USD 1 billion in reserves depleted due to turmoil

* PM blames it all on 51-day political crisis


By Saman Indrajith

Foreign reserves had declined by USD 1 billion within the 51-day political crisis completely upsetting the debt management plans of the country, Prime Minister Ranil Wickremesinghe said, yesterday, making a ministerial statement in Parliament.

The PM said he was confident of overcoming all the challenges in the economic front and the government would present a "people-friendly budget".

Wickremesinghe remained focussed on stabilising the rupee. "The rupee depreciated by 3.8 percent within the 51 days of the crisis while other currencies gained value. From October 26 to December 16, 2018, USD 312.9 million in Treasury Guarantees, USD 29.1 million in Treasury Bills and USD 29.8 million in Treasury Bonds flowed out of the country. We previously had a target of reaching USD 8 billion foreign reserves by the end of this year. We had USD 7,991 million foreign reserves as at October 26, but this had dropped to USD 6,985.4 million owing to the political crisis. As per the estimates, we need a total of USD 5,900 billion to pay for foreign loans and interests this year. Sri Lanka’s highest ever loan installment of USD 2,600 million is due on January 14. Our effort was to manage this debt in manner that it does not burden the ordinary masses. That is why we had made far-sighted plans, but now we have to start again."

The Reserve Bank of India had agreed to provide USD 400 million under SAARC swap facility, the PM said. Asked by NFF Leader Wimal Weerawansa whether the government had promised to lease out China Bay and Kankasanturai ports, Mattala airport and Colombo Port’s East Terminal to India in return, the PM answered in the negative, adding that only the terms and conditions of SAARC swap facility would apply to it.  

The PM also said that another USD 500 million was expected from Chinese Panda Bonds and Japanese Samurai Bonds. He said that USD 1 billion was expected to be obtained from the international monetary market, adding that Finance and Mass Media Minister Mangala Samaraweera would fly to Washington next week to discuss about it. The Premier expressed confidence that those would help arrest the depreciation of Rupee and stabilize it in the market.

The Premier also said that the government would bring down the cost of living and also to develop the tourism sector and the export market.

 "All our mid-term plans stalled due to the political crisis. The political instability for 51 days dealt a severe blow to our economy which was gradually recovering. The economic growth stalled, the rupee further depreciated, Sri Lanka downgraded in international ratings and it failed to secure any aid or loan from any country or international monetary institution during that period. The government projects and programmes came to a standstill. The total damage to the economy is vast and it will take time to bounce back. We need to win back the confidence of the investors and international community. The political turmoil occurred just after Sri Lanka was named a best tourist destination. Some countries imposed travel bans on Sri Lanka and many foreigners cancelled their trips as a result. This deprived us a lot of foreign exchange."

The PM, recapping his own words in Parliament on October 27, 2016 where he urged to think about the country before personal and political motives, said that double down of effort was the need of the hour to confront the challenges before the country in the aftermath of 51 days of political instability.

"We are ready to rebuild the economy shattered by 51-day long crisis. It is not an easy task, but as Sri Lanka upheld people’s sovereignty and democracy overcoming all the challenges against them, we are confident that we can uplift the economy."

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