The Investor Sentiment - Equity and investments forum for Sri Lankans

Join the forum, it's quick and easy

The Investor Sentiment - Equity and investments forum for Sri Lankans
The Investor Sentiment - Equity and investments forum for Sri Lankans
Would you like to react to this message? Create an account in a few clicks or log in to continue.
Please send an email to if you face any technical difficulties when posting
Display results as :
Advanced Search
Latest topics
CCS.N0000 ( Ceylon Cold Stores)Wed Mar 20, 2024 11:31 amHawk Eye
When Will It Be Safe To Invest In The Stock Market Again?Wed Apr 19, 2023 6:41 amකිත්සිරි ද සිල්වා
Dividend AnnouncementsWed Apr 12, 2023 5:41 pmකිත්සිරි ද සිල්වා
MAINTENANCE NOTICE / නඩත්තු දැනුම්දීමThu Apr 06, 2023 3:18 pmකිත්සිරි ද සිල්වා
SEYB.N0000 (Seylan Bank PLC)Thu Mar 30, 2023 9:25 amyellow knife
The Korean Way !Wed Mar 29, 2023 7:09 amකිත්සිරි ද සිල්වා
In the Meantime Within Our Shores! Mon Mar 27, 2023 5:51 pmකිත්සිරි ද සිල්වා
What is Known as Dementia?Fri Mar 24, 2023 10:09 amකිත්සිරි ද සිල්වා
SRI LANKA TELECOM PLC (SLTL.N0000)Mon Mar 20, 2023 5:18 pmකිත්සිරි ද සිල්වා
THE LANKA HOSPITALS CORPORATION PLC (LHCL.N0000)Mon Mar 20, 2023 5:10 pmකිත්සිරි ද සිල්වා
Equinox ( වසන්ත විෂුවය ) !Mon Mar 20, 2023 4:28 pmකිත්සිරි ද සිල්වා
COMB.N0000 (Commercial Bank of Ceylon PLC)Sun Mar 19, 2023 4:11 pmකිත්සිරි ද සිල්වා
REXP.N0000 (Richard Pieris Exports PLC)Sun Mar 19, 2023 4:02 pmකිත්සිරි ද සිල්වා
RICH.N0000 (Richard Pieris and Company PLC)Sun Mar 19, 2023 3:53 pmකිත්සිරි ද සිල්වා
Do You Have Computer Vision Syndrome?Sat Mar 18, 2023 7:36 amකිත්සිරි ද සිල්වා
LAXAPANA BATTERIES PLC (LITE.N0000)Thu Mar 16, 2023 11:23 amකිත්සිරි ද සිල්වා
What a Bank Run ?Wed Mar 15, 2023 5:33 pmකිත්සිරි ද සිල්වා
104 Technical trading experiments by HUNTERWed Mar 15, 2023 4:27 pmkatesmith1304
GLAS.N0000 (Piramal Glass Ceylon PLC)Wed Mar 15, 2023 7:45 amකිත්සිරි ද සිල්වා
Cboe Volatility Index Tue Mar 14, 2023 5:32 pmකිත්සිරි ද සිල්වා
AHPL.N0000Sun Mar 12, 2023 4:46 pmකිත්සිරි ද සිල්වා
TJL.N0000 (Tee Jey Lanka PLC.)Sun Mar 12, 2023 4:43 pmකිත්සිරි ද සිල්වා
CTBL.N0000 ( CEYLON TEA BROKERS PLC)Sun Mar 12, 2023 4:41 pmකිත්සිරි ද සිල්වා
COMMERCIAL DEVELOPMENT COMPANY PLC (COMD. N.0000))Fri Mar 10, 2023 4:43 pmyellow knife
Bitcoin and Cryptocurrency Fri Mar 10, 2023 1:47 pmකිත්සිරි ද සිල්වා
CSD.N0000 (Seylan Developments PLC)Fri Mar 10, 2023 10:38 amyellow knife
PLC.N0000 (People's Leasing and Finance PLC) Thu Mar 09, 2023 8:02 amකිත්සිරි ද සිල්වා
Bakery Products ?Wed Mar 08, 2023 5:30 pmකිත්සිරි ද සිල්වා
NTB.N0000 (Nations Trust Bank PLC)Sun Mar 05, 2023 7:24 amකිත්සිරි ද සිල්වා
Going South Sat Mar 04, 2023 10:47 amකිත්සිරි ද සිල්වා
When Seagulls Follow the TrawlerThu Mar 02, 2023 10:22 amකිත්සිරි ද සිල්වා
Re-activatingSat Feb 25, 2023 5:12 pmකිත්සිරි ද සිල්වා
SAMP.N0000 (Sampath Bank PLC)Wed Nov 30, 2022 8:24 amකිත්සිරි ද සිල්වා
APLA.N0000 (ACL Plastics PLC)Fri Nov 18, 2022 7:49 amකිත්සිරි ද සිල්වා
Banks, Finance & Insurance Sector ChartTue Nov 15, 2022 5:26 pmකිත්සිරි ද සිල්වා
VPEL.N0000 (Vallibel Power Erathna PLC)Sun Nov 13, 2022 12:15 pmකිත්සිරි ද සිල්වා
WATA - WatawalaSat Nov 05, 2022 8:44 amකිත්සිරි ද සිල්වා
KFP.N0000(Keels Food Products PLC)Sat Nov 05, 2022 8:42 amකිත්සිරි ද සිල්වා
Capital Trust Broker in difficulty?Fri Oct 21, 2022 5:25 pmකිත්සිරි ද සිල්වා
IS PIRATING INTELLECTUAL PROPERTY A BOON OR BANE?Thu Oct 20, 2022 10:13 amකිත්සිරි ද සිල්වා
What Industry Would You Choose to Focus?Tue Oct 11, 2022 6:39 pmකිත්සිරි ද සිල්වා
Should I Stick Around, or Should I Follow Others' Lead?Tue Oct 11, 2022 9:07 amකිත්සිරි ද සිල්වා
DV-2024 Program: Online RegistrationThu Oct 06, 2022 11:26 amකිත්සිරි ද සිල්වා

