SL economic strain completely unnecessary
Sri Lanka will overcome the economic hurdles, but it is completely unnecessary, a major emerging market fund manager says.
Mattias Martinsson, CEO and CIO of Tundra Fonder in Stockholm told the Business Times on Thursday that it is hard for him to comprehend how the crisis in Sri Lanka panned out. He added that international funds will not take a bet on Sri Lankan equities just yet. “The bailout package from the International Monetary Fund (IMF) and restructuring takes time. The country needs to be closer to getting the IMF package to attract foreign funds,” he said noting that the funds would want to understand the future plan of the country and will request more firm ground on the economic condition.
Sri Lanka was aware that the situation could become critical as far back as June ’21 and that was the time to prepare to go for a bailout, he added.
He pointed out that the IMF was not considered an option till recently. “I have not seen anything like this.”
He also said that if the pandemic and the war between Russia and Ukraine didn’t happen the country could have worked its macroeconomic difficulties.
“With debt restructuring, IMF bailout and the bridging finance Sri Lanka can manage. In the long run, the country will get through this but it is a completely unnecessary hardship.”
Taking Egypt as an example which went through a similar crisis Mr. Martinsen pointed out that Egypt attracted investment from friendly countries before floating its currency. “With such funds coming in Egypt’s currency strengthened and then they floated it.”
He added that limited access to essential goods is a big issue – much more than currency depreciation as was witnessed in Lebanon.
“My interpretation is that the government took a bet for things to get better or things to turn around and hoped that tourism will rebound.
As a responsible government, this is clearly not what one must do.”
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