Sri Lanka plans IMF talks on ways to lure foreign investors
COLOMBO, June 16 (Reuters) - Sri Lanka plans to discuss strategies with the International Monetary Fund (IMF) to lure foreign investment, President Anura Kumara Dissanayake said on Monday, in the aftermath of the Indian Ocean nation's financial crisis.
Sri Lanka has recovered strongly from the crisis caused by a record shortage of dollars, thanks to a $2.9-billion bailout from the IMF and efforts to cut inflation, rebuild reserves, and stabilise its currency over four years from March 2023.
Beyond last year's economic growth of 5%, Sri Lanka still needs to focus on deeper reforms such as reforming loss-making state enterprises and trimming a bloated public service, Dissanayake said.
"As part of efforts to grow sustainably we will offer incentives to attract foreign investment and will hold discussions with the IMF in this regard," he told a conference in Colombo, without giving a timeframe.
Sri Lanka defaulted on its foreign debt at the height of the crisis in 2022 but is close to finalising a $22.5-billion rework with support from the global lender.
Colombo boosted power prices by 15% last week in its effort to secure IMF executive board approval for the fifth tranche of its facility, standing at about $334 million.
Sri Lanka is among the small open economies that face major risks such as tariffs, geopolitical conflict and economic fragmentation, said Gita Gopinath, the IMF's first deputy managing director.
"That is why there is no room for policy errors," she added, pointing out that about half of Sri Lanka's 16 past IMF programs had ended prematurely, with reform fatigue setting in and hard-won gains reversed.
Sri Lanka started talks with Washington after the United States imposed tariffs of 44% in April on its exports of about $3 billion, which were later suspended.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Daily Mail
6 hours ago
- Daily Mail
ALEX BRUMMER: Treasury is a hurdle for growth
Britain has an overload of budgetary data. As the IMF noted in its recent annual inspection, too frequent fiscal events mean constant policy changes to meet targets. Chancellor Rachel Reeves is victim of her own rules in her determination not to be Liz Truss, who ruined the UK's reputation for probity. The rush to get on top of borrowing and debt was responsible for the ill-fated attack on winter fuel payments which is being reversed. Similarly, the Government is now under pressure from the backbenches to pull back on welfare reforms, introduced in the spring statement. The latest public sector borrowing data shows that in the first two months of the current financial year borrowing is not far off target. At £37.7billion it was less than the Office for Budget Responsibility predicted. It would be terrific if one could say this is down to growing GDP. Reality is that Reeves swingeing increase to employers' national insurance contributions brought in 22 per cent more to the Government coffers in May than a year earlier. Early months of the year often give a misleading reading. Tax receipts are boosted by the timing of capital gains payments. Spending by government departments has yet to ramp up. The full impact of the Government's interest rate bill is not felt. It is too soon for anyone in Whitehall to predict victory. The corollary of the stabilised public finances is May retail sales. The slump is a result of higher shop prices and rising uncertainty about jobs. The real worry for a government backing a growth agenda is that it is not happening. The just-published public spending review and infrastructure plans show that capital spending will climb to a peak of 3.9 per cent of output by 2027-28 but then fall back. It is unlikely to produce the transformation that Labour wants before the next election. The Treasury is spellbound by the public finances. That reflects a history of crisis management dating back to the 1976 sterling collapse and refreshed by the 2008 great financial crisis and the Truss episode. I recall during the banking crisis being called by a senior Treasury official who cautioned against big bailouts because it might trigger a run on the pound. The growth agenda doesn't sit easily at the Treasury. The Department for Business ought to be an expansion engine. It is hampered by a reputation as a parking space for sub-octane Cabinet ministers. Incumbent Jonathan Reynolds is no more than a cypher for Downing Street where real polices are set. The long delays in launching an industrial-tech strategy are a case in point. One must reach back to the Harold Wilson government of the 1960s to find a model for industrial innovation with the Department of Economic Affairs headed by George Brown. It eventually collapsed in a heap like its heavy drinking founder. A growth agenda, building on science, tech and AI excellence, needs a powerhouse department of growth and secretary of state capable of resisting Treasury orthodoxy. That person may not exist in a Labour government bereft of commercial experience and top-notch economic thinkers. Andy Burnham, in exile in Manchester, shows signs of the kind of bravery required. That's probably why political rivals would prefer he were not empowered.
