Sri Lanka’s securities commission ordered the Colombo Stock Exchange to be halted next week to give investors more time to have clarity on the country’s economic conditions.
The board of directors of the Colombo Stock Exchange called upon Sri Lanka's Securities and Exchange Commission (SEC) to temporary close the stock market citing the present situation in the country, the securities regulator said in a statement on its website on Saturday.
"Many other stakeholders of the securities market, including the Colombo Stock Brokers Association, have also sought the temporary closure of the market on the same grounds," the SEC said.
“The SEC has carefully considered the grounds that have been adduced by them and has evaluated the impact the present situation in the country could have on the stock market, in particular the ability to conduct an orderly and fair market for trading in securities.”
Sri Lanka needs between $3 billion and $4bn this year to pull itself out of an unprecedented economic crisis and plans to start talks with the International Monetary Fund (IMF) for help, Finance Minister Ali Sabry said.
The country is looking at making a “decent case” before the IMF to help preserve the economy, Mr Sabry said. Talks are scheduled to begin in Washington on April 18 and he expects emergency relief funds a week later, if things go well.
He indicated some funds the nation is seeking will come from other lenders and governments besides the IMF, but didn’t provide a breakdown.
The funds are crucial to the success of a debt restructuring process initiated by the island nation this week after suspending some outstanding loan and interest payments.
Citizens exasperated by double-digit inflation amid a shortage of everything from fuel to food and power cuts for as long as 13 hours have taken to the streets, seeking President Rajapaksa’s ouster, as well as that of his brother, Prime Minister Mahinda Rajapaksa.
It would be in the best interests of investors as well as other market participants if they are afforded an opportunity to have more clarity and understanding of the economic conditions presently prevalent, in order for them to make informed investment decisions, the SEC said in the statement.
Therefore, the SEC decided to direct the CSE to temporarily close the stock market for a period of five business days starting April 18, the statement added.
Meanwhile, a Sri Lankan delegation is headed to Washington, looking to secure up to $4bn from the IMF and other lenders to help the island nation pay for food and fuel imports and limit debt defaults, according to Bloomberg.
The country is in political turmoil, with street protests by citizens calling for the ouster of President Gotabaya Rajapaksa.
The $81bn economy faced $8.6bn worth of debt obligations this year before it suspended payments on foreign loans to preserve cash to pay for essential food and fuel imports.