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☆ World Bank approves $700 mln for crisis-hit Sri Lanka
▼ + stars: | 2023-06-28 | by ( ) www.reuters.com time to read: +1 min

[1/2] People wait in line to buy domestic gas tanks near a distributor, amid the country's economic crisis, in Colombo, Sri Lanka, May 23, 2022. REUTERS/Dinuka Liyanawatte/File PhotoCOLOMBO, June 29 (Reuters) - The World Bank approved $700 million in budgetary and welfare support for Sri Lanka on Thursday, the biggest funding tranche for the crisis-hit island nation since an International Monetary Fund (IMF) deal in March. "Through a phased approach, the World Bank Group strategy focuses on early economic stabilization, structural reforms, and protection of the poor and vulnerable," the World Bank's country director for Sri Lanka, Faris Hadad-Zervos, said in a statement. Sri Lanka is struggling with the worst financial crisis since its independence from Britain in 1948 after the country's foreign exchange hit record lows and triggered its first foreign debt default last year. The IMF approved a bailout of nearly $3 billion in March, which Sri Lanka expects will bring additional funding of up to $4 billion from the World Bank, the Asian Development Bank and other multilateral agencies.

Persons: Dinuka, Faris Hadad, Zervos, Uditha Jayasinghe, Chris Reese, Sonali Paul Organizations: REUTERS, World Bank, Sri, Monetary Fund, World Bank Group, IMF, Asian Development Bank, Thomson Locations: Colombo, Sri Lanka, Britain, China, Japan, India

☆ World Bank to provide $500 mln budget support to Sri Lanka
▼ + stars: | 2023-06-27 | by ( ) www.reuters.com time to read: +1 min

COLOMBO, June 27 (Reuters) - Sri Lanka will enter into an agreement with the World Bank for $500 million in budgetary support after the cabinet approved it on Tuesday, the biggest funding tranche for the crisis-hit nation since an International Monetary Fund deal in March. The island nation of 22 million is emerging out of its worst economic crisis in seven decades and its economy is expected to shrink 2% this year before returning to growth next year, following last year's record contraction of 7.8%. Reuters reported last week that the World Bank is likely to approve $700 million in budgetary and welfare support for Sri Lanka at its board meeting on June 28, out of which $200 million will be for welfare programmes. The government said on Tuesday that funding from the lender will come in two tranches. Reporting by Uditha Jayasinghe; Writing by Shivam Patel; Editing by Edmund KlamannOur Standards: The Thomson Reuters Trust Principles.

Persons: Uditha Jayasinghe, Shivam Patel, Edmund Klamann Organizations: World Bank, Monetary Fund, Reuters, Sri, Thomson Locations: COLOMBO, Sri Lanka

☆ Sri Lanka set to start tea-for-oil barter with Iran next month
▼ + stars: | 2023-06-23 | by ( Uditha Jayasinghe | ) www.reuters.com time to read: +2 min

COLOMBO, June 23 (Reuters) - Sri Lanka is set to start bartering tea to Iran next month in lieu of $250 million owed for oil, a Sri Lankan official told Reuters on Friday, as the crisis-hit country tries to lift sales to a key market and protect its forex reserves. "This is very timely for us because we get access to an important market and both Iran and Sri Lanka can trade without relying on dollars," Sri Lanka's Tea Board Chairman Niraj de Mel told Reuters. "The agreement was to send $5 million worth of tea each month for 48 months but we plan to start with about $2 million per month." Globally popular Ceylon Tea is Sri Lanka's highest foreign exchange-earning crop, brewing $1.25 billion for the cash-strapped country last year, according to government data. Iran has been one of Sri Lanka's main tea buyers but exports have fallen steadily from $128 million in 2018 to $70 million last year as U.S. sanctions on Iran hit trade.

