Discover and read the best of Twitter Threads about #EconomicCrisisLK
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Now that the initial euphoria/rage about the IMF approval has hopefully faded, going to talk a bit about what it means and how I look at it.
#SriLanka #lka #EconomicCrisisLK
#SriLanka #lka #EconomicCrisisLK
Usual disclaimer of being personal opinion and thereby, subjective. I'm also especially aware of how political and partisan the topic has become, and being clear that's not my goal.
3/ So yeah, the IMF is here. For me, it's part of a long process and there's so much that remains up in the air, but broadly I remain cautiously optimistic.
✅The IMF Executive Board has approved #LK's 17th IMF program, under the Extended Fund Facility (EFF). However, this is only the beginning.
Here is a 🧵about what this means for 🇱🇰 and what happens next. 1/6
#EconomicCrisisLK #IMF #SriLanka #Reforms
Here is a 🧵about what this means for 🇱🇰 and what happens next. 1/6
#EconomicCrisisLK #IMF #SriLanka #Reforms
🏦The EFF aims to provide assistance to countries experiencing serious balance of payments imbalances because of structural impediments, or slow growth. It provides support for comprehensive programs with policies needed to correct structural imbalances over a longer period. 2/6 
Domestic Debt Restructuring (DDR): A stitch in time saves nine.
Excerpts of an interview with Dr. @NCdeMel by
@MarianneDavid24
Details why DDR should be done sooner, rather than later.
Links to full interview + paper is on the last tweet.
@CSE_Media #EconomicCrisisLK
1/10
Excerpts of an interview with Dr. @NCdeMel by
@MarianneDavid24
Details why DDR should be done sooner, rather than later.
Links to full interview + paper is on the last tweet.
@CSE_Media #EconomicCrisisLK
1/10
How to tackle a DDR?
So far #SriLanka has talked about restructuring ext debt & not domestic debt.
Our paper shows that current IMF targets for DR are unlikely to deliver a sustainable pathway for econ recovery & debt management, unless rates are brought down by over 10%.
2/10
So far #SriLanka has talked about restructuring ext debt & not domestic debt.
Our paper shows that current IMF targets for DR are unlikely to deliver a sustainable pathway for econ recovery & debt management, unless rates are brought down by over 10%.
2/10
We don’t see a path for reducing int rates adequately, given high risk in the economy & lack of confidence on financial management.
Int rates are also high because Govt has a huge borrowing appetite simply to repay what has already been borrowed.
That is a vicious cycle.
3/10
Int rates are also high because Govt has a huge borrowing appetite simply to repay what has already been borrowed.
That is a vicious cycle.
3/10
Finance Fallacy: Real rate = Nominal rate – inflation rate
Most investors rely on this formula, which is WRONG!
Let me tell you why.
1/6
@CSE_Media #EconomicCrisisLK
Most investors rely on this formula, which is WRONG!
Let me tell you why.
1/6
@CSE_Media #EconomicCrisisLK
First, let's look at the meaning of those terms?
• Nominal int rate: rate of return earned in “money” terms
• Real int rate: rate of return earned in “real” (purchasing power) terms. It's the return after adjusting for effect of #inflation (impact of rising price levels)
2/6
• Nominal int rate: rate of return earned in “money” terms
• Real int rate: rate of return earned in “real” (purchasing power) terms. It's the return after adjusting for effect of #inflation (impact of rising price levels)
2/6
Why the formula is wrong?
“Fisher's Equation” gives the link between:
• Real rate (R),
• Nominal rate (N), and,
• Expected inflation rate (E).
1 + N = (1 + R) * (1 + E)
So,
R = {(1 + N)/(1 + E)} – 1
An “approximation” of this turns out to:
R = N - E
3/6
“Fisher's Equation” gives the link between:
• Real rate (R),
• Nominal rate (N), and,
• Expected inflation rate (E).
1 + N = (1 + R) * (1 + E)
So,
R = {(1 + N)/(1 + E)} – 1
An “approximation” of this turns out to:
R = N - E
3/6
On this independence day, I'd like to tell a story of a country in economic crisis and why, despite everything, I'm still cautiously hopeful for the long term of Sri Lanka.
#SriLanka #lka #SriLankaIndependenceDay #EconomicCrisisLK
#SriLanka #lka #SriLankaIndependenceDay #EconomicCrisisLK
After years of borrowing that led to an unsustainable situation, an external moment triggered a huge economic crisis in the country, possibly the worst in modern history.
The exchange rate skyrocketed, inflation rose to very high levels before falling, interest rates shot up to unexpectedly high levels. There were huge shortages across the country, especially of food and medicine in the poorer parts of the country.
#SriLanka ISB holders Group insists that Domestic Debt is "reorganised"
This has both good as well as bad sides.
