Sri Lanka's ambitious governance and macro-linked bonds | Explained
The Hindu
Sri Lanka introduces innovative governance-linked and macro-linked bonds to incentivize economic growth and improve governance practices.
Sri Lanka's restructuring of $12.55 billion in international bond debt is set to lead to the launch of a series of new, as-yet-untested instruments linked to economic growth and governance.
Observers say it is one of the most complex sets of instruments ever arranged in a restructuring. The bonds aim to give the country additional debt relief if the economy falters and to encourage it to improve its governance.
Below are some aspects of the new bonds.
The governance-linked bond (GLB) is the first of its kind and is designed to reward Sri Lanka for transparency and effective economic management by reducing the interest on its debt. To earn that reduction, Sri Lanka must meet targets, or key performance indicators (KPIs), seen as indicating better governance.
The first KPI demands that Sri Lanka exceed a baseline ratio set by the International Monetary Fund (IMF) for total revenue to GDP in both 2026 and 2027, which the Fund has projected at 15.3% and 15.4% respectively.
The second target requires the Finance Ministry to prepare and publish a "Fiscal Strategy Statement" on its website in both 2026 and 2027.
If Sri Lanka meets both targets, the bond coupon will be reduced by 75 basis points from late 2028. This would reduce its interest payments by $80 million over the remaining life of the instrument, which matures in 2035.
Tata Consumer CEO adjusts Starbucks store opening plans, maintains goal of 1,000 stores by 2028.
Tata Steel operationalizes all-women shift at Noamundi Iron Mine, showcasing commitment to women's empowerment in mining industry.
India's circular economy potential: $2 trillion market value, 10 million jobs by 2050, says G20 Sherpa Amitabh Kant.
Stock market indices decline on Monday due to global cues, with Sensex dropping 384.55 points and Nifty losing 100.05 points.
India's merchandise exports fall in November as import bill hits record high, leading to a soaring trade deficit.
India's wholesale prices ease in November, with food inflation slowing, fuel prices in deflation, and manufactured products rising.
COP29 in Baku boosts carbon market standards for international emissions control, highlighting potential benefits and challenges of carbon trading.
Rupee weakens to 84.83 against US dollar due to muted equities and high oil prices, RBI leadership transition impacts.
Benchmark indices Sensex and Nifty decline due to global cues and caution ahead of WPI inflation data.
Dixon Technologies and Chinese mobile phone company Vivo will set up a joint venture.
Donald Trump hosted Apple CEO Tim Cook for a Friday evening dinner at the president-elect’s Mar-a-Lago resort, per a source.