Persons: Niraj de Mel, riyals, de Mel, Uditha, Krishna N, Das, Peter Graff Organizations: Sri, Reuters, Tea, United Arab Emirates, Ceylon Petroleum Corp, Tea Board, National Iranian Oil Company, International Monetary Fund, Thomson Locations: COLOMBO, Sri Lanka, Iran, Ceylon, Sri Lanka's, Lanka's, UAE, Lankan

☆ Sri Lanka readies ailing Thai elephant for flight home
▼ + stars: | 2023-06-21 | by ( ) www.reuters.com time to read: +2 min

"But he is very gentle and obedient, which has made it easier to try and get him used to the process." Since he was gifted to Sri Lanka in 2001, the elephant, often used to carry Buddhist relics in processions, has spent most of his time at a Buddhist temple in Kalutara, about 75 km (47 miles) from Colombo, the commercial capital. Perera, who oversees his care, along with a mahout and other staff, said he would probably need hydrotherapy facilities that Sri Lanka lacks to restore full movement. Thailand will pay for the elephant's journey home, while Sri Lanka has footed the cost of his medical care and food, which runs into about 400 kg (882 lb) a day. The pachyderm is expected to return to Sri Lanka after treatment, Prime Minister Dinesh Gunawardena has said, and animal welfare activists hope he will be sent to a sanctuary.

Persons: Read, Sak Surin, Madusha Perera, Muthu Raja, Chiang Mai, Perera, Dinesh Gunawardena, Uditha Jayasinghe, Clarence Fernandez Organizations: Sri, Thomson Locations: Sak Surin, Sri Lanka, Thai, Thailand, Colombo, Sri, COLOMBO, Sri Lankans, Chiang, Kalutara, Lanka

☆ Exclusive: World Bank set to approve $700 mln for Sri Lanka next week -sources
▼ + stars: | 2023-06-19 | by ( Uditha Jayasinghe | ) www.reuters.com time to read: +2 min

The International Monetary Fund approved a bailout of nearly $3 billion in March, which Sri Lanka expects will bring additional funding of up to $4 billion from the World Bank, the Asian Development Bank and other multilateral agencies. Of the proposed World Bank funding, $500 million will be for budgetary support and is likely to come in two tranches of $250 million each, one of the sources, from the World Bank, said. All four sources, from the World Bank and the Sri Lankan finance ministry, sought anonymity as they were not authorised to talk to the media. "Households that have registered for support will be ranked ... and the lowest 2 million will be eligible for support," the source added. The World Bank and the finance ministry did not immediately respond to requests for comment.

Persons: Read, Uditha Jayasinghe, Krishna N Organizations: Bank, Sri, Reuters, Monetary Fund, World Bank, Asian Development Bank, IMF, Thomson Locations: Colombo, Sri Lanka, COLOMBO, Sri Lankan

☆ Sri Lanka's economy shrinks 11.5% in first quarter as financial crisis continues
▼ + stars: | 2023-06-15 | by ( Uditha Jayasinghe | ) www.reuters.com time to read: +2 min

COLOMBO, June 15 (Reuters) - Sri Lanka's economy (LKGDP=ECI) shrank 11.5% in the first three months of 2023, official data showed on Thursday, as the country remained in the grip of its worst financial crisis in decades. Sri Lanka's central bank projects that GDP will shrink by 2% this year while the International Monetary Fund (IMF) estimates a contraction of 3%. "A pickup in private sector credit will be a growth positive and credit growth will increase over the next six to nine months," Cooray added. Sri Lanka's economy contracted by a record 7.8% last year after its foreign exchange reserves hit record lows, plunging the island into the worst financial crisis since it gained Independence from the British in 1948. But Sri Lanka still needs to complete debt restructuring talks by September in time for the first IMF review.

Persons: ”, Shehan Cooray, Cooray, Uditha, John Stonestreet, Susan Fenton Organizations: Statistics Department, Sri, International Monetary Fund, Thomson Locations: COLOMBO, Sri Lanka's, Sri, Sri Lanka

☆ Sri Lanka extends freeze on outward capital transactions by 6 months
▼ + stars: | 2023-06-13 | by ( ) www.reuters.com time to read: 1 min

COLOMBO, June 13 (Reuters) - Sri Lanka's government has decided to extend a restriction on outward capital transactions by six months due to pressure on its limited foreign exchange reserves, cabinet spokesperson Bandula Gunawardena said on Tuesday. The decision will be revisited after debt talks are finalised in September, added Gunawardena, who is also the transport minister of the island country. Reporting by Uditha Jayasinghe; writing by Sudipto ganguly; Editing by Kim CoghillOur Standards: The Thomson Reuters Trust Principles.

