President outlines structural benchmarks for macro-economic adjustments

COLOMBO (News 1st); Sri Lankan President Ranil Wickremesinghe speaking in Parliament on Wedneday (26) outlined the structural benchmarks for macro-economic adjustments

•Parliamentary approval of the new Central Bank Act which will be tabled in parliament next month - 

•Completion of the asset quality review component of bank diagnostic exercise for the two largest state-owned banks and the three largest private sector banks 

•Parliamentary approval of the welfare benefit payment scheme and the application of the new eligibility criteria to identify low-income families for receiving welfare benefit payments – End of May

•Cabinet approval of a comprehensive strategy to restructure the balance sheets of the CEB, CPC, Sri Lankan Airlines, and the Road Development Authority - End-JUNE 

•Cabinet approval of a full revision of the Banking Act - End-JUNE 

•Enact new anti-competition legislation to harmonize it with the United Nations Convention against Corruption, pending comprehensive asset recovery provisions. it is a new anti-corruption legislation  - End-JUNE 

•Cabinet approval of revenue measures to support fiscal consolidation during 2024 - End-JULY 

•Development by the CBSL of a roadmap for addressing banking system capital and Foreign exchange liquidity shortfalls and intervening in banks assessed to be non-viable - End-JULY 

•Completion of the rollout of the ITMIS, expanding its coverage to all 220 heads - End-SEP

•Publication of the report of an IMF-led governance diagnostic technical assistance mission to assess Sri Lanka's anti-corruption framework - End-SEP

•Submission to Parliament for the first reading of the 2024 Appropriation Bill - End-OCT

•Determination by the MOF of the size, timing, instruments, and terms and conditions for potential government recapitalization of viable banks which are unable to close capital shortfalls from private sources - End-OCT. 2023

•Parliamentary approval of the 2024 Appropriation Act and the spending allocations in line with program parameters - End-DEC. 2023

•Submission to Parliament of a new PFM law that will authorize the budget formulation process, roles and responsibilities of relevant agencies, and information and accountability requirements - End-DEC. 2023

•Improve the Bulk Supply Transaction Account (BSTA) to accurately measure the electricity subsidy, and start using it to determine the cost recovery based electricity tariff and government transfer requirement - End-DEC. 2024

•Parliament approval of a full revision of the Banking Act - End-DEC. 2023

•Set retail fuel prices to their cost-recovery levels with monthly formula based adjustments, and compensate the CPC for providing any fuel subsidies with on budget transfers – Continuous

•Adjust the end-user electricity tariff schedule to its cost-recovery with semi-annual formula-based adjustments on a forward-looking basis in January and July each year – Continuous

Achieving Debt Sustainability:

• Debt stock: Public debt should decline below 95 per cent of GDP by 2032 
 
• Post-programme gross financing needs: average annual gross financing needs of the central government during 2027- 32 should remain below 13 per cent of GDP compared to 34.6% in 2022

• Post-programme foreign exchange debt service: annual foreign exchange debt service of the central government should remain below 4.5 per cent of GDP in each year over 2027-32 compared to 9.4% in 2022

• Programme financing gaps: debt service reduction during 2023-27 should be sufficient to close external financing gaps. 

• Under staff baseline scenario, US$17 billion in debt service reduction is required, including the arrears accumulated in 2022 

Sri Lankan President Ranil Wickremesinghe said that the government is aiming for a USD 17 Billion Debt Reduction

"We cannot manage without debt restructuring. That is what I want to make clear to all the members," he told the house.