The Colombo Page reported that the Advisory Committee appointed to assist the National Economic Council has made five recommendations that need to be implemented immediately quoting the President’s Media Division
The proposals are:-
1. Immediate appointment of a Technical Team consisting of officials representing the Central Bank and the Treasury to formulate programs proposing international financial assistance.
2. Appointment of a financial advisor immediately and a legal advisor.
3. The Technical Team should immediately come up with a reform program to propose international financial assistance.
4. Identify an expert team to assist the Finance Minister.
5. Focus on confidence-building measures after solving supply related issues.
The proposals seem to suggest establishing more committees and teams rather than concrete recommendations for getting the economy out of the woods.
China Considering Additional Aid
The Colombo Page also reported that the Chinese Ambassador to Sri Lanka Qi Zhenhong says that China is currently considering Sri Lanka’s request of US $ 2.5 billion financial aid from China.
Sri Lanka had requested a credit facility of US $ 1 billion and a loan assistance of US $ 1.5 billion.
China has provided US $ 2.5 billion in financial assistance to Sri Lanka as a solution to the crises faced by the country from the beginning of the Covid epidemic up to now, the envoy noted.
Chinese Ambassador to Sri Lanka Qi Zhenhong said that Chinese businessmen have already invested US $ 1.5 billion in the Colombo port city
Acute Energy Crisis
Sri Lanka Army personnel have been deployed from to monitor the distribution of fuel at filling stations operated by the state-owned fuel distributor, Ceylon Petroleum Corporation (CPC) reports Colombo Page quoting Military Spokesman Brigadier Nilantha Premaratne.
The Spokesperson said that military personnel will be monitoring whether the fuel received at the Ceypetco filling stations is properly distributed to the customers.
Status of Sri Lanka's Debt
Sri Lanka has about $2 billion of foreign-currency reserves against total debt repayment of $7 billion for 2022, including a $1 billion dollar bond maturing in July. It has three months, maybe less, before a default as per the Bloomberg Report.
The roots of the debt crisis is seen in the government’s “capital market borrowing back in 2007 which accounts for 38 percent of the country’s foreign debt, while loans from China accounted for 10 percent”.
However genesis of the food crisis and inflation is bad policy decisions on fertilizers and poor management of foreign exchange.
The International Monetary Fund intends to begin discussions with Sri Lanka on a program to support the country, said Gerry Rice, Director, Communications Department of IMF as per Colombo Page.
As per the Page, speaking at a media briefing Thursday (March 17), Mr. Rice said the IMF has concluded the board meeting on Article IV consultation with Sri Lanka late last month and highlighted the urgent need to implement a credible and coherent strategy to restore macro-economic stability and debt sustainability protecting vulnerable groups through strengthened well-targeted social safety-nets.