Posted on 04/13/2022 9:34:49 PM PDT by logi_cal869
The Government yesterday signaled Sri Lanka was bankrupt, announcing a temporary suspension of repayment of all external debt as of yesterday, saying the country can no longer honour its commitment owing to poorer financial position caused by external and internal shocks.
The move puts an end to Sri Lanka’s outstanding track record of servicing its external debt obligations since the independence but a “negotiated or soft default” is viewed as more respectable as opposed to a disastrous “hard default”.
Treasury Secretary Mahinda Siriwardena told journalists yesterday that the “orderly and consensual” restructuring of external debt obligations will be buttressed by an economic assistance program supported by the International Monetary Fund (IMF).
He recalled that Sri Lanka has had an unblemished record of external debt servicing since independence in 1948.
“However recent events including the COVID-19 pandemic and fallout from the hostilities in Ukraine, eroded Sri Lanka’s fiscal position,” he said.
(Excerpt) Read more at ft.lk ...
Must be due to the 'Putin price hike'. /s
I wonder what the Center for Naval Analyses has to say this week. /s/s
I wonder when the Chinese flag will fly over Sri Lankan Parliament Building. /s/s/s
When I first saw this I thought it was the babylon bee
Not to mention a bonehead decision to take the whole country’s agriculture “100% organic,” resulting in immediate 20% reduction of rice and tea production. Both are major export moneymakers.
Belt and Road. Get the belt and hit the road.
"For U.S. policymakers, the bottom-line concern is not really about the fairness of China’s loans anyway but rather about the extent to which friendly states may fall into China’s orbit. If the United States wants to prevent that from happening, it should pay closer attention to the domestic structural and economic factors that drive these states to seek Chinese deals. The start of the Biden administration offers a good opportunity to do that.We are doomed.First, Washington can address the structural obstacles facing small states in the larger international economic system. In particular, it can use its influence in multilateral development banks to assist middle-income countries that have not sufficiently updated their economic practices. Next, the United States should acknowledge the agency of small states and not diminish them as relinquishing sovereignty when they conduct their own commercial infrastructure deals. In the case of Hambantota port, Sri Lanka’s leadership also sought U.S. financing, which was not forthcoming; U.S. investors were uninterested in the project.
As part of its renewed focus on climate change, the Biden administration might consider opportunities to provide development finance to turn Hambantota into a hub for fuel that complies with a January 2020 requirement from the International Maritime Organization (IMO) to curb sulfur content. In the past year, Sri Lanka has relaunched fuel service operations to capitalize on the need for ships to have IMO-compliant fuel.
Ironically, so did I.
I then wondered if this is the first of many dominoes...
Pretty names.
I wonder what collateral China has. Usually their belt and road initiatives come with some strict collateral.
China lent billions to poor countries. They can’t pay it back. May 19, 2020
But it looks like India is coming to the rescue...
SriLanka needs between $3 billion to $4 billion this year to pull itself out of an unprecedented economic crisis....India to the rescue with $2 Billion....IMF will likely carry the rest. .....Until next time.
Sri Lamka population = 22 Million people....Sri Lanka’s also has had monster external debt arising from their persistent trade deficits...$60 billion debt.
How can they ever repay their debt since they don’t have goods to offer that
their creditor nations want to buy?
It appears Sri Lanka is yet another debtor nation.
What are the major products exported from Sri Lanka?
Mineral fuels including oil:$695.2 million
Vehicles:$537.8 million
Iron and steel:$292.5 million
Salt,sulphur,stone,cement:$291.7 million
Cereals:$241.4 million
Cotton:$232.8 million
Machinery:$218.1 million
Pharmaceuticals:$208.5 million
Knitted or crocheted fabric:$132.6 million
Arms,ammunition:$121.2 million
But another site has a different list and claims $11B a year in exports.
The most recent exports are led by Tea ($1.27B), Other Women’s Undergarments ($518M), Knit Women’s Undergarments ($466M), Knit Women’s Suits ($447M), and Non-Knit Women’s Suits ($446M). The most common destination for the exports of Sri Lanka are United States ($2.61B), United Kingdom ($922M), India ($740M), Germany ($678M), and Italy ($460M).
You can’’t have too many other women’s undergarments.
Tourism accounts for another $3.5 billion a year pre-covid.
Well I’m old school and believe in living within your means - not wants - and establish debt only when necessary. It should be so for countries as well, unfortunately establishing debt is how things operate in the world today.
$60 billion for 20 million population is still a lot $3,000 per person. The average wage there is $13k a year USD.
Well their cost of living is another factor. And with every nation going into inflation mode now I suspect there’s many who won’t want to cut back.
It sounds to me like they are willing to do a restructure and the IMF will help. And India’s providing a $2 billion line of credit.
I think they will work it out.
Assuming they have fair elections, voters will get more attuned to financial management for future elections.
Adding debt loans to debt - just adds more debt if they can’t meet their debt load now. Economies are going to get worse before better. They couldn’t meet the IMF “conditions” before so with the economy already unstable I don’t see things favorable with more debt....and what conditions they’ll now have to agree to.
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