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China Vows Continued Support for Sri Lanka Amid Debt Crisis

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China has affirmed its commitment to supporting Sri Lanka as the crisis-hit island nation’s prime minister concluded a visit to Beijing aimed at finalizing a debt restructuring agreement.

Prime Minister Dinesh Gunawardena arrived in China on Monday, where he met with President Xi Jinping and attended the Boao Forum, a prominent international gathering.

During Gunawardena’s visit, discussions centered on Sri Lanka’s ongoing economic challenges, with China holding approximately 10 percent of the country’s total foreign debt.

According to a joint bilateral statement released on Friday, China expressed its willingness to continue supporting its financial institutions in actively negotiating with Sri Lanka. Beijing also pledged to maintain friendly communication with other creditors and play a constructive role in assisting Sri Lanka with financial relief.

Both parties agreed to exert maximum efforts to advance the Port City Colombo and Hambantota Development Project, aiming to transform them into flagship initiatives of the Sino-Sri Lankan joint construction under the Belt and Road initiative.

Hambantota port, once considered a white-elephant project initiated by former president Mahinda Rajapaksa, has been subject to scrutiny for its heavy borrowing from China. Sri Lanka, unable to repay a substantial loan acquired from China in 2017 for the port’s construction, handed it over to the state-owned China Merchants Group on a 99-year lease for $1.12 billion.

Sri Lanka faced a significant economic downturn, defaulting on its $46 billion external debt in April 2022 due to a shortage of foreign exchange to finance essential imports such as food, fuel, and medicine. In response, the country secured a $2.9 billion bailout from the International Monetary Fund (IMF) last year, contingent upon reaching a debt agreement that satisfies foreign creditors.

While China had tentatively agreed to restructure Sri Lanka’s debt in December, the details of the arrangement have yet to be finalized by both parties. Sri Lanka’s government had initially aimed to conclude the foreign debt restructuring by early April.

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Bangladesh’s Foreign Reserves Dip Below $19bn Mark

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During the eleventh month of the current fiscal year, the country’s foreign currency reserves have fallen below $19 billion for the first time. After paying off some import bills, the reserves have now stood at $18.26 billion on Sunday.

According to the International Monetary Fund (IMF), as of May 8, the total foreign currency reserves of the country were $19.82 billion.

Mohammad Mezbauul Haque, the spokesperson of Bangladesh Bank, informed that through the Asian Clearing Union (ACU), the central bank has paid off import bills totaling $1.63 billion over the past two months.

However, Bangladesh Bank maintains that after paying off the import bills, the foreign currency reserves now stand at $23.71 billion.

According to the Central Bank’s accounts, the reserves were $25.27 billion on May 8.

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DSE, DBA Commends PM’s Directive for Govt. Listing

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The Dhaka Stock Exchange (DSE) and the DSE Brokers Association (DBA) have expressed gratitude towards Prime Minister Sheikh Hasina for her directive to list government companies in the capital market, a move hailed as timely and positive.

The directive was issued during the recent meeting of the Executive Committee of the National Economic Council (Ecnec) last Thursday.

Dr. Hafiz Muhammad Hasan Babu, Chairman of DSE, described the directive as a significant step towards enhancing the dynamics of the capital market. He emphasized that besides invigorating the capital market, this move would also attract foreign investment and promote sustainable development.

Despite previous efforts, government institutions had not been listed in the stock exchange, according to a notification issued by the DSE. The Prime Minister’s directive is seen as a pivotal step towards revitalizing and expanding the economy.

Dr. Babu further remarked, “The listing of reputable companies in the capital market, as directed by the Prime Minister, will greatly benefit the country’s economy. It will also enhance investor confidence.”

Similarly, the DBA released a notification applauding the Prime Minister’s directive, terming it as positive and timely for the capital market.

Saiful Islam, President of DBA, expressed optimism about the directive’s potential to accelerate the country’s capital market and overall economy. He pledged support to relevant government departments and regulatory bodies in implementing the directive, ensuring its positive impact on the economy, including the capital market.

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India Shows Interest in Funding Bangladesh’s Teesta Project

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India has expressed interest in financing Bangladesh’s Teesta project, announced Foreign Minister Hasan Mahmud. Speaking to reporters after a meeting with Indian Foreign Secretary Vinay Mohan Kwatra, Mahmud stressed the importance of aligning the project with Bangladesh’s needs. He confirmed discussions on the Teesta issue during the meeting. Mahmud also affirmed Prime Minister Sheikh Hasina’s upcoming visit to New Delhi, indicating that the finalization of the date would depend on the formation of the new Indian government following ongoing elections.

Meanwhile, the IMF has approved a $1.15 billion staff-level loan for Bangladesh in its third tranche. Mahmud noted the ongoing elections in India and the subsequent formation of the new government as factors influencing the scheduling of PM Hasina’s visit.

When asked about the sequence of visits to India and China, Mahmud suggested Delhi’s geographical proximity to Bangladesh. Diplomatic sources suggest PM Hasina’s visit to India is planned for early July, following India’s elections.

Pre-election surveys indicate strong prospects for Indian Prime Minister Narendra Modi’s re-election. Modi previously congratulated PM Hasina on her electoral victory in January, expressing optimism about strengthening ties between the two nations.

The last bilateral engagement between the prime ministers occurred during the G-20 Leaders Summit in September 2023. Modi is expected to invite South Asian and BIMSTEC leaders to his swearing-in ceremony, fostering regional cooperation.

Addressing border killings, Mahmud emphasized the government’s commitment to ending such incidents and promoting the use of non-lethal weapons by border forces. Discussions also covered enhancing physical and people-to-people connectivity, including cooperation with India to import hydropower from Nepal and Bhutan through India. Mahmud highlighted the need to further ease visa restrictions to strengthen people-to-people relations.

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