The Finance Ledger

News Summary. SMEs are quite significant to the Sri Lankan economy. They generate over 50%of the GDP of the country, and give employment to approximately 4.5 million of its citizens. However, SMEs have issues of poor access to finance, excessive regulations, and poor government support. Recently, SJB MP Dr. Harsha de Silva, Ceylon United Business Alliance(CUBA), had a proposal on how these issues can be solved to allow SMEs a greater role in the economy. Dr. Harsha de Silva's proposals 1.Export-focused Diplomacy                 Sri Lanka brought commercial officers and ambassadors to train at an economic diplomacy program   with the Havard kennedy School in 2017 on commercial promotion of Sri Lankan exports. This program was stopped, and embassies have not played a role in helping exports. Harsha put forward the proposal to revive it by putting trade officers of the export development board in embassies. These officers would liaise wit...

Interest rates are a crucial element of economic performance and key instruments in monetary policy. The term structure of interest rates, which is commonly visualized with a yield curve, describes how government bond yields differ from their time to maturity. This structure indicates inflation, economic growth and the stance of monetary policy.  Before we dive into the term structure of interest rates, it is important to understand some foundational concepts. Spot Rate: The rate of return earned when the investor buys and sells the bond without collecting coupon payments. This is extremely common for short-term traders and market makers.  Yield to Maturity (YTM): T he total rate of return that will have been earned by a bond when it makes all interest payments and repays the original principal What is the Term Structure of Interest Rates? It represents the relationship between interest rates (or yields) on debt instruments that have the same credit quality but different matur...