Spotlight: Econ Op-eds in Summary (Week ended 14th October'20)
1. Sri Lanka’s economic dependency deepens after Moody’s rate cut
By: Shihar Aneez
· Sri Lanka’s high levels of debt have combined with the expectation of a recession this year to result in large financing requirements. Along with a high fiscal deficit, this has led rating agencies to downgrade Sri Lanka’s credit rating this year. This makes it extremely difficult to finance our payments without bilateral funding.
· There are only a few countries that can provide any support. Japan and the EU are unlikely to be able to help, given diplomatic tussles with Japan and the EU already suffering on its own. The MCC grant might be up for discussion with the US, but even this is unlikely to be a large amount.
· That leaves China as one of the country’s only ways to get financial support. The visit to Sri Lanka of a high-powered delegation is a positive step towards this, as is the US$ 500 mn budgetary assistance that followed. China has also pledged further investment as well. If all goes well, this might even prompt geopolitical support, which can continue to support Sri Lanka’s financial situation.
(Compiled by: Chayu Damsinghe)
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