Sri Lanka to bring back bond, equity investors
The Sri Lankan government is looking at working with financial partners who had invested with them in bond and equity in the past prior to 2015.
“We are looking at partners in the past that have invested in bond and equity (in Sri Lanka) and we will want to work with them again,” Prime Minister’s Economic Advisor Nivard Cabraal told the Business Times on Friday.
He explained that once the country’s macroeconomic fundamentals have stabilised these investors would want to come back to the market.
In this respect, the new government intends on bringing in “a new economic robustness,” he noted.
Moreover, Mr. Cabraal pointed out that Sri Lanka needs to work on building back its shock absorbing ability for which the economy needs to have its own buffers to withstand any global shocks. He made this observation in response to some concerns of a global economic recession next year.
He pointed out that while these cycles do take place in the economic world, Sri Lanka which had eroded its buffers like in the depreciation of the rupee and high interest rates, set in place in 2014 need to rebuild on them.
The government has also come up with a team in preparation for the next International Monetary Fund (IMF) round of discussions for the next tranche.
Mr. Cabraal explained that once the new Governor for the Central Bank is appointed they would decide on how best to work out their plans.
Sri Lanka intends on working with the IMF and wants to renegotiate certain points like the new tax policy they have introduced and also the removal of the pricing formula and all other matters that would be in line with the new President’s policy focus and economic plan.
The PM’s Advisor also noted that they would start discussions with the Chinese authorities on how to move forward in line with the government’s view that the sale of the Hambantota Port was a “mistake.”
In 2017 the previous government leased the port for 99 years to China Merchants Port Holdings Co. in a bid to settle debts amounting to US$1.1 billion.
However, Mr. Cabraal did not state whether the government intends on going for a full ownership or a share of the port together with the Chinese company.
The port is a vital link in China’s Belt and Road Initiative from Kenya to Myanmar.
Commenting on the East Container Terminal (ECT) and its new MOU entered into between Sri Lanka, India and Japan, he pointed out that the complex nature of these matters needed to be worked out.
“These matters are more complex issues and need a deep understanding,” Mr. Cabraal said.
Earlier this year the former government entered into a Memorandum of Cooperation with India and Japan to carry out the operations of the ECT with the establishment of a Terminal Operations Company.
Under this company Sri Lanka was to retain 51 per cent stake and the rest to be divided between the other two countries. Japan was to fund the project with a 40-year loan at a concessionary interest rate; and at the time India’s inclusion was considered vital due to its heavy transshipment volumes contributing to the Colombo Port.