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Economic stabilization process advancing under new govt.

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A press briefing on the economic stabilization process and the proposed relief packages for the public was held today (Dec. 26) at the Presidential Media Center (PMC).

Minister of Labor and Deputy Minister of Economic Development, Dr. Anil Jayantha Fernando, along with Deputy Minister of Finance and Planning, Dr. Harshana Suriyapperuma, attended in the briefing.

The media statement released by the PMD during the press briefing is as follows:

1. Economic Stabilization

Economic stabilization is key to take the country out of abyss created by past regimes.  At the time the government assumed office those who are responsible for the crisis had unilaterally suspended external debt servicing in April 2022, entered into IMF program for Extended fund facility (EFF) of approximately USD 3 billion over a period of 4 years to be received in 8 installments, and paddled through the IMF program and debt restructuring process connected to in in line with debt sustainability analysis connected to it. The delayed and complex nature of the debt restructuring process incurred additional costs to the country and created additional burdens on the people. However after, considering both pros and cons of the context prevailed at that time in terms of social, political and economic perspective, the government proceeded with the options in the best interest of the people of the country.

Accordingly, it was possible to reach the staff-level agreement of the third review on 26th November 2024, in line with the program parameters, and government revenue measures   with appropriate engagement, and timely facilitation. In the lead-up to the board approval from the IMF, the government is engaging with necessary stakeholders to obtain the next tranche of the EFF.Debt Restructuring
It consists of both domestic and external restructuring. Domestic debt restructuring was completed in July 2023. External restructuring excludes multilateral creditors on various ground and arguments. The rest consists of official bilateral debt and private ISB holders.  

Bilateral Debt

The bilateral debt is delt with the Official Creditor Committee (OCC) co-chaired by France, India and Japan representing 17 countries, China Exim Bank, China Development bank, other official creditors (Kuwait, Saudi Arabia, Iran and Pakistan) and other commercial creditors.

OCC had agreed to the terms and conditions in June 2024 and the loans with China Exim bank had already been restructured in October 2023 within the agreed framework, ensuring comparability of treatment (CoT). Except the other official creditors (Kuwait, Saudi Arabia, Iran and Pakistan) accounting roughly USD 300 million representing about 1% total external debt subject restructuring , all other bilateral creditors have already agreed for restructuring  within the agreed framework.ISB Creditors

Much delayed ISB restructuring had passed several stages of negotiations with agreements, disagreements, changes to proposals, adjustments in line with DSA and IMF consents, had finally agreed in principle (AIP) on 19 September 2024 just two days prior to the presidential election. Ad Hoc Group (AHG) and Local banking consortium represent ISBs which account for USD 14.2 billion including a past due interest of USD 1.7 billion.

By prioritizing and facilitating actions in a timely manner, the new government has demonstrated a strong political commitment to steering the country toward economic stability. These efforts toward financial stability have been independently acknowledged by third parties, including rating agencies which have upgraded the ratings by several notches, which was only possible due to the correct prioritization and implementation of economic stabilization measures. Hence, the government continued with the restructuring process and facilitated it to ensure the successful completion of the issuance of new bonds for the exchange of existing ones on 20th December 2024 in order to achieve the critical objective of stabilizing the economy in pursue of navigating the country with the growth and development trajectory towards a thriving nation and beautiful life.

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2. SME Sector Facilitation2.a.1. Parate Extension

Instead of merely postponing the Parate execution date, the government engaged with stakeholder groups to ensure acceptable solutions was found for this long-standing issue. As a result, the Parate execution has now been extended until 31st March 2025.2.a.2. Relief Package

The relief for businesses is not only in the form of an extension of time. Based on data provided by the Central Bank, 99% of borrowers with outstanding capital of less than 25 million rupees in restructured loans have been granted a 12-month extension to renegotiate with banks and agree on a settlement path. Borrowers with debts between 25,000,000 and 50,000,000 rupees have been granted a 9-month extension, while all other borrowers are entitled to a 6-month extension. This relief package, proposed by the government and to beimplemented through the Central Bank, also includes several other important measures, such as easing the credit rating status, extending the repayment period, offering low interest rates for restructured debt, and providing a transparent mechanism to resolve valuation disputes.

This package aims to ensure that the SME sector can actively contribute to the economy.