Persons: Bandula Gunawardena, Uditha Jayasinghe, Sudipto ganguly, Kim Coghill Organizations: Thomson Locations: COLOMBO

☆ Sri Lanka lifts import limits on 286 items as crisis eases
▼ + stars: | 2023-06-10 | by ( Uditha Jayasinghe | ) www.reuters.com time to read: +2 min

COLOMBO (Reuters) - Sri Lanka lifted import restrictions on 286 items, the Finance Ministry said on Saturday, a fresh sign the South Asian nation is starting to emerge from its worst economic crisis in decades. FILE PHOTO: A general view of city's skyline, amid the country's economic crisis in Colombo, Sri Lanka, April 19, 2022. Sri Lanka’s reserves grew 26% to a 17-month high of $3.5 billion in May, helped by stronger remittances and tourism earnings. “With the economy stabilising, import restrictions on 286 items have been lifted from Friday midnight,” the Finance Ministry said in a statement. Sri Lanka will also slash prices of 60 essential drugs by 16% from this week.

Organizations: Reuters, Finance, REUTERS, International Monetary Fund, Finance Ministry, IMF, Sri Locations: COLOMBO, Sri Lanka, Colombo

☆ Sri Lanka to remain on policy loosening course, next rate cut likely in August -analysts
▼ + stars: | 2023-06-02 | by ( Uditha Jayasinghe | ) www.reuters.com time to read: +3 min

Sri Lanka plunged into crisis last year as its foreign exchange reserves ran out, food and energy prices spiralled and protesting mobs forced the ouster of the country's then president. "With no inflation risk the central bank will cut rates aggresssively to push demand and target growth." The CBSL expects Sri Lanka's GDP to contract by 2% in 2023, slightly better than the 3% contraction predicted by the IMF. Five analysts backed CBSL and IMF estimates, two said Sri Lanka would perform better and one projected a steeper contraction of 4.8%. []Sri Lanka will begin rolling back import restrictions on 300-400 items from next week, as per a statement from the finance ministry which gave no further details.

Persons: CBSL, Dimantha Mathew, Kenji Okamura, Uditha Jayasinghe, Devayani, Swati Bhat, Toby Chopra Organizations: Sri, Citi Bank economists, International Monetary Fund, First, IMF, Thomson Locations: COLOMBO, Lanka's, Sri Lanka's, Sri Lanka, Colombo

[1/2] Staff members work at a packing section at a garment factory in Colombo after the International Monetary Fund's executive board approved a $3 billion bailout for Sri Lanka. The Central Bank of Sri Lanka (CBSL) cut its standing deposit facility rate and standing lending facility rate to 13% and 14%, respectively, from 15.5% and 16.5% previously. The central bank raised rates by a record 950 basis points last year to tame inflation and by 100 bps on March 3 this year. "There is a need to bring the interest rates down because the cost of government financing is high," said Udeeshan Jonas, chief strategist at equity research firm CAL. Sri Lanka secured a $2.9 billion bailout from the IMF in March and aims to complete restructuring debt talks by September, coinciding with the first review by the lender.

