FINANCIAL CHRONICLE™
Dear Reader,

Registration with the Sri Lanka FINANCIAL CHRONICLE™️ would enable you to enjoy an array of other services such as Member Rankings, User Groups, Own Posts & Profile, Exclusive Research, Live Chat Box etc..

All information contained in this forum is subject to Disclaimer Notice published.


Thank You
FINANCIAL CHRONICLE™️
www.srilankachronicle.com


Join the forum, it's quick and easy

FINANCIAL CHRONICLE™
Dear Reader,

Registration with the Sri Lanka FINANCIAL CHRONICLE™️ would enable you to enjoy an array of other services such as Member Rankings, User Groups, Own Posts & Profile, Exclusive Research, Live Chat Box etc..

All information contained in this forum is subject to Disclaimer Notice published.


Thank You
FINANCIAL CHRONICLE™️
www.srilankachronicle.com
FINANCIAL CHRONICLE™
Would you like to react to this message? Create an account in a few clicks or log in to continue.
FINANCIAL CHRONICLE™

Encyclopedia of Latest news, reviews, discussions and analysis of stock market and investment opportunities in Sri Lanka

Click Link to get instant AI answers to all business queries.
Click Link to find latest Economic Outlook of Sri Lanka
Click Link to view latest Research and Analysis of the key Sectors and Industries of Sri Lanka
Worried about Paying Taxes? Click Link to find answers to all your Tax related matters
Do you have a legal issues? Find instant answers to all Sri Lanka Legal queries. Click Link
Latest images

Latest topics

» LOLC Group's stunning performance goes beyond numbers!
by Riz123 Yesterday at 1:19 pm

» Will CEYLON TOBACCO COMPANY PLC (CTC.N0000) delist from the CSE?
by rajithasahan Yesterday at 10:40 am

» UNION ASSURANCE PLC (UAL.N0000)
by ErangaDS Sun Mar 03, 2024 10:30 am

» CSE ready for another Downtrend?
by D.G.Dayaratne Sat Mar 02, 2024 9:25 pm

» EXPO.N - Expo Lanka Holdings De-Listing
by smallinvestor Fri Mar 01, 2024 4:50 pm

» ලොව වැඩිම පොලී ගෙවන රට බවට ශ්‍රි ලංකාව පත් වෙයි
by Beyondsenses Fri Mar 01, 2024 3:43 pm

» Suspension of Parate Execution: Impact to Banking Sector Shares
by God Father Fri Mar 01, 2024 7:15 am

» TAFL is the most undervalued & highly potential counter in the Poultry Sector
by atdeane Thu Feb 29, 2024 10:33 pm

» Excellent Report pending From CTC (Keep eye on CTC )
by ddrperera Thu Feb 29, 2024 7:11 pm

» Ceylon cold stores
by Beyondsenses Thu Feb 29, 2024 11:21 am

» Investor Alert: Sri Lanka Stock Brokering Mafia Strongly Active!
by D.G.Dayaratne Thu Feb 29, 2024 6:29 am

» CENTRAL INDUSTRIES PLC (CIND.N0000)
by D.G.Dayaratne Wed Feb 28, 2024 9:39 pm

» What are the key aspects of the Online Safety Act?
by God Father Tue Feb 27, 2024 10:35 pm

» How to defeat Ranil Wickramasinghe at the next Presidential Elections
by empire Sat Feb 24, 2024 10:34 am

» FINANCE AND LEASING SECTOR
by ApolloCSE Sat Feb 24, 2024 1:35 am

» Why Foreign Sales have gone up during last few days
by D.G.Dayaratne Fri Feb 23, 2024 10:21 am

» Market Performance (2022-2024)
by D.G.Dayaratne Fri Feb 23, 2024 6:10 am

» Richard Pieris Exports PLC (REXP.N0000) future looks bleak!
by God Father Wed Feb 21, 2024 3:34 pm

» ANALYSIS: Sri Lanka Car Market 2024
by D.G.Dayaratne Mon Feb 19, 2024 11:14 am

» RED ALERT!! from Richard Pieris and Company PLC
by ChooBoy Sun Feb 18, 2024 10:28 pm