Information posted in this forum are entirely of the respective members' personal views. The views posted on this open online forum of contributors do not constitute a recommendation buy or sell. The site nor the connected parties will be responsible for the posts posted on the forum and will take best possible action to remove any unlawful or inappropriate posts.
All rights to articles of value authored by members posted on the forum belong to the respective authors. Re-using without the consent of the authors is prohibited. Due credit with links to original source should be given when quoting content from the forum.
This is an educational portal and not one that gives recommendations. Please obtain investment advises from a Registered Investment Advisor through a stock broker

Go down
Top contributor
Top contributor
Posts : 5785
Join date : 2014-02-28

Sri Lanka sails towards fiscal consolidation Empty Sri Lanka sails towards fiscal consolidation

Sun May 08, 2016 9:51 am
Message reputation : 100% (3 votes)
Sri Lankan Government is set to prune capital expenditure of state institutions amounting to Rs. 626 billion while re-working the 2016 budget aimed at fiscal consolidation in the wake of an agreement with the IMF on a 36-month Extended Fund Facility (EFF) for 185 per cent of Sri Lanka’s quota in the IMF (about SDR 1.1 billion or US$1.5 billion), state policy makers revealed. The IMF is now working on the staff report for the Executive Board to get their approval towards disbursing the EFF in installment basis to Sri Lanka commencing from next month, IMF sources in Washington said.

The Treasury is facing a major task of tackling weak income generation with tax revenues down considerably while the budget deficit in 2015 has gone up to 7.2 per cent of GDP from 6 per cent in 2014. Amendments to revenue proposals have disfigured the 2016 budget beyond identification, an economic expert in the state policy think tank who wished to remain anonymous said. The IMF EFF will boost the countries dwindling foreign exchange reserves which has dropped to US$ 6.2 billion in March from $6.3 billion in January this year, he said adding that tax reforms are not possible at the moment due to low economic growth and missing budget targets.

Sri Lanka should take prompt action to improve tax administration, broaden the tax base and eliminate a range of tax loopholes as suggested by the IMF during negotiations for the EFF, he pointed out. The Central Bank is likely to issue sovereign bonds to the tune of $2.2 with the clinching of the IMF bailout facility by Sri Lanka. Economist Professor Sirimal Abeyratne expressed the hope that an IMF programme will bring short term temporary benefits, raising the confidence of investors and businesses that government finances will be put on a more stable path. He told the Business Times that the bailout facility would help to treat the country’s economic ills for two or three months and thus the government should take prompt action to tackle the current situation.

The government’s action of tax hike increases revenue will help to reduce the budget deficit, he said adding that like spending cuts, it could cause lower spending and lead to a fall in economic growth. One of the best ways to reduce the budget deficit as a percentage of GDP is to promote economic growth. With economic growth, people pay more VAT, companies pay more corporate tax (tax on profits), and workers pay more income tax. High economic growth will reduce the budget deficit as there is a need to raise tax rates or cut spending, he disclosed. Meanwhile Fitch Rating said Sri Lanka’s IMF programme eases near-term balance-of-payments risks but will require sustained commitment from the authorities to address long-standing weaknesses in external and public finances.

Fitch said therefore it has no immediate impact on Sri Lanka’s ‘B+’/Negative sovereign rating. The downgrade resulted from rising refinancing risks, a decline in foreign reserves, and weakening public finances. But refinancing risk remains high. Sri Lanka has large external debts to refinance, with over $3 billion of external debt due in 2016 and an external liquidity ratio far below the ‘B’ and ‘BB’ category medians, the rating agency said The programme sets ambitious fiscal targets that may be hard to achieve. It aims to slash Sri Lanka’s fiscal deficit to 3.5 per cent of GDP in 2020 from a recently restated 7.4 per cent last year, partly through comprehensive tax system reform.

Persistently low government revenue, which has dropped to around 12 per cent of GDP, is a key contributor to fiscal weakness, and implementing reforms to the tax system could be challenging (last November’s budget did not outline any major tax reforms), Fitch Ratings said. Meanwhile Moody’s said the IMF programme will ease Sri Lanka’s liquidity pressures but ‘not its fiscal challenges”. In a media statement on Thursday, the rating agency said that the IMF programme will have a credit-positive effect on liquidity, but will only marginally affect government credit metrics, unless fiscal policy implementation is much smoother than “we expect”.

The IMF programme has three potential benefits for Sri Lanka’s external financing profile. First, programme disbursements, together with $650 million of forthcoming multilateral and bilateral loans, according to the IMF, will increase liquidity. Second, the IMF financing will be at more favourable terms than Sri Lanka can get through the market. Third, the agreement may help restore market access, Moody’s said. “However, we expect bumps in the sovereign’s fiscal consolidation path because of difficulties in implementing robust revenue raising measures. We forecast a further increase in the government’s debt burden and debt/GDP ratio this year and next, leaving Sri Lanka vulnerable to a shift in financing conditions.” ... 92931.html
Ethical Trader
Ethical Trader
Top contributor
Top contributor
Posts : 5568
Join date : 2014-02-28

Sri Lanka sails towards fiscal consolidation Empty Re: Sri Lanka sails towards fiscal consolidation

Mon May 09, 2016 1:58 pm
Thanks Shashi.
Back to top
Permissions in this forum:
You cannot reply to topics in this forum