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Spotlight: Econ Op-eds in Summary (Week ended 12th January '21)



1. Going to the IMF still an option?

By Dinesh Weerakkody

  • The existing economic crisis of Sri Lanka could be attributed to the massive drop in tourism as a result of the pandemic coupled with tax cuts, high public spending and large debt payments which is pushing the country towards near bankruptcy.

  • In such a situation, while payment of US$ 500 Mn due in January would be certainly paid off, with tourism not expected to see a full recovery until 2023 and no permanent fix to drive up exports and FDIs, attracting the balance of US$ 7 Bn required within the year is going to be a heinous task.

  • Therefore, with early crisis concessions from the world bank having expired, a new framework led by the G20 and supported by private sector creditors will be critical to unlock IMF financing for debt-ridden countries.

For the full article – Refer Daily FT

2. Economic recovery; the IMF, SOE reforms and Sri Lanka’s options

By Tennakoon Rusiripala

  • Decreasing foreign reserves, rising inflation seems to pressure the stability of economy. There is increasing uncertainty within the country about food security. Amidst these uncertainties, the Central bank raised rates in order to control inflation.

  • Despite these perilous conditions, there is still a debate about IMF assistance, with those who are against pointing out that conditions attached to a program would leave the country worse-off. However, Sri Lanka have sought assistance from IMF before and conditions imposed by IMF were more towards structural reforms, lower budget deficits, policy reforms and strong financial management.

  • The advantage in associating ourselves with the IMF in an economic recovery program overweighs these conditions. The biggest advantage is the benefit accruing to us through their monitoring function which involves surveillance and capacity building in addition to their lending function.

For the full article – Refer Daily FT

(Compiled by: Promodhya Abeysekara, Malik Nazahim & Mariyan Perera)

Disclaimer: This information has been compiled from sources believed to be reliable but Frontier Research Private Limited does not warrant its completeness or accuracy. The bullet points provided for each summarised opinion article is written by Frontier Research and has no connection to the respective author. Furthermore, the information contained in these reports/emails are confidential and should not be shared publicly. Disclosure, copying and distribution is strictly prohibited.

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