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President calls for improved interaction between creditors & debtors

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President Ranil Wickremesinghe, participating in a high-level panel discussion at the Global Leaders’ Summit for a New Global Financing Pact, in Paris yesterday (22), discussed the country’s experience with debt restructuring and the need for a comprehensive approach to address the challenges faced by middle-income nations. 

He said Sri Lanka faced limited access to financing and took ownership of its debt and economic restructuring program. The president emphasized the need for timely and automatic access to concessional financing and highlighted the high costs incurred during the process. He also called for improved interaction between creditors and debtors and suggested a new approach to address geopolitical issues. 

President Wickremesinghe emphasized the urgency of restructuring to avoid instability and advocated for a separate process for middle-income countries to address their unique challenges.

He expresses gratitude for the IMF’s intervention and Sri Lanka’s coordination, which allowed dealing with both creditor groups. Ongoing negotiations with Japan, India, and China regarding trade integration and development programs also aided the process. However, President Wickremesinghe highlights the need for improved interaction between the committee and debtors during the restructuring process, suggesting that a new approach is necessary.

Following is an excerpt of the question posed by the Moderator First Deputy Prime Minister of Spain Nadia Calvino at the panel discussion and the response by President Wickremesinghe;

Q. So President Wickremesinghe, you are in a somewhat special situation. We move now into a middle-income country. The coordination challenges are maybe greater in the sense that you are not subject to the common framework, which is heard that it was an important instrument in the case of Chad. The official creditor committee has been formed with Paris Club and non-Paris Club members and we understand that India’s decision to participate and co-chair these creditors gathering is a major milestone. So what is your view about the restructuring process and what do you consider to be the main bottlenecks? We have already heard from the President of Chad that we need to reduce bureaucracy and we all agree on that. Simplification is sometimes the most complex thing to achieve. But, we are very interested to hear your experience in this regard. 
A. When Sri Lanka was declared bankrupt as a middle-income country, we were not eligible under the common framework for debt restructuring. We had limited access to concessionary financing and there was a complete loss of external financing. Therefore, Sri Lanka’s response was to take ownership of this program, both for debt restructuring as well as the economic restructuring needed for growth. Then we negotiated our conditionality with the IMF and the creditors. 

So, it’s like we were working on a menu, the argument of what are the items that should get on and what are the items that could be taken off. I think we had an agreement actually to about 90% of the items. So, we own it as much as the IMF is. Of course, we had two exceptional situations.

One is that India came to our help and that was nearly four billion US dollars available when no other source of funding was available. Secondly, through the World Bank and the ADB, we went through the process of reverse graduation.

So the gain became entitled to concessionary funding. But from the time we declared ourselves bankrupt, there was a delay in bureaucracy on both sides. We delayed and if we had funding by May, the upheavals of July could have been avoided.

But anyway, we had the upheavals of July. We went in immediately as it settled down. By September, we had a staff-level agreement, but it took us another six months for the agreement to come before we got any monetary assistance.

So, we undertook significant economic reform that imposed pain on the population but without any predictability. Now, this is the problem we have. I would say given the increasing vulnerabilities facing middle-income nations, MIC’s access to concessional financing must be viewed from a broader perspective. That is access to an automatic and timely, under an agreed criterion. If you fulfill the criteria.

Secondly, I mean, I agree President Acharya defined it. We could have done it much faster. 

We did the debt. The staff level agreement came last September. By November, we had the climate prosperity plan, which we announced at COP 27. Now, it’s been followed up by Sri Lanka’s growth agenda for a highly competitive green economy. So our financial needs, both official and private, have virtually quadrupled. So that’s problem others also have to face. Then I would say following the conclusion of the negotiations with the IMF and the successful approval of the Extended Fund Facility (EFF), we have had no roadmap to follow regarding the next phase of debt restructuring. So before we can get the next tranche from the IMF. So it’s a question of us now mapping the road out.

But I would like to certainly point out a few of the experiences. The data-led approach was the key to our success. It was our program, not an IMF program.

Secondly, we found a sponsor for us among the official creditor community. That helps. Thirdly, you have to be very pragmatic when you are implementing this. I’m not sure that a binding framework like the common framework would have rendered the process quicker or more efficient. The approach for a middle-income country would be to move. If you have a common framework, what happens is we move as fast as the slowest creditor.

So we get tied down. So that’s why we are not in favor of a common framework. We were able to create traction with the most committed creditors, raising the general quality and efficiency of the process. Because we are still frustrated by the lack of process.

The cost for us, economic and social, has been very high. Now, as far as the creditors, our creditors include the Paris Club and the non-Paris Club members of which India and China are two of our main creditors, and Japan from the Paris Club.

So we’ve attempted to establish an ad hoc platform for the official creditors, including the Paris Club members and others. India, Hungary, and others came on to participate in the ad hoc platform.

China participated as an observer. We shared the information with all parties on an open transaction, a transparent process. Then I must thank IMF for the intervention of the IMF and Sri Lanka’s coordination, we are dealing with both groups. So what else helped us was that Sri Lanka had ongoing negotiations with Japan, India, and China separately regarding further trade integration and also some of the development programs for the future. 

