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Analysis

Sri Lanka supports increased investment through public-private partnerships
OBG
plus

Rising public debt and spending rationalisation has brought public-private partnership (PPP) deployment to the forefront of economic and trade policy reforms, with the Vision 2025 development strategy emphasising increased utilisation and diversification of PPPs. Shared development frameworks are thus expected to expand beyond the mainstay power and transport sectors into education, health and tourism. To…

Analysis

Sri Lanka lowers tariffs to increase trade volumes and investment
OBG
plus

Flat export growth and a widening trade deficit have prompted Sri Lanka to launch a series of trade policy reforms aimed at boosting domestic competitiveness and export-oriented investment. A new trade strategy, announced in early 2017, is expected to shift the focus towards value-added manufacturing offerings and support programmes for exporters. Tariff reforms have been identified as a critical…

Analysis

EU reinstates trade preferences for Sri Lanka
OBG
plus

The government’s push to increase export receipts will benefit from the restoration of its Generalised System of Preferences Plus (GSP+) trade concessions status with the EU, which had been suspended for nearly seven years prior to mid-2017. Although data shows that EU imports from Sri Lanka did not significantly decline in the years following its loss of GSP+ concessions, regaining the status is…

Analysis

More moderate lending growth forecast for Sri Lanka's banks due to stricter monetary policy
OBG
plus

Following several years of high credit growth, lending in Sri Lanka slowed in 2017 on the back of stricter monetary policies and higher interest rates. While credit growth is not forecast to reach the peak levels seen between 2015 and 2016, it is expected to rise moderately from 2018 to 2020 thanks to renewed GDP growth and better credit quality. Cooling Off Private sector credit soared…

Analysis

Private bank growth in Sri Lanka offers new investment opportunities
OBG
plus

Sri Lanka’s private banks enjoyed strong loan and deposit growth in 2017 due to careful asset management and judicious repricing. However, ongoing increases in capital requirements are leading a number of institutions to undertake rights issues and float debenture bonds to raise funds, giving investors a chance to participate in the market’s overall growth. Market Share According…

Analysis

Tax reforms and Inland Revenue Act bolster the federal budget in Sri Lanka
OBG
plus

Low government revenue is a key challenge facing sustainable macroeconomic growth in Sri Lanka, adversely affecting its finances and limiting the government’s ability to fund infrastructure and social initiatives. Tax reforms launched under an IMF loan agreement, coupled with the Inland Revenue Act (IRA) to improve tax collection, should offer much-needed fiscal space. Revenue Volatility Data from…

Analysis

Sri Lankan stock market outlook
OBG
plus

Sri Lanka had a challenging year in 2017, with GDP growth slowing notably to 3.3% in the third quarter, from 4.6% during the same period the previous year. The country was affected by a series of natural disasters and a dengue fever epidemic, which impacted tourist arrivals, retail, construction and agriculture, while driving the inflation index to highs of 7.8% in October. Together with the…

Analysis

Sri Lankan bond market outlook
OBG
plus

Monetary tightening and the Central Bank of Sri Lanka (CBSL) flexible exchange rate policy served to cool the economy by slowing down credit to desired levels and controlling inflation to some degree. The economy, which saw significant weakness in 2016 and the first quarter of 2017, readjusted accordingly. Starting in February 2017 foreign investors returned at a slow and steady pace, resulting…

Analysis

Sri Lanka embraces its potential as a renewable energy powerhouse
OBG
plus

Sri Lanka is poised to become a regional, and perhaps global, leader in renewable energy (RE) development, with the push to switch to a robust clean energy agenda coming in the wake of increasingly extreme weather patterns, which includes two years of severe drought that significantly reduced hydropower output. According to a May 2017 report published by the Asian Development Bank (ADB) and…

Analysis

Sri Lanka looks to liquefied natural gas as medium-term energy source
OBG
plus

Sri Lanka’s electricity shortages have become increasingly severe in recent years, with declining hydro-power output, and chronic problems and breakdowns at the Lakvijaya coal station, a 900-MW plant located in Norochcholai. This, combined with rising Japanese and Indian interest in countering China’s geopolitical influence, has facilitated the incorporation of liquefied natural gas (LNG)…