BreakingNews.ie
13 hours ago
- BreakingNews.ie
Putin boasts about Russia's economy despite recession fears
President Vladimir Putin has hailed Russia's economic outlook, saying it has managed to curb inflation and ease its reliance on energy exports. His optimistic account in a speech at the St Petersburg International Economic Forum contrasted with sombre statements by some members of his government, who warned at the same conference that Russia could face a recession. Advertisement Economic Minister Maxim Reshetnikov had said that the country is 'on the brink of going into a recession'. Mr Putin mentioned the recession warnings, but emphasised that 'it mustn't be allowed'. He pointed out that manufacturing industries have posted steady growth, allowing the country to reduce its reliance on oil and gas exports. 'The perception of Russian economy as based on raw materials and dependent on hydrocarbons exports have clearly become outdated,' Mr Putin said, adding that the economy grew by 1.5% in the first four months of 2025 and inflation has dropped from double digits to 9.6%. Advertisement Mr Putin has used the annual forum to highlight Russia's economic prowess and encourage foreign investment, but Western executives have shunned it after Moscow sent troops into Ukraine in 2022, leaving it to business leaders from Asia, Africa and Latin America. The economy, hit with a slew of Western sanctions, has so far outperformed predictions. High defence spending has propelled growth and kept unemployment low despite fuelling inflation. Large recruiting bonuses for military enlistees and death benefits for those killed in Ukraine also have put more income into the country's poorer regions. But over the long term, inflation and a lack of foreign investments pose threats to the economy. Advertisement Economists have warned of mounting pressure on the economy and the likelihood it would stagnate due to lack of investment in sectors other than the military. Mr Putin said the growth of military industries helped develop new technologies that have become available to the civilian sector. He vowed to continue military modernisation, relying on lessons learned during the fighting in Ukraine. 'We will raise the capability of the Russian armed forces, modernize military infrastructure and equip the troops with cutting-edge equipment,' Mr Putin said. Advertisement
Reuters
20 hours ago
- Reuters
Vatican-backed report seeks financial reform to avert decades of lost development
LONDON, June 20(Reuters) - A commission launched by the late Pope Francis has outlined financial reforms it says could help to avert decades of lost development in poor countries that face onerous repayments as global public debts reach record levels. The Jubilee Commission report is published ahead of the once-a-decade United Nations Financing for Development Conference that takes place in Seville, Spain, later in June. The environment for this jubilee-year campaign could hardly be more different from the last - 25 years ago - that yielded billions in historic debt forgiveness. Mariana Mazzucato, a University College London professor and member of the commission, said today's debt crisis was symptomatic of "a broken investment model". "The solution has to be public investment strategies that build productive capacity, domestic value added and sustainable fiscal space," she said. The report recommends measures including more debt suspension initiatives and steps to ensure money from institutions, such as the International Monetary Fund and the World Bank, does not end up flowing from countries to private creditors. It also urges legal changes in London and New York - the jurisdictions for most bond contracts - to disincentivise creditors from refusing to take part during debt restructurings. After the debt forgiveness that followed the previous jubilee campaign, many developing countries, freed of their existing debt, turned to more expensive private lending, and China's lending ballooned. As a result, countries including Sri Lanka, Zambia and Ghana slid into default. A wave of sovereign defaults unleashed by the COVID-19 pandemic - and exacerbated by the pressure of Russia's invasion of Ukraine and a global rate-hiking cycle that boosted borrowing costs - largely crested last year. But the commission said dozens of countries are still squeezing spending to repay debt - with long-term implications for development and social cohesion. Average interest costs for developing countries as a share of tax revenues has almost doubled since 2014, while 3.3 billion people - and more than half of Africans - live in countries that spend more on debt service than health. The system, the commission's leaders said, traps countries in a cycle in which private lenders send cash when times are good - but quickly shut off access when global risk re-emerges. When lenders of last resort, such as the IMF, send money, the commission said that money often goes towards repaying creditors to avoid default. Martin Guzman, commission co-chair and Argentina's ex-Economy minister, said that created a problem for both creditors and debtors. "They don't come to the table with the right conditions for engaging timely and sustainable restructurings, and that aggravates the development crisis," he said.
