G20 leaders must address the sovereign debt crisis

Thursday, 24 December 2020 00:02 -     - {{hitsCtrl.values.hits}}

ICC Global CEO John Denton

State Minister Nivard Cabraal

ICC SL Chairman Dinesh Weerakkody

The International Chamber of Commerce Sri Lanka with the Daily FT organised a webinar to discuss  ‘Investment Climate and Strategies to attract FDI into Sri Lanka’ on 17 December. 

The opening remarks were delivered by ICC Global CEO John Denton and the keynote address was given by State Minister of Money and Capital Market and Public Enterprise Reforms Ajith Nivard Cabraal.

The ICCSL, Daily FT seminar discussed the opportunities for Sri Lanka to attract FDI. Joining a Q and A session moderated by International Chamber of Commerce (ICC) Sri Lanka Chairman Dinesh Weerakkody, John Denton International Chamber of Commerce Secretary General emphasised that it is vital for G20 leaders to address the sovereign debt crisis in developing and middle income economies to help relieve some of the current shocks to FDI. 

Further he noted that financial assistance to help the world’s poorest countries, and a pledge by G20 leaders to collaborate to do whatever is takes to stabilise markets, restore confidence and safeguard jobs is a must. He urged Italy the next head of the G20 to call for an urgent meeting in January to address many of these issues. Based on 2010 estimates the G20 contributed to 80% of global GDP and over 70% of international trade.

Minister Ajith Nivard Cabraal noted that every country (39 countries) which has been economically downgraded by rating agencies have responded at their best amid the COVID-19 situation. The Minister further noted that the way that the rating agencies have responded is insensitive and unfair. 

However he noted that many investors have responded positively. He said: “Many of the investors did not respond in the way that they had been expected to, as they understand well our debt crisis and how Sri Lanka had dealt with it.”

He further noted that international multilateral agencies are not cooperating enough to contribute to the developing countries to come out of the crisis and highlighted the medium-term positive developments as a result of several key proposals presented in the Government Budget 2021 with regard to fiscal consolidation and deficit financing in the period ahead.

Denton responding to a question noted that micro, small and medium-sized enterprises – which form the backbone of the world economy and account for upwards of 80% of employment in many countries – will be the hardest hit by the economic impact of COVID-19. He asserted that ICC would take every measure to support MSMEs and avoid rampant unemployment.

He asserted: “We must maintain the viability of the millions of small businesses across the world upon which so many workers and families rely.”

The Minister responding to a question about Sri Lanka’s FDI potential noted that Sri Lanka has good soft infrastructure, good skills, a strong private sector, good sea routes and a stable policy regime and therefore welcomed investors to make use of these opportunities and take positions here. 

Denton however noted the need for predictability, sustainability, transparency and respect for the law to become a popular destination for FDI.