Persons: Dinuka, Udeeshan Jonas, Uditha Jayasinghe, Swati Bhat, Shri Navaratnam, Raju Gopalakrishnan Organizations: Staff, Monetary Fund's, Sri, REUTERS, Central Bank of Sri, Colombo, Monetary Fund, Reuters, CAL, Thomson Locations: Colombo, Sri Lanka, Lanka's, Central Bank of Sri Lanka

☆ Sri Lanka c.bank to hold rates as inflation stays high
▼ + stars: | 2023-05-30 | by ( Uditha Jayasinghe | ) www.reuters.com time to read: +2 min

COLOMBO, May 30 (Reuters) - Sri Lanka's central bank is expected to keep rates unchanged at its policy meeting this week as it continues to support the debt-laden economy amid persistently high inflation. Sri Lanka secured a $2.9 billion bailout from the International Monetary Fund (IMF) in March and aims to complete restructuring debt talks by September. Thirteen out of the fifteen analysts and economists polled by Reuters expect the Central Bank of Sri Lanka (CBSL) to hold benchmark rates steady on Thursday, at its fourth policy rate announcement this year. The central bank raised rates by a record 950 basis points last year to tame inflation and by 100 bps on March 3. The first review of its IMF programme is expected in September and Sri Lanka plans for it to coincide with the completion of debt restructuring talks with creditors.

☆ IMF official says Sri Lanka reforms critical, evaluating progress
▼ + stars: | 2023-05-15 | by ( Uditha Jayasinghe | ) www.reuters.com time to read: +2 min

COLOMBO, May 15 (Reuters) - The International Monetary Fund (IMF) mission in Sri Lanka will evaluate progress made on reforms so far and complete an exercise to improve governance in key areas of the economy, an IMF official said on Monday. An IMF team is in Colombo until May 23 as part of regular consultations ahead of the first review mission later this year. "It is now essential to continue the reform momentum," said Krishna Srinivasan, Director of Asia Pacific Department at IMF. Sri Lanka, with the help of a $2.9 billion bailout from the global lender, is trying to recover from its worst financial crisis since gaining independence in 1948 and turn around its battered economy. Peter Breuer, IMF Senior Mission Chief for Sri Lanka, Asia and Pacific Department said the lender will be looking at whether the government's macro framework is still appropriate or whether it requires revisions.

☆ Sri Lanka Supreme Court clears path for decriminalisation of homosexuality
▼ + stars: | 2023-05-09 | by ( Uditha Jayasinghe | ) www.reuters.com time to read: +2 min

LGBTQ+ rights activists in Sri Lanka have been campaigning for years to change the law in a country where homosexuality is still punishable by a prison sentence and a fine, leading to the private member's bill presented in parliament last month. The Supreme Court, after hearing more than a dozen petitions on both sides of the argument, ruled it was not unconstitutional, Speaker of Parliament Mahinda Yapa Abeywardena said. “The Supreme Court is of the opinion that the bill as a whole or as any provision thereof is not inconsistent with the constitution,” the speaker told parliament. Activists will still have to lobby for support from the 225 parliamentarians to push forward the proposed legislation through parliament. This Supreme Court decision is major for the community in terms of any kind of progress they have seen over the last couple of years," Coswatte added.

☆ Sri Lanka's economy to shrink by 2% in 2023, central bank says
▼ + stars: | 2023-04-27 | by ( Uditha Jayasinghe | ) www.reuters.com time to read: +1 min

NEW DELHI, April 27 (Reuters) - Sri Lanka's economy is expected to shrink by 2% in 2023, its central bank said in an annual report on Thursday, as the country struggled to emerge from its worst financial crisis in decades. The central bank projected Sri Lanka's economy would grow by 3.3% in 2024, according to the report. The World Bank estimates Sri Lanka's economy will contract by 4.3% in 2023. "Sri Lanka's economy has been gradually stabilising since mid-2022. Sri Lanka, which defaulted on its foreign debt a year ago, is currently negotiating its debt repayments with bondholders and bilateral creditors.

☆ Fortune teller sees bleak future as Sri Lankans celebrate new year
▼ + stars: | 2023-04-11 | by ( Uditha Jayasinghe | ) www.reuters.com time to read: +3 min

About 85% of Sri Lanka's 22 million population celebrate the New Year on April 14, observing auspicious times and visiting family. Sri Lanka's economic meltdown, triggered by a severe foreign exchange shortage, low tax revenues and high debt, has seen the cost of living soar. Sri Lanka secured an IMF bailout last month but is still ironing out how to restructure debt owed to bilateral creditors and bondholders. His power bill has jumped 29,000 rupees per month to 105,578 now after big increases in tariffs. Fortune teller Chandani hopes things will improve in the new year.

