 12 and 13 provide an indication of what
policies and actions will need to be taken in order to restore economic stability and growth – the fundamental requirement to get buy-in from the creditors. There are huge political ramifications for whichever government is in charge to sell it to the public. This is why the future political stability is very doubtful.
I also realise that many in this group would have been quite upbeat with the IMF staff level agreement seeming to be a success. I am not so sure. Slides 22, 23 and 24 paint a bleak picture. The creditor negotiations are at best expected to take till end November to allow for the IMF managemnt approval in December. Reaching agreement with the creditors and IMP will be Q2 of 2023 and only then if at all will any of the 2.9B USD IMPA grant be available. These are best case scenarios.
I did not hear the actual presentation but have been able to access and interpret it.
In my view only the Sri Lankans themselves can dig themselves out of this hole. No amount of paltry diaspora initiatives will help. It is like
trying to empty the ocean with a thimble. Of course this is not to say that family and friends back home should not be individually supported.
I hope that this has given you all some perspective and I would welcome your comments.
Aubrey
