GFN is a bit of a bonkers indicator, and I don't think it makes sense to prioritize it for sovdebt. A thread based off a piece I wrote (technical, but hope the thread is not too bad). Relevant to SL Personal opinion on this, since it is quite an academic argument on the basis of what COULD be. Important point is that even my view here doesn't really matter in the grand scheme, SL works within the global debt architecture and has no ability to unilaterally change it.

A lot of "ideology first" narratives of the DDO that pick and choose numbers (sometimes incorrectly) to fit a message. Attempted to set out a wide range of numbers to argue what the actual impact of the DDO on to the EPF is. TLDR - Not much of an impact of EPF. Of course, one can fiddle around with numbers to show a loss, but upto reader to decide if these are data first or ideology first fiddlings.

Excellent article by @TheoMaret and @Brad_Setser on SL's debt restructuring assumptions - a simple yet critical point on how "easy" it is and thereby, not "sustainable".

A few thoughts beyond on areas I have an alternate view.
ft.com/content/34f53d… Will take 3 overall points Theo and Brad make

1. Sri Lanka will still be left with a high interest/revenue ratio
2. The DSA does not address external debt sustainability
3. The DSA does not ensure Sri Lanka's debt sustainability

Did politicians or voters who voted them in cause the Sri Lankan economic crisis was a question that was increasingly asked since 2022, though very partisan now.

Would like to talk of a 3rd (unwilling?) actor here - middle class consumption To be clear, I'm not trying to "blame" anyone here, but rather to explore how the reality of what happened is far more complex than "corruption" or even "bad leadership" and "bad policy".

All my views, but very happy to discuss any disagreements!

Now that the DDO is approved, thought I'd talk through some of the questions and hopefully help understand what's going on there.
#SriLanka #lka #EconomicCrisisLK #DomesticDebt #SovDebt I've been staying out of this discussion until recently given the sensitivity of the matter, and an inability to talk about this without getting into technical numbers. Think now though, there are some overall questions I CAN help answer or at least help frame.

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 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.

With the recent appreciation of the currency and the interest rate hike as well, a lot of questions floating around so doing a quick explainer

#Sr Disclaimer - Personal views all. Key point is that very specific short-term moves are rarely due to overall factors, but more day-to-day decisions made in the forex market. Bankers have more visibility into those than I do, especially into how it'll perform next few days

Far more delayed than I expected (economy wasn't behaving nicely enough 🙃) but here's the piece on ways to realistically deal with the costs of the tariff hikes in context of the CEB's financial issues, and a Twitter summary of the same

econlanka.substack.com/p/tariff-hikes…

https://twitter.com/ChayuDamsinghe/status/1627275906430693378

Disclaimer - As mentioned in previous piece, a lot of this remains an oversimplification. Energy sector is v complex to put in a few articles. There are likely more things that can be done beyond this and reallocations possible. Personal views as always

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 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.

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 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.

Quick thread on what I'm expecting from Budget 2023, and what it could mean.

#SriLankaEconomicCrisis #SriLanka #lka #EconomicCrisisLK #Budget2023 2/ As always, personal opinion, but especially here, since this is speculative just a day in advance.

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 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.

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 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.

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 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!

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 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.

With the new government finally expected to bring in an interim budget in August (fingers crossed), lets look at government expenditure, how high it really is, and what we can do about it.

#SriLanka #EconomicCrisisLK

(1/25) Despite some belief that Sri Lanka has high expenditure levels, and we need to "cut down" on this - this is actually not the case.

Looking at the data shows that Sri Lanka actually has quite low government expenditure by global and regional standards.

(2/25)

Time for a series of polls, at least of my Twitter audience. Remember, Twitter polls are anonymous.

Do try to answer the lot, promise it'll be interesting!

(also please don't read too much into the wording of the answers!)

Question 1: Do you want GR out from the presidency? Question 2: Do you want RW out from the premiership/presidency?

For good intentions and bad, a question coming up now is "What happens if #GoHomeGota succeeds?"

A lot of false info and lies floating around about this, so let me try and clarify to best of my ability

#අරගලයටජය #EconomicCrisisLK #GoHomeRanil for reach

(1/20) Disclaimer first, especially since political content. Politics is not my expertise, so take THAT aspect with a grain of salt. Will do my best to keep this analysis economic. But still personal opinion

(2/20)

A small thing on Steven Hanke and his push for a currency board.

He works for the Cato Institute, a free-market think tank pushing for right-wing policy. That's fine, people can have views. But important to be AWARE of this bias.

Here are a few extracts from Hanke: "A Dollarization Mission for Secretary Pompeo"

"If Secretary Pompeo wants to make life even more difficult for Beijing’s renminbi promoters, he should grab the mantle and start promoting the use of the U.S. dollar. "

Why is there no fuel in Sri Lanka?

Main reason - no USD to pay for it.

Then why is there no USD?

Let me try and explain, and thereby give some hope on how we can get out of this sooner than later.

(1/19)

#EconomicCrisisLK #FuelCrisisLK #GoHomeGota2022 Sri Lanka has had 2 main sources of USD.

1 - export/remittance/tourism earnings (ie trade)
2 - investment/grant/debt inflows (ie fund flows)

Our main source of outflows have been 3 - imports and 4 - debt repayments.

So increase 1 and 2, reduce 3 and 4. Simple, right?

(2/19)

Coming back after a few days off Twitter, thought I'd try and explain in a (hopefully) easy + visual way why, despite things being really tough right now, there's space for hope - even if it doesn't feel like it
🧵👇
#SriLankaEconomicCrisis #EconomicCrisisLK #SriLanka #aragalaya Disclaimer - personal opinion of course, and this framework is a complete oversimplification, but hopefully this can serve as a useful introduction into why there's space for hope