This assisted our process. But as far as my experience is, we need, we have to have some improvement in the interaction between the committee and the debtors because the debt restructuring process is a negotiation and it should in essence be interactive. Looking at the dealing with the Paris Club and non-Paris Club, we need a new approach because this is basically a geopolitical issue.

The mistrust between the US and China and the growing tension, it has to be addressed by all, not merely by Sri Lanka or the country concerned. If you do not resolve it, I think we will still, in Asia and Africa, we will get caught into another situation, not our making. So these will be the major issues that we have addressed. 

And restructuring is needed. I agree with it. It has to move fast, otherwise, most countries, whether low-income countries or middle-income countries, will not have much hope and there will be more instability, political and economic instability. And without creating a separate process under this roundtable, we should deal with the issues of middle-income countries because most are under stress. It’s better to deal with them under stress than when they are bankrupt. So that process has to evolve.

(President’s Media Division)

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Shooting incident ‘targeting’ former MP Uddika was self-orchestrated : Police

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Sri Lanka Police says it has been uncovered that the incident where several gunshots had been fired at the vehicle belonging to former Anuradhapura District parliamentarian Uddika Premaratne, had been orchestrated by the actor-turned-politician himself with the assistance of an Assistant Superintendent of Police (ASP) in the area.

Speaking during a press conference held in Colombo today (13), the Police Media Spokesman DIG Nihal Thalduwa said that the suspects connected to the incident have been identified so far following investigations carried out by the CID.

On September 17, 2023, a group of unidentified gunmen had opened fire at Premaratne’s car soon after he returned to his residence in Anuradhapura at around 10:35 p.m. The parliamentarian had managed to escape unharmed.

The perpetrators, who had arrived in a car, were said to have targeted the parliamentarian who was walking towards the house after parking his vehicle. The left rear door glass of Premaratne’s car was damaged in the shooting incident for which the gunmen were believed to have used a pistol.

Anuradhapura police initiated investigations soon after the incident was reported and Special Task Force (STF) personnel were deployed to beef up the security near the MP’s house. Later, investigations into the matter were handed over to the Criminal Investigation Department (CID).

However, the former MP claimed that the existing system within the country was the reason behind the recent shooting incident targeting him.

Speaking in Parliament in this regard, MP Premaratne said that while he believed the system was the cause behind the recent shooting outside his residence, it is also the reason why the country is in the state it is today.

Later on 27 February 2024, the Sri Lanka Podujana Peramuna (SLPP) MP resigned as a Member of Parliament, following which S.C. Muthukumarana of SLPP was appointed to fill the vacant MP seat.

However, Premaratne was later reported to have flown to Canada, seeking political asylum, which he refuted, and claimed that he was expecting a work visa in Canada.

In 2020, the popular actor was announced as a candidate for the 2020 parliamentary election from the Anuradhapura District as a member of the Sri Lanka People’s Freedom Alliance, a political alliance led by the SLPP formed in 2019. 

He obtained 133,550 votes and won a seat in the 16th Parliament of Sri Lanka.

(adaderana.lk)

(This story, originally published by adaderana.lk has not been edited by SLM staff)

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Apple is the world’s first $1 trillion brand: Kantar

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Kantar BrandZ’s Top 10 Most Valuable Global Brands 2024 has named Apple as the world’s first trillion-dollar brand, holding onto pole position for the third consecutive year. 

Google, Microsoft, and Amazon join Apple atop the rankings, with McDonald’s rounding up the top 5.

Demonstrating how effective AI has become for driving brand value, NVIDIA has lept 18 places to crack the top 10 for the first time, holding sixth position with a 178% year-on-year brand value increase. 

Facebook rejoined the Top 10 after a one-year absence, while Oracle joined the Top 10 for the first time. 

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The G7 Summit begins today

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Leaders of the Group of Seven (G7) countries are meeting for a three-day summit, starting today (13 June) to discuss global affairs in the southern region of Puglia (Apulia), Italy.  

Heads of state of the seven members – the United States, Canada, Germany, France, Italy, Canada and the United Kingdom – as well as the chiefs of the European Council and the European Commission will be present at the event.

Italy, the host of this year’s event, has extended an invitation to more than 10 other countries for sideline discussions. These include UAE’s Mohamed bin Zayed, Algeria’s President Abdelmadjid Tebboune, Jordan’s King Abdullah II and Turkey’s President Recep Tayyip Erdogan. Notable absentees are Egypt and Saudi Arabia, who it  is reported, had been invited.

Support for Ukraine is top of the agenda. President Volodymyr Zelenskyy is scheduled to arrive on the summit’s first day for two sessions dedicated to the war-torn country. The G7’s most anticipated outcome is an agreement over a $50bn loan for Ukraine backed by profits accrued on Russian assets frozen in the West. 

The war on Gaza is also expected to dominate talks. 

Pope Francis will also be among the guests – the first time a pontiff has been invited to the summit – for a session dedicated to artificial intelligence (AI). Other specific sessions will be on migration, financial issues and the situation in the Asia Pacific. 

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