Any winning Presidential candidate and Party will have to continue the ongoing IMF reforms as there is no other way to improve the current economic growth path, said founder Chairman of diversified business entity, Almas Holdings, Imtiaz Buhardeen.
“Some politicians might promise changes such as tax cuts but eventually they will have to give a proposal to the IMF to cover that amount from another increase,” he said.
Buhardeen said that getting IMF support in 2023, implementation of IMF conditions and reforms helped to stabilise the economy and this trend should continue.
“Though some decisions taken by the Government during this IMF reform process created lots of pain for some citizens, it helped most of the country’s indicators to improve,” he said.
Buhardeen said the current reform process had helped many areas to stabilise during the latter part of last year.
“Inflation came down from 70% to below 5%, Interest rates down to 12% from 20% while the Exchange rates also stabilised.
“Foreign reserves increased to around USD 4 billion and from a negative growth rate for around four to six quarters, Sri Lanka’s third quarter GDP in 2023 turned positive. The fourth quarter is expected to be better than this,” he said.
Workers’ remittances improved and they started using formal banking channels due to the confidence in the banking system. Tourism also started to boom and ended the year with almost 1.5 million arrivals and over USD 2 billion in revenue.
The new tax policies helped the Government increase revenue collection and new management measures saw some of the loss-making State Owned Enterprises become profitable while in the third quarter listed companies started making better profits.
“Due to these factors, interest rates which were very high, close to 30%, making it difficult for businesses to reinvest, came down,” Buhardeen said.
Buhardeen with 35 years experience in investing in the share market in the Colombo Stock Exchange and overseas markets, commenting on market performance for last year, said that ASPI gained by 25.5% and in USD terms by around 35%. “Overall the big cap counters did well with Banks and ‘PD’ shares.”
“But most Investors were down, up to 30% on mid Cap and penny shares depending on entry points. Overall, the turnover levels were low on average Rs. 1.7 billion and in the second half, below the Rs. 1 billion mark compared to 2022 which was around Rs. 3 billion and in 2021 passing the Rs. 5 billion mark.”
He recalled that 2021 was the best for the market with low interest rates and high liquidity in the market while 2022 was the worst with the country going through shortages, queues, dollar shortage and finally government defaulting on loans.
“I expect it’s time for CSE to be reflected as a place to make money this year, with investors shifting from Debt Instruments and Fixed Income investments which give lower returns at current rates.”
Commenting on what to expect in the future, he said that with low Interest rates money will flow back to the market and businesses will make better profits. “Expected foreign inflows would result in Ratings upgrades.” Most of the money and investment went into high yield Bonds, TBs, FDs and Debentures, which were attractive options, making it difficult for the market to perform.
