This edition includes coverage and analysis on the usability of the IMF financing and the volatility of the exchange rate.
This inaugural edition of our latest publication series known as ‘Verité Research Debt Update. ’Sri Lanka is currently experiencing a financial crisis on an unprecedent scale. In May 2022, Sri Lanka defaulted on its debt servicing obligations for the first time in its history since independence. Against this backdrop, the Verité Research Debt Update provides a regular update for investors, policy makers and analysts, on the latest debt related financial news together with a brief analysis on the latest developments. This edition includes coverage and analysis on the financial assurance letters issued by China, India and a group of private bond holders.
The government of Sri Lanka proposed introducing a new law to establish stronger rules on public finance management. The analysis shows that the core weakness in Sri Lanka is not the lack of rules but the lack of compliance. To be effective, any new law will need to contend with this problem of governance
This note argues that the Sri Lankan government’s recent proposal to implement universal tax registration is neither a viable nor effective strategy to increase the country’s tax revenue. Instead, the note proposes four alternative measures that are more feasible, while still serving the same purpose of expanding the tax base and generating more revenue.
Fair and effective recruitment practices have a significant impact on preventing and countering human trafficking. Universally accepted principles of fair recruitment suggest that workers should be well-informed of all aspects of employment, including the nature of the employment, payment mechanisms, access to dispute resolution, and safe return.
Exposure to poor air quality is ranked among the top 10 leading global risk factors for disease. The lack of visibility of air pollution often results in delay in public policy and personal responses, till the problem is acute. Improving the collection and access of air quality data is the first step, to making it safe to breathe in Sri Lanka.
This is the second report in a series of two reports on Sri Lanka’s central government budget for the year 2022. The report assesses whether the expenditure allocations and taxation policies are in line with the government’s policy.
ශ්‍රී ලංකාව තුළ ස්ත්‍රී පුරුෂ සමාජභාවයට අනුකූල වූ අයවැයකරණය ක්‍රියාත්මක කිරීම සම්බන්ධයෙන් ශ්‍රී ලංකා රජය අත්කර ගෙන ඇති අසාර්ථකත්වය මෙම වාර්තාව මගින් ඉස්මතු කෙරේ. රාජ්‍ය ප්‍රතිපත්ති සැලසුම් කිරීම දුර්වල වීම හේතුවෙන් සැලසුම් ක්‍රියාත්මක කරන ආයතන අතර වගවීම දුර්වල වන ආකාරය දක්වන සවිස්තරාත්මක සිද්ධි අධ්‍යයනයක් ලෙස ස්ත්‍රී පුරුෂ සමාජභාවයට පදනම් කරගත් ප්‍රධාන කාර්ය සාධන දර්ශකවලට අදාළ වැඩසටහන සැලකිය හැක. අයවැය ප්‍රතිපත්ති ක්‍රියාවට නැංවීමට පෙර මනාව නිර්වචනය කරන ලද රාමු සහ නිසි අධීක්ෂණ යාන්ත්‍රණයන් ක්‍රියාත්මක වන බව සහතික කරමින් හොඳ විශ්ලේෂණයක් සිදු කිරීමේ වැදගත්කම මෙම වාර්තාව මගින් අවධාරණය කෙරේ.
Sri Lanka faces a challenge to emerge from the continuing crisis. This background note argues that domestic debt restructuring (DDR) provides four benefits critical for the economy and country to emerge from the present crisis stronger and more resilient than before. First, DDR provides a pathway toward solvency for the Government of Sri Lanka. Second, it provides the foundations for the stability of the economy (macro stability). Third, it reduces the likelihood of needing subsequent sovereign debt restructuring, and fourth, it facilitates the equitable sharing of the burden of the costs of the crisis.
A key debate during Sri Lanka’s economic crisis is whether the current dollar shortage is a short-term liquidity problem or a more protracted and systemic issue that requires debt reduction. This insight responds to the view that the dollar shortage is a short-term liquidity problem primarily caused by reduced tourism revenue since the onset of COVID-19. As this insight describes, there are three reasons to be skeptical of this argument.