Sabry says global investors ready for SL if necessary reforms implemented

Foreign Affairs Minister Ali Sabri   

• Claims Govt.’s economic development policy well-received internationally
• Fresh $ 1.2 b investment into Port City Colombo
• Sinopec planning to launch a fuel refinery in Sri Lanka

Foreign Affairs Minister Ali Sabri on Monday stated that investors from across the world are ready for Sri Lanka if essential reforms are implemented to establish a favourable environment for investors.

The Minister also stated that, while some people are waiting for the country’s banking system to collapse, the Government’s economic development agenda has received international acclaim.

He made these remarks while participating at a briefing held at the Presidential Media Centre (PMC) on its “One Way to a Stable Country” series featuring Ministers.

Sabry said that during his recent visit to China, he met with the Chinese Ministers of Finance and Foreign Affairs, as well as the Exim Bank of China Chairman, who expressed their admiration for the efforts taken to promote economic stability and progress in this country.

He also stated that the chairman of China Harbour Engineering Corporation has stated its willingness to invest $ 1.2 billion in the Port City of Colombo.

Sabry pointed out that the Bloomberg newspaper, which was published in China, on 20 June stated that Sri Lanka is effectively managing a challenging economic issue and creating an acceptable economic situation.

Following are excerpts from Foreign Affairs Minister Sabri remarks at the PMC briefing. 

Inflation in our country was 80% last year. It is a very difficult situation as a country. In such a background, the value of your money is severely devalued. The value of Rs. 2 million will decrease to Rs. 1.2 million. Such a situation should be avoided as a country. We wanted to keep Sri Lanka from turning into another Lebanon or Venezuela. That is why we sought assistance.

Lebanon’s inflation rate this year is 485%. Venezuela has 285% inflation. However, inflation in Sri Lanka is 12%. It is expected to fall to 7%-8% by the end of the month. We’ve stopped the current economic incompetence from continuing. There are still power outages in Lebanon. Even if there is a power outage in Sri Lanka, this is not the case right now.

We had a declining economy that had gone off the rails. It is dangerous to continue. The Government has initiated numerous steps to prevent it.

In the face of the crisis, the Government has successfully managed inflation. The International Monetary Fund determined that we would be unable to repay the debt by 2020.  We have to pay $ 203 million as of 7 April 2021. However, the Government was unable to pay it. The Government has $ 20 million in cash. As a result, the country was declared bankrupt.

We had a Governmental debt of 128% of GDP at the time. By 2032, we should have reduced that to 95%. It’s an obvious challenge. The debt should be lowered in order to meet the Government’s objectives. It is essential to manage the country’s economy so that debt may be serviced from income. Domestic and foreign loans should be optimised for this purpose.

Loans from the International Monetary Fund, World Bank, Asian Development Bank, and others cannot be restructured. The reason for this is that they made loans with long-term payments at a relatively low-interest rate. No country in the world has written off those parties’ loans. Nobody else in the world will lend to us if they don’t. We have also received financing from India, Japan, China, and countries representing the Paris Club. At the moment, they are having fruitful discussions about debt optimisation.

There are groups that have given commercial loans at high interest rates. There is a reason we have to take commercial loans. That is, our country changed from being a low-income country to a middle-income country in 1997. Since then, we have stopped giving loans at low interest rates. That is the reason why commercial loans have to be taken at higher interest rates.

However, the companies who provided us with loans have agreed to assist us with debt optimisation. They stated that by receiving this relief, Sri Lanka will be able to develop its economy as a debt-paying country. If this is not done, the country risks going bankrupt once more.

To avoid going bankrupt again, we must optimise our domestic debt. Contributions from funds such as the banking system, employee benefit factors, and employee trust funds should be considered. In addition, our 57 million bank depositors must be safeguarded.

Politicians do not practice credit optimisation. It is being prepared with the participation of the Treasury, the Central Bank, and international financial consultants. However, many misinterpretations of this process and its outcomes are made both within and outside of Parliament. It is not a positive position for the country. Last year was claimed to have had the highest bank interest rate in history. It was between 30% and 36%. However, bank interest is currently declining. Treasury bill interest has fallen to 16% as of today.

Bank interest rates are falling from 29% to 16%-17%. It could fall to 11%-12% by the end of the year. As a result, the interpretations held by various parties are incorrect.

If the country’s debt is not constantly restructured, investors will not come. In such circumstances, inflation becomes unmanageable.

Although some individuals are expecting the country’s financial system to fail, the Government’s economic development initiative has been praised internationally.

Investors from all over the world are eager to invest in Sri Lanka if we are willing to implement the required reforms and create an investor-friendly environment.

During my recent visit to China, I had discussions with the Finance Minister, the Foreign Affairs Minister and the Exim Bank of China Chairman. They expressed appreciation for the measures taken for economic stabilisation and progress in this country.

Also, in the discussion held with the chairman of China Harbour Engineering Corporation, it was mentioned that he is ready to invest $ 1.2 billion in the Port City of Colombo. Also, China’s Sinopec Company informed about their readiness to start a fuel refinery in this country.

Not only that, the Chinese Bloomberg newspaper published on 20 June has also mentioned that Sri Lanka is successfully facing the severe economic challenge and is creating a good economic situation.