» Sri Lanka: China EXIM Bank Debt Moratorium to End in 2024
by God Father Sun Feb 18, 2024 8:29 am

» IPO Failures in Sri Lanka
by God Father Sun Feb 18, 2024 8:21 am

» HOTEL AND TRAVEL SECTOR
by ErangaDS Sat Feb 17, 2024 9:57 pm

» Treasury Bill is an option of Fixed income
by ResearchMan Sat Feb 17, 2024 2:31 pm

» CONSTRUCTION SECTOR
by Gaudente Thu Feb 15, 2024 7:40 pm

LISTED COMPANIES

Submit Post
ශ්‍රී ලංකා මූල්‍ය වංශකථාව - සිංහල
Submit Post


CONATCT US


Send your suggestions and comments

* - required fields

Read FINANCIAL CHRONICLE™ Disclaimer



EXPERT CHRONICLE™

ECONOMIC CHRONICLE

GROSS DOMESTIC PRODUCT (GDP)



CHRONICLE™ YouTube

Disclaimer
FINANCIAL CHRONICLE™ Disclaimer

The information contained in this FINANCIAL CHRONICLE™ have been submitted by third parties directly without any verification by us. The information available in this forum is not researched or purported to be complete description of the subject matter referred to herein. We do not under any circumstances whatsoever guarantee the accuracy and completeness information contained herein. FINANCIAL CHRONICLE™ its blogs, forums, domains, subdomains and/or its affiliates and/or its web masters, administrators or moderators shall not in any way be responsible or liable for loss or damage which any person or party may sustain or incur by relying on the contents of this report and acting directly or indirectly in any manner whatsoever. Trading or investing in stocks & commodities is a high risk activity. Any action you choose to take in the markets is totally your own responsibility, FINANCIAL CHRONICLE™ blogs, forums, domains, subdomains and/or its affiliates and/or its web masters, administrators or moderators shall not be liable for any, direct or indirect, consequential or incidental damages or loss arising out of the use of this information. The information on this website is neither an offer to sell nor solicitation to buy any of the securities mentioned herein. The writers may or may not be trading in the securities mentioned.

Further the writers and users shall not induce or attempt to induce another person to trade in securities using this platform (a) by making or publishing any statement or by making any forecast that he knows to be misleading, false or deceptive; (b) by any dishonest concealment of material facts; (c) by the reckless making or publishing, dishonestly or otherwise of any statement or forecast that is misleading, false or deceptive; or (d) by recording or storing in, or by means of, any mechanical, electronic or other device, information that he knows to be false or misleading in a material particular. Any action writers and users take in respect of (a),(b),(c) and (d) above shall be their own responsibility, FINANCIAL CHRONICLE™ its blogs, forums, domains, subdomains and/or its affiliates and/or its web masters, administrators or moderators shall not be liable for any, direct or indirect, consequential or incidental violation of securities laws of any country, damages or loss arising out of the use of this information.


AI Live Chat

You are not connected. Please login or register

Elections cast a shadow of uncertainty over Sri Lanka’s economic recovery

Go down  Message [Page 1 of 1]

God Father


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics

Elections cast a shadow of uncertainty over Sri Lanka’s economic recovery Sri-la11

Nearly two years after announcing a debt default in the middle of a severe social and political crisis, the Sri Lankan economy is showing the first signs of recovery. Year-on-year inflation dropped sharply to a low of 1.5 per cent in October 2023 from its peak of 70 per cent a year earlier. Interest rates are edging down accordingly and the highly volatile currency is now fluctuating within an acceptable range.

A man covers his ears as group of supporters of President Ranil Wickremesinghe celebrates while he addresses the nation, after the International Monetary Fund's executive board approved a $3 billion loan, in Colombo, Sri Lanka 21 March 2023 (Photo: REUTERS/Dinuka Liyanawatte)

After the longest and deepest stretch of negative growth — lasting seven consecutive quarters — the economy finally returned to positive growth of 1.6 per cent in the fourth quarter of 2023. While the modest recovery may appear underwhelming, it still marks an important milestone for a country that suffered such a harsh economic setback.