Let me tell you all about it, in English.
1/12
@CSE_Media #EconomicCrisisLK
This has both good as well as bad sides.
Let me tell you all about it, in English.
1/12
@CSE_Media #EconomicCrisisLK
The "Group"
• Known as "an ad-hoc creditor committee"
• Consists of 100+ foreign investors
• Led by a steering committee of 10+ members
• Represents over 55%+ of ISBs non- domestic holdings
• Advised by Rothschild and White & Case
Source: Min. of Finance (23.09.2022)
2/12
• Known as "an ad-hoc creditor committee"
• Consists of 100+ foreign investors
• Led by a steering committee of 10+ members
• Represents over 55%+ of ISBs non- domestic holdings
• Advised by Rothschild and White & Case
Source: Min. of Finance (23.09.2022)
2/12
Summary
• They are ready to hold debt restructuring talks - quickly and effectively
• They acknowledge Sri Lankan authorities’ engagement with official creditors toward a resolution of the current crisis and restoration of debt sustainability.
3/12
• They are ready to hold debt restructuring talks - quickly and effectively
• They acknowledge Sri Lankan authorities’ engagement with official creditors toward a resolution of the current crisis and restoration of debt sustainability.
3/12
Déjà Vu: SDF restrictions are back!
@CBSL restricted access to its Standing Deposit (SLF) and Standing Lending Facility (SLF) to Banks.
Last time this happened was in Sep 2014.
Let me tell you:
• Why?
• What?
• How?
in a simple way.
1/13
@CSE_Media #EconomicCrisisLK
@CBSL restricted access to its Standing Deposit (SLF) and Standing Lending Facility (SLF) to Banks.
Last time this happened was in Sep 2014.
Let me tell you:
• Why?
• What?
• How?
in a simple way.
1/13
@CSE_Media #EconomicCrisisLK
What is SDF/SLF?
SDF: banks can park their excess money on an overnight basis. SDF Rate now is 14.5% p.a.
SLF: banks can borrow money on an overnight basis, to meet their liquidity needs. SLF Rate now is 15.5% p.a.
Collectively, SDFR and SLFR is called "CBSL policy rates".
2/13
SDF: banks can park their excess money on an overnight basis. SDF Rate now is 14.5% p.a.
SLF: banks can borrow money on an overnight basis, to meet their liquidity needs. SLF Rate now is 15.5% p.a.
Collectively, SDFR and SLFR is called "CBSL policy rates".
2/13
What’s the role of SDF?
Banks with excess money (usually) lend to other banks, at a rate higher than SDFR.
This is because they can earn SDFR simply by depositing at CBSL.
After lending, any excess money that remains, they'd park at CBSL SDF.
3/13
Banks with excess money (usually) lend to other banks, at a rate higher than SDFR.
This is because they can earn SDFR simply by depositing at CBSL.
After lending, any excess money that remains, they'd park at CBSL SDF.
3/13
At the end of SL's economically hardest single year since probably the 1930s, thought I'd take a look back at the changes we've had and what factors I'm looking at for 2023.
#SriLankaEconomicCrisis #EconomicCrisisLK #lka #SriLanka
#SriLankaEconomicCrisis #EconomicCrisisLK #lka #SriLanka
2/ I'll limit the lookback so as not to repeat and focus on how I personally think of 2023. As always, all of this is just personal opinion, especially in context of the absolutely massive uncertainty we continue to be in.
3/ My biggest takeaway from 2022's economic journey is how much I see as achieved for the country. To be very clear, this is not a statement on the current administration, but on a view on change I see on the overall system.
Quick thread on what I'm expecting from Budget 2023, and what it could mean.
#SriLankaEconomicCrisis #SriLanka #lka #EconomicCrisisLK #Budget2023
#SriLankaEconomicCrisis #SriLanka #lka #EconomicCrisisLK #Budget2023
2/ As always, personal opinion, but especially here, since this is speculative just a day in advance.
3/ Main point of the budget going to be both short term (2023) and long term (next few years) plan on reducing budget deficit. Both IMF driven but regardless, something SL needs to do.
Here's a hypothetical example to show the story of corruption and theft in Sri Lanka and why it's really painful to reverse it - for reasons that you might not realise!
#SriLanka #lka #EconomicCrisisLK #SriLankaCrisis #corruption
#SriLanka #lka #EconomicCrisisLK #SriLankaCrisis #corruption
2/ Let's assume some 20 years ago, in an election, a politician's crony friend donated some 100m LKR to an election campaign. In return, the crony wanted at least 200m LKR in profit a year in some way if the politician got elected.
3/ The politician gets elected. Now, he must help his crony friend.
Can he explicitly steal 200m and give every year? Nah, that's too easy to trace.