The financially strapped South Asian country will also start formal negotiations for the debt it owes to bilateral creditors and overseas bondholders after the domestic debt operation, aiming to complete those parallel debt talks by September. Central bank and treasury officials said they expected that "exploring options for a domestic debt operation" will help achieve much-needed liquidity relief, including both local currency T-Bills and T-Bonds. Government officials told investors that only T-Bills held by the central bank would be considered for a debt rework, while a voluntary domestic debt operation was expected for the holders of $24 billion of T-Bonds. Sri Lanka is struggling with its worst economic crisis in more than seven decades. To that end, Sri Lanka has already frozen public recruitment and has hiked taxes and power tariffs by 66% this year.

☆ Sri Lanka receives first tranche of IMF bailout
▼ + stars: | 2023-03-22 | by ( Uditha Jayasinghe | ) www.reuters.com time to read: +1 min

REUTERS/Dinuka LiyanawatteCOLOMBO, March 22 (Reuters) - Sri Lanka has received the first tranche of an IMF bailout programme, President Ranil Wickremesinghe told parliament on Wednesday. "This sets the stage for Sri Lanka to have better fiscal discipline and improved governance," Wickremesinghe said. It clears the way for Sri Lanka to rework a substantial part of its $84 billion worth of public debt. State finance minister Shehan Semasinghe said in an interview that Sri Lanka is ready to engage in restructuring talks with bilateral and private creditors to recover debt sustainability as "soon as possible." This was the 17th IMF bailout for Sri Lanka and the third since the country's decades-long civil war ended in 2009.

[1/5] A general view of a main market is seen, after The International Monetary Fund's executive board approved a $3 billion, in Colombo, Sri Lanka March 21, 2023. REUTERS/Dinuka LiyanawatteCOLOMBO, March 21 (Reuters) - Sri Lanka will receive the first tranche of about $330 million from the International Monetary Fund in the next two days, and, going forward, disbursements would be tied to reviews that take place every six months, an IMF official said on Tuesday. Peter Breuer, Senior Mission Chief for Sri Lanka, Asia and Pacific Department at IMF, said debt sustainability was one of the key criteria for the IMF to approve a bailout for any economy. International dollar bonds issued by the country soared following the IMF package approval. The biggest bilateral creditors, including China, India and Japan, have guaranteed support to Sri Lanka in its efforts to put the economy back on track.

☆ Wickremesinghe delivers IMF deal for Sri Lanka despite public mistrust
▼ + stars: | 2023-03-21 | by ( Uditha Jayasinghe | ) www.reuters.com time to read: +5 min

Only 4% were satisfied with the way things were going in Sri Lanka, down from 7% in October but higher than 2% in June. The Paris Club of creditors, which includes Japan, earlier this year gave financing assurances to support the IMF deal. A Japan-funded $1.8 billion light-railway project, which was suspended in 2019, is among infrastructure projects that Sri Lanka is now trying to restart. But Sri Lanka still needs to renegotiate its debt, a potentially drawn-out process where Wickremesinghe, who is also the finance minister, will have to deal with demands from China, India and other creditors. A crisis-weary public may still have to absorb years of continuing hardship as Sri Lanka tries to fix its economy during the four-year IMF programme, warned Jayadeva Uyangoda, a senior political analyst.

☆ IMF approves nearly $3 bln bailout for Sri Lanka
▼ + stars: | 2023-03-20 | by ( ) www.reuters.com time to read: +2 min

March 20 (Reuters) - The International Monetary Fund (IMF) on Monday said its executive board approved a nearly $3 billion bailout for Sri Lanka, and the country's presidency said the program will enable it to access up to $7 billion in overall funding. The decision will allow an immediate disbursement of about $333 million, the IMF said, and will spur financial support from other partners, potentially helping Sri Lanka emerge from its worst financial crisis in over seven decades. IMF Managing Director Kristalina Georgieva said Sri Lanka also needs to undertake various reforms. "For Sri Lanka to overcome the crisis, swift and timely implementation of the EFF-supported program with strong ownership for the reforms is critical," Georgieva said in a statement. Sri Lanka President Ranil Wickremesinghe's office said in a statement that the IMF program will help improve the country's standing in international capital markets, making it attractive for investors and tourists.

