Economy Forward

The media is full of new reported on the IMF's 1st review of the US$ 3 bn IMF programme held in September 14 to 27, 2023. All IMF friends and well wishers eagerly waited for the release of the 2nd tranche of US$ 330 mn immediately after this review. High expectations were based on significant national policy changes implemented by the authorities sitting at the IMF table in a short period of time from the receipt of the first tranche of US$ 333 mn immediately after the approval of the IMF programme on 20 March 2023. Under this 48-months long programme, US$ 663 mn is scheduled to receive in 2023. Some media quoting the IMF press briefing held on 27 September reported that IMF did not reach a staff-level agreement with Sri Lanka due to a potential shortfall in government revenue generation and, therefore, 2nd tranche of about US$330m would only be released after the IMF reaches a staff-level agreement, and there was no fixed timeline for receiving it. However,...

  The press notice issued by the new CB (NCB) on 21 September 2023 (last Thursday) shows a list of new Treasury bonds and Treasury bills issued by the Public Debt Department for the conversion of provisional advances and Treasury bills held by the CB under the Domestic Debt Optimization policy (DDO). See link:  https://www.cbsl.gov.lk/sites/default/files/cbslweb_documents/press/pr/press_20230921_conversion_of_outstanding_credits_of_cbsl_to_government_into_negotiable_debt_instruments_under_ddo_e.pdf Accordingly, 10 new Treasury bonds and 12 existing Treasury bills have been issued to the NCB  on 21 September 2023   as indicated below. Accordingly, total debt so converted amounted to Rs. 2,713,144,352,006 consisting of Rs. 2,492,347,352,006 into Treasury bonds and Rs. 220,797,000,000 into Treasury bills. Treasury bonds are issuances of new series while Treasury bills are reissuances to existing series. The maturity of 10 new Treasury bonds is annualized for 10 years ra...

  The new Central Bank of Sri Lanka (NCB) governed by a new Act effective from 14 September 2023 has released a brand new publication on 21 September 2023 titled "Financial Soundness Indicators Q2 of 2023."  see the link to the publication  https://www.cbsl.gov.lk/sites/default/files/cbslweb_documents/publications/financial_soundness_indicators_2023_q2.pdf   I felt to jot down few thoughts to question the meaningless and purpose of this publication of dumping a set of statistics to the general public at this juncture. Features of the publication - 04 things No message by the Governor or any high ranking official is conveyed on the level of financial soundness covered in the publication. The publication covers 13 short tables to highlight movements of selected financial statistics collected/computed from the balance sheet and income statement of the licensed banking sector and licensed finance company sector to compare the position in 2nd quarter 2023 with that of 202...

  I was surprised to see that the new central bank (NCB) today (20 September 2023) announced the results of the weekly auction of Treasury bills as usual (as below), instead of my expectation to stop the activity immediately after the certification of the Central Bank of Sri Lanka Act, No 16. of 2023 (CBSLA) on 14 September 2023 which repealed the Monetary Law Act (MLA) that governed the Central Bank of Sri Lanka since its inception in 1950. My expectation was extremely high because of the massive fuss that the present central bank management carried over the involvement of the central bank in the fiscal front consequent to the provisions of the MLA. Accordingly, a public notion was created that the economic crisis coupled with hyper-inflation was a result of the excessive money printing to finance the government.  The public debt management, issuance of government securities on behalf of the government, purchase of government securities (Treasury bills) from such issuanc...

  This article is to provide several issues of the DDO governance relating to the exchange of Treasury bonds with the EPF as revealed from the CB press notices and to highlight the financial loss to the EPF against the general notion of no loss spread by the authorities. The press notice issued by the Public Debt Department on 14 September It provides the details of 12 new Treasury bonds privately issued under the DDO as shown below. See the press notice  https://www.cbsl.gov.lk/sites/default/files/cbslweb_documents/press/pr/press_20230914_settlement_of_exchange_of_accepted_eligible_treasury_bonds_for_twelve_new_step_down_fixed_coupon_treasury_bonds_pursuant_to_the_dod_optimisation_programme_e.pdf Highlights of the issuance area as follows. The issuance is back-dated to six days from 15 January 2023 to 15 June. 2023. Bonds are due to mature on 12 dates from March 2027 to February 2038. Each bond carries two coupon rates, i.e., 12% up to 1st semi-annual coupon due in 2026 and 9...