2.b. School Stationery Assistance for School Children2.b.1. Children in the Aswesuma Families

To ease the burden on parents from vulnerable groups in society, Rs. 6,000 per child has been allocated to purchase essential school books and stationery for the upcoming school term. Children from Aswesuma recipient families will begin receiving this benefit shortly.2.b.2. Children Not Receiving Aswesuma
Children from families who are not currently receiving Aswesuma but are facing economic hardship will also be provided with this benefit, based on recommendations from the Ministry of Education. It is expected that the process will be finalized soon, and the disbursement scheme will start within a few days, ensuring that all deserving children facing economic hardship receive assistance.

(President’s Media Division)

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Fuel prices upped

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The Ceylon Petroleum Corporation (CPC) has announced a revision of fuel prices, effective from midnight today (June 30).

The price of Petrol 92 Octane has been increased by Rs. 12 to Rs. 305 per litre, while the price of Kerosene has been increased by Rs. 07 to Rs. 185 per litre. The price of Auto Diesel has also been increased by Rs. 15, bringing it to Rs. 289 per litre.

However, the prices of Petrol 95 Octane and Super Diesel remain unchanged, according to Ceypetco.

The new fuel prices are as follows:

• Petrol Octane 92 – Rs. 305 (increased by Rs. 12)
• Auto Diesel – Rs. 289 (increased by Rs. 15)
• Kerosene – Rs. 185 (increased by Rs. 7)
• Petrol Octane 95 – Rs. 341 (not revised)
• Super Diesel – Rs. 325 (not revised)

Meanwhile, Lanka IOC has also revised retail fuel prices to match Ceypetco prices.

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“Sri Lanka, only Asian country currently holding talks to revise Trumps’ tariffs”

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Sri Lanka is the only country in the Asia region currently holding discussions with officials in the United States to revise the tariffs introduced by US President Donald Trump earlier this year, according to Minister of Labour and Deputy Minister of Economic Development Prof. Anil Jayantha Fernando.

Joining the Parliamentary debate today (30), where MPs are debating the fiscal strategy statement of the government, the Deputy Minister of Economic Development stated that they are hopeful the government will be able get a better deal from the US regarding the 44% tariff imposed earlier this year.

A Sri Lankan delegation last month held discussions in Washington, D.C., focusing on tariff-related matters, following an invitation extended by the Office of the United States Trade Representative (USTR).

The reciprocal tariffs imposed by United States President Donald Trump has been paused for 90 days at present.

Deputy Minister of Economic Development Prof. Anil Jayantha Fernando in Parliament stated that the government will take all steps within their powers to reduce the tariffs imposed by the US which will have a major bearing on many local industries.

The Deputy Minister while the government is taking such important steps to safeguard local companies, the opposition is only focused on jeopardizing the work of the present administration

(adaderana.lk)

(Except for the headline, this story, originally published by adaderana.lk has not been edited by SLM staff)

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Indian officials extend US visit to iron out trade deal, sources say

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Officials from India will extend their Washington visit to try to reach agreement on a trade deal with U.S. President Donald Trump’s administration and address lingering concerns on both sides, two Indian government sources said on Monday.

Trade talks between India and the U.S. have hit roadblocks over disagreements on import duties for auto components, steel, and farm goods, ahead of Trump’s July 9 deadline to impose reciprocal tariffs.

The Indian delegation had been expected to conclude discussions by last Friday, but was staying on until at least Monday evening to iron out differences and move towards an agreement, officials said, declining to be named as the discussions are private.

“There are certain disagreements over opening up the agriculture and dairy sectors, though India has offered tariff concessions on 90% of tariff lines. A final call will be taken by the political leadership of the two countries,” one of the government sources said.

“The Indian delegation could stay for another one to two days if discussions continue,” the second source said.

India’s commerce ministry and the U.S. Trade Representative Office did not immediately respond to requests for comment.

Agriculture and dairy are “big red lines” for India in its ongoing trade negotiations with the U.S., Finance Minister Nirmala Sitharaman told the Financial Express newspaper in an interview published on Monday.

“Yes, I’d love to have an agreement, a big, good, beautiful one; why not?” Sitharaman said, adding that an early conclusion of the trade deal would serve India better.

Trump said last week that America was going to have a “very big” trade deal with India, but gave no details.

(Reuters)

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