☆ Sri Lanka to announce debt restructuring strategy in April - cenbank chief
▼ + stars: | 2023-03-09 | by ( Uditha Jayasinghe | ) www.reuters.com time to read: +3 min

The bailout is the culmination of months of negotiations as Sri Lanka looks to emerge from its worst economic crisis in more than seven decades. Weerasinghe said the country would expedite negotiations with commercial creditors and announce the debt restructuring strategy in consultation with them, before finalising the debt restructuring terms. Currently, Sri Lanka has to repay about $6 billion annually until 2029, President Ranil Wickremesinghe told parliament on Tuesday, but Weerasinghe said this amount will be reduced post-debt restructuring. Sri Lanka also has a $1.5 billion swap arrangement with China but that can only be used if domestic reserves support three months of imports. Weerasinghe also said that inflation is likely to come down faster than earlier forecast, even by the central bank.

[1/2] Sri Lankan rupees are seen in a bowl at a vegetable vendor's shop amid the rampant food inflation, amid Sri Lanka's economic crisis, in Colombo, Sri Lanka, July 29 , 2022. China has extended its "firm support to Sri Lanka through a debt treatment", EXIM Bank wrote in the letter to the Sri Lankan government on March 6. "Meanwhile, we would like to expedite the negotiation process with your side regarding medium- and long-term debt treatment in this window period, with a view to finalising the specifics of a debt treatment in the coming months. We will make our best efforts to contribute to the debt sustainability of Sri Lanka." The letter mirrors what EXIM Bank sent to Sri Lanka in January, except for the target of finalising debt-treatment specifics in the coming months.

[1/2] Sri Lankan rupees are seen in a bowl at a vegetable vendor's shop amid the rampant food inflation, amid Sri Lanka's economic crisis, in Colombo, Sri Lanka, July 29 , 2022. China has extended its "firm support to Sri Lanka through a debt treatment", EXIM Bank wrote in the letter to the Sri Lankan government on March 6. "Meanwhile, we would like to expedite the negotiation process with your side regarding medium- and long-term debt treatment in this window period, with a view to finalising the specifics of a debt treatment in the coming months. We will make our best efforts to contribute to the debt sustainability of Sri Lanka." By end-2020, Sri Lanka owed EXIM $2.83 billion, or 3.5% of its external debt, according to IMF data.

It was not clear what new support China, the world's biggest sovereign creditor, had extended to Sri Lanka on Monday. By end-2020, Sri Lanka owed the Export-Import Bank of China $2.83 billion or 3.5% of the island's external debt, according to IMF data. Sri Lanka needs to repay about $6 billion on average each year until 2029 and will have to keep engaging with the IMF, Wickremesinghe said. Countries in debt distress such as Zambia and Sri Lanka have faced unprecedented delays in securing IMF bailouts as China and Western economies have clashed over how to provide debt relief. Sri Lanka has been waiting for about 187 days to finalise a bailout after reaching a staff-level deal with the IMF.

☆ Sri Lanka expects approval of $2.9 billion IMF deal after China support
▼ + stars: | 2023-03-07 | by ( Uditha Jayasinghe | ) www.reuters.com time to read: +4 min

"Sri Lanka has completed all prior actions that were required by the IMF," Wickremesinghe said. It was not clear what new support China, the world's biggest sovereign creditor, extended to Sri Lanka on Monday. By end-2020, Sri Lanka owed the Export-Import Bank of China $2.83 billion or 3.5% of the island's external debt, according to IMF data. Sri Lanka needs to repay about $6 billion on average each year until 2029 and will have to keep engaging with the IMF, Wickremesinghe said. Sri Lanka has been waiting for about 187 days to finalise a bailout after reaching a staff-level deal with the IMF.

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