The architect of this semi-recovery, Sri Lanka’s President Ranil Wickremesinghe, is yet to declare his intentions as Sri Lanka heads into the all-important presidential elections in 2024, where voters will decide who will lead the country for the next five years.

With the country’s Supreme Court apportioning responsibility for the crisis to the previous government led by former president Gotabaya Rajapaksa in a ruling handed down in November 2023, attention is turning to sustaining the recovery and deciding who can be best trusted to manage it. If polling numbers are to be believed, the front runner is from a Marxist-Leninist party — the Janatha Vimukthi Peramuna — which secured a mere 3.2 per cent of the popular vote in 2019.

The turnabout largely reflects popular disgruntlement with the day-to-day struggles of falling real incomes and lost livelihoods. While tax increases, market-based pricing on fuel, a shake-up of the welfare system and a clampdown on spending under the terms of Sri Lanka’s Extended Fund Facility (EFF) with the International Monetary Fund (IMF) are repairing the country’s public finances, the average citizen has suffered deeply.

Unlike in the past, where successive IMF programs were used to paper over problems and leave the job of overhauling the economy half done, this time around there is a critical need to convince Sri Lanka’s foreign creditors of its commitment to staying on course.

A concern is the economy’s continued high exposure to external shocks as external debt restructuring negotiations drag on. In October 2023, there was marked progress as Sri Lanka reached a preliminary agreement with China’s Exim Bank and secured the agreement of other large bilateral creditors like Japan and India. Sri Lanka has yet to reach an understanding with the country’s bondholders. An October 2023 proposal by bondholders for GDP-linked bonds was turned down by the Sri Lankan authorities. Without a final restructuring agreement, dollar infusions from bilateral donors, development partners and private investors remain a trickle rather than a flow.

It is also not helping that export earnings are falling. By October 2023, earnings had shrunk by over 10 per cent on the back of higher domestic production costs and sluggish global demand. While earnings from tourism and worker remittances are improving, the fact that vast numbers of Sri Lankans are leaving the country in search of better prospects is also of serious concern. With weak household spending and less than two months of foreign reserve import cover to deal with a volatile global economy, Sri Lanka’s recovery path is far from smooth.

While the tax burden is deeply unpopular, Sri Lankans will have to live with higher taxes, a public spending squeeze and a drop in living standards regardless of the promises politicians make before the 2024 elections.

Sri Lanka received the second tranche under the EFF agreement in December 2023. Delivering on the EFF commitments is crucial to tapping further budgetary assistance from multilateral financial institutions and retaining the goodwill of Sri Lanka’s sovereign creditors. With hardly any room for policy manoeuvring on the macroeconomic front until the economy is on a surer footing, what the elections may disrupt is the more challenging regulatory reforms that could accelerate the recovery in lost output.

Ranil Wickremesinghe is pursuing reforms to transform the land and labour markets, overhaul state owned enterprises and modernise the education system. Relaxing labour laws, expanding the private sector’s role in delivering tertiary education, selling government stakes in state owned enterprises or entering into regional trade agreements run up against vested interests. These initiatives will slow down in the run up to the election and whether they get picked up thereafter will depend on the electoral outcome. The strategy for now appears to be to ring-fence as much of the reform agenda as possible through legislation.

The crucial 2024 elections will do much to decide Sri Lanka’s future. The focus is not only on the economy but also on the need for stronger institutions and governance mechanisms. Weaknesses in governance are largely faulted for triggering the economic crisis. All these issues may make voter behaviour more unpredictable and tempt presidential aspirants to make unrealistic promises in the hope of attracting votes.

These claims and counter-claims will add to the uncertainties, but the grim reality for any eventual winner is that there is a gruelling recovery path ahead and any policy disruption will only make it that much more difficult.

Dushni Weerakoon is Executive Director and Head of Macroeconomic Policy research at the Institute of Policy Studies of Sri Lanka.

https://www.eastasiaforum.org/2024/01/16/elections-cast-a-shadow-of-uncertainty-over-sri-lankas-economic-recovery/

Back to top  Message [Page 1 of 1]

Permissions in this forum:
You cannot reply to topics in this forum