Instead, he creates an opportunity for the crony friend to earn that kind of money.
Can he explicitly steal 200m and give every year? Nah, that's too easy to trace.
Instead, he creates an opportunity for the crony friend to earn that kind of money.
1/ These tax changes are sudden and unexpected, cause pain, and feel unfair for many. I'm going to try and make some sense of why this ended up so and what we can do about it.
#EconomicCrisisLK #SriLankaEconomicCrisis #lka #SriLanka #TaxHike
#EconomicCrisisLK #SriLankaEconomicCrisis #lka #SriLanka #TaxHike
2/ Personal views not reflecting anyone else. Twitter is also not a great place for this due to character limits - so this interview I did might be a better explanation.
3/ To start with - yes, these taxes are painful. There's no question about it. Yes, the pain will be different for different people - someone might have to cut down on a night of drinks with friends while someone else might struggle with debt.
1/ Corruption and tackling it is a key question, especially now that tax hikes have come in place. Noting down my thoughts on it and how we can move forward regarding the problem in my view.
#EconomicCrisisLK #SriLankaEconomicCrisis #lka #SriLanka #Corruption
#EconomicCrisisLK #SriLankaEconomicCrisis #lka #SriLanka #Corruption
2/ As always my personal view. This is how I see corruption in SL rather than any academic or "correct" way to see it (which doesn't exist obv). So discussion and questions welcome!
3/ I personally think of corruption as happening in one of 5 ways.
1. Outright theft and low-level bribes
2. Political expenses
3. Crony projects
4. Crony policies
1. Outright theft and low-level bribes
2. Political expenses
3. Crony projects
4. Crony policies
1/ From a piece I wrote a few months ago but never got around to publishing. Vast majority of Sri Lankans have access to poor quality of life, and in a crisis, my view was that we should ideally focus on them. The piece is linked at the end.
#EconomicCrisisLK #lka #SriLanka
#EconomicCrisisLK #lka #SriLanka
2/ Of course, this is very much personal view and there are many flaws in this argument as its oversimplified a lot. But my hope was that this serves as a good basis to think and talk about inequality in Sri Lanka.
3/ The main idea is that concept of "middle class" or "lower class" or "upper class" is way too subjective and moral. Becomes very difficult to talk and make decisions based on it. Recent tax debate shows this as well.
Taxes are Bad. Inflation is worse. Ignorance is worst.
Yes, taxes are up.
Yes, it’s very steep.
Yes, it could’ve been done at a slower pace.
The million dollar question is:
At what cost?
Want to know?
Let me tell you more.
@CSE_Media #EconomicCrisisLK
1/6
Yes, taxes are up.
Yes, it’s very steep.
Yes, it could’ve been done at a slower pace.
The million dollar question is:
At what cost?
Want to know?
Let me tell you more.
@CSE_Media #EconomicCrisisLK
1/6
Yes, taxes take our money away. We feel it as it’s visible.
But if you look closely, inflation takes away more.
It’s a silent serial killer.
It’s worse for low/middle income groups, because they spend most % share of their income on food.
Remember, food inflation is 95%.
2/6
But if you look closely, inflation takes away more.
It’s a silent serial killer.
It’s worse for low/middle income groups, because they spend most % share of their income on food.
Remember, food inflation is 95%.
2/6
What creates inflation?
• Cost-push
Supply side effects (shortages, disruptions, etc.)
• Demand-pull
Demand side effects - related to money printing & low interest rates.
The spike in inflation was mostly due to demand side, while recently was due to supply side effects.
3/6
• Cost-push
Supply side effects (shortages, disruptions, etc.)
• Demand-pull
Demand side effects - related to money printing & low interest rates.
The spike in inflation was mostly due to demand side, while recently was due to supply side effects.
3/6
President @RW_UNP addresses @ParliamentLK.
@BandulaDr says the @RW_UNP is broadening the lunch project for school children and 51 percent in the student community there will be food security. The president has increased the budget of the project by 4 billion rupees.
#SriLanka #SLNews #LKA #EconomicCrisisLK @CabinetSL
#SriLanka #SLNews #LKA #EconomicCrisisLK @CabinetSL
The Government annually implements the school lunch program aiming at 1.08 million students in 7,926 schools spending Rs. 4 billion says @BandulaDr.
#SriLanka #SLNews #LKA #EconomicCrisisLK @CabinetSL
#SriLanka #SLNews #LKA #EconomicCrisisLK @CabinetSL
@sjbsrilanka withdraws the proposed @HarshadeSilvaMP to COPE and recommends @charith9. - Opposition Leader @sajithpremadasa.
