[ad_1]
ECONOMYNEXT – Sri Lanka’s debt restructure will take place on the existing debt sustainability analysis based on original projections made by the International Monetary Fund, Central Bank Governor Nandalal Weerasinghe said, despite economic indicators improving faster than expected.
Sri Lanka has brought inflation down faster than predicted in an International Monetary Fund macroeconomic framework and the exchange rate has also appreciated. Some of the indicative targets for March has been exceeded.
“To restore debt sustainability there are a few targets,” Governor Weerasinghe told reporters after a monetary policy meeting where policy rates were cut 2.5 percent.
“As you know there are three targets. So restructuring will happen on the basis of those targets.”
According to the IMF’s debt sustainability analysis Sri Lanka has to bring down the gross financing need, the annual borrowings and roll-overs of debt to an average of 13.5 percent of gross domestic product in 2027-2032 year.
Foreign debt service should not exceed 4.5 percent of GDP in the same period.
The debt to GDP ratio will should be brought down to 95 percent by 2032. The primary deficit of the budget has also been brought down significantly keeping a tight control on expenditure.
Growth and exchange rate will change the values. Higher growth will increase the GFN as a share of GDP.
Stable exchange rate, which implies monetary stability, can also boost growth and make it easier to manage budgets.
Last year also inflation out-turn were better than expected and growth at 7.8 percent was a little better than the 7.8 percent projected.
“Their projection for inflation last year was 70 percent. The actual was 50-pct,” Weerasinghe said. “That does not mean they are going to revise the whole 3, 4 year, 10 year framework.”
Sri Lanka itself as projected stronger growth than the IMF’s 3.1 percent for the next few years.
There may be a revision to the economic outlook after the September review of Sri Lanka’s IMF program in September, Governor Weerasinghe said.
The September review will be based on June data. By September Sri Lanka is also hoping to wrap up debt re-structuring. (Colombo/June11/2023)
[ad_2]
Source_link
