• Stresses the need for a common economic program and enhanced governance and accountability
• Warns sharp rise in interest rates will place pressure on many businesses 

JKH Chairman Krishan Balendra

Premier blue chip John Keells Holdings Chairman Krishan Balendra yesterday strongly urged all parties to leave aside political differences and work together in the national interest towards a common

economic program and enhanced governance and accountability.

He said the appointment of a new President on 21 July and the subsequent appointment of a Prime Minister and Cabinet, in line with the relevant constitutional and Parliamentary procedures, should result in the achievement of the political stability needed to resolve the current economic crisis and implement the necessary reforms. “While most political parties have committed to support progressive reforms and the necessary policies required to address the economic issues,” he added.

Balendra also welcomed the positive progress made thus far in terms of engagement with the International Monetary Fund (IMF), where technical discussions have concluded. The authorities expect that a staff level agreement can be reached shortly given anticipated political stability. As a precursor to an IMF program, the Government appointed the financial and legal advisors to support the creditor negotiation process to restructure the country’s foreign debts, whilst also engaging with supportive nations to secure bridge funding.

He said in terms of policy actions, the Central Bank of Sri Lanka undertook significant policy rate hikes to curtail spiralling inflation and support the currency while increases in both direct and indirect tax rates were announced along with fuel pricing adjustments and proposed revisions to increase electricity tariffs to have market reflective pricing mechanisms to reduce the cost of subsidies to the Government.

“We are supportive of the initial steps taken by the authorities towards economic recovery and urge all key stakeholders to reach consensus to ensure the actions required to revive the economy are taken in a decisive and expeditious manner,” Balendra said.

However, the JKH Chairman noted that the significant increase in interest rates and the continued depreciation of the currency during the quarter, resulted in significant pressure on the cost structures of many businesses in the country.

“While the pricing adjustments on account of the inflationary impacts of the depreciation of the currency have taken place to an extent and could be one-off in the event the currency does not depreciate any further.” Balendra said the sharp rise in interest rates will place pressure on many businesses due to pressure on funding working capital requirements, particularly in the context of current supply chain challenges.

He said the JKH Group has mitigated the risk of increasing LKR interest rates, to an extent, as it had converted many of its short-term facilities into term facilities while also ensuring such facilities were obtained on a fixed/capped rate basis.

JKH kicks off FY23 with  strong performance