#lka #slnews
#lka #slnews
Ranjith Siyambalapitiya says, for a month #SriLanka spends 93 billion rupees on state worker salaries each month, for pension we spend 119 billion rupees a month and for the entire year it comes to 1428 billion rupees.
#EconomicCrisisLK #SLNews #LKA @ParliamentLK
#EconomicCrisisLK #SLNews #LKA @ParliamentLK
Sri Lanka's Opposition launches a program called Maha Jana Sabhava, where ideas and issues are being collected from the general public, with motives of potentially implementing system change and combating the #EconomicCrisisLK.
#SriLanka #SLnews
#SriLanka #SLnews
Several communities represented at the discussion such as #Aragalayaprotestors belonging to the deaf community, lawyers, mothers, state workers and supporters of SJB and was chaired by SJB Leader @sajithpremadasa, National Organiser TissaAttanayake and @hirunika7.
1)Discussions revolved around -
1. Economic Crisis and a plan for recovery
2. Increases in malnutrition and decreases in healthy Body Mass Index (BMI)
3. Establishment of committees for certain sectors involved in business and enterprise
4. Men and women's rights
1. Economic Crisis and a plan for recovery
2. Increases in malnutrition and decreases in healthy Body Mass Index (BMI)
3. Establishment of committees for certain sectors involved in business and enterprise
4. Men and women's rights
In a previous tweet, we gave an explanation of what the increase in someone’s electricity bill would look like in rupee terms, instead of focusing only on the % increase.
#DefaultLK #EconomicCrisisLK
#DefaultLK #EconomicCrisisLK
1/ Although the bills go up, a less focused fact is that the subsidy for lower-end users actually increases substantially (details below). Looking at the whole evidence implies that there is little to suggest the tariff hike is as regressive as a first glance might suggest.
2/ The main reason for the increase in tariffs is the rise in generation costs for the CEB, stemming from the rising price of oil and higher foreign exchange costs. In a recent PUCSL conference, the following was provided
#Thread: Sri Lankan scholars, experts & writers have, over the last few months, offered insightful commentary in @the_hindu to help us better understand and appreciate #SriLankaEconomicCrisis, as well as the political unrest it brought about.
Sharing some links below:
Sharing some links below:
#SriLanka: October 2021: The ground benath the President's feet - Prof. Jayadeva Uyangoda
thehindu.com/opinion/lead/t…
thehindu.com/opinion/lead/t…
#lka: April 2022: Sri Lanka stares at bankruptcy or redemption - Ahilan Kadirgamar thehindu.com/opinion/lead/s…
"We don't encourage violence but we have to be determined and strong," says Geoffrey Alagaratnam of the President's Council.
Geoffrey Alagaratnam of the President's Council said, "The #Aragalaya has done very well not violent, peaceful and non-political unfortunately somewhere down the line it got diluted." #SLNews #LKA
A Press Conference was held by the Family Health Bureau. The thread below mainly focuses on Nutrition for kids and the promotion and education of breastfeeding during the #EconomicCrisisLK.
#SriLanka #SLNews #LKA #Malnutrition @MoH_SriLanka
#SriLanka #SLNews #LKA #Malnutrition @MoH_SriLanka
The breastfeeding week will continue from Aug 01-Aug 07 under the theme; Step up for breastfeeding, educate and support. #SLNews
Stay tuned for live parliament updates, where chairmanship is under President @RW_UNP on the thread below.
#SriLanka #SLNews @ParliamentLK
#SriLanka #SLNews @ParliamentLK
@RW_UNP @ParliamentLK #SriLanka's President @RW_UNP made his arrival to @ParliamentLK alongside the Speaker @YapaMahinda and the Secretary-General of Parliament, Dhammika Dasanayake. This is the inauguration of the first day of the third session of the ninth parliament.
.@RW_UNP addresses the @ParliamentLK and says, "Our country has different religions, languages, and cultures. I will protect all their rights." #SriLanka #SLNews
Time for another #FactCheck, especially on how the protest has delayed IMF support.
According to Minister @nanayakkara77 the "chaotic situation in the country fuelled by revolutionaries" delayed a staff-level agreement b/w SL and the IMF. [1]
This is FALSE.
According to Minister @nanayakkara77 the "chaotic situation in the country fuelled by revolutionaries" delayed a staff-level agreement b/w SL and the IMF. [1]
This is FALSE.
The delay in progressing on IMF negotiations is largely due to the delays in enacting tax laws to change the tax structure, presenting a plan to achieve debt sustainability, and adopting an interim budget.
Whilst the IMF has not officially issued any statements about the protests delaying a bailout, it has called on Sri Lanka to pro-actively engage with China on debt-restructuring.
#lka #EconomicCrisisLK #SriLankaProtests #srilankancrisis
#lka #EconomicCrisisLK #SriLankaProtests #srilankancrisis
