While admitting that Sri Lanka’s economy was in a bad shape due to local factors, and global factors beyond its control, Special Assignments Minister Dr. Sarath Amunugama yesterday said the Central Bank was negotiating with the IMF to obtain US$ one billion under a Stand By Arrangement (SBA) to boost sagging foreign reserves of the country.
Addressing the media at the weekly SLFP news briefing at the party head office, Minister Amunugama said the first tranche of the SBA was expected by late February or early March.
“Unfortunately, our economy depends on global economic situation. There is a huge gap between the inflow and outflow of capital as a result of the prices of our traditional exports of tea, rubber and coconut have been low in the last couple of years,” he said.
“In contrast, prices of many of our import goods have been on the rise except oil and petroleum products. Sri Lanka’s economy would have been in an extremely precarious situation if oil prices also remained high,” Minister Amunugama said.
“Sri Lanka’s annual debt service amounts to a mammoth US$ 4 billion or more which is a big burden on the economy. The foreign remittances have remained relatively stagnant in recent times, which has aggravated the situation,” Minister Amunugama stressed.
The relief package given to the public in two stages last year, slashing prices of several commodities including fuel and gas prices, large scale vehicle imports using Concessionary Vehicle Import Permits have contributed to deplete the State revenue in a big way, Minister Amunugama said.
Skills Development and Vocational Training Minister Mahinda Samarasinghe said the Middle East crisis, economic meltdown in the US, Europe, and China in particular, had affected the global economy dearly and smaller countries like Sri Lanka in particular.
“For instance, China’s economy has recorded a slow growth of 6.9 % in 2015 as opposed to 12 % or more in the previous ten years or so. The slow growth of the world’s second largest economy has no doubt had a big negative effect on the world economy,” he said.
Minister Samarasinghe responding to a journalist said the lifting of sanctions on Iran by the US and the EU undoubtedly was a good message to Sri Lanka but it took time to enjoy the full benefits as clearing of doors for banking transactions and re-arranging and re-opening of imports from countries like Sri Lanka need time.
HE said volatile situation in Russia, Iran, Syria and Iraq - our major tea buyers had reflected very badly on Sri Lanka’s economy.
Responding to another query, Minister Samarasinghe said he knew nothing about the unnamed investor who had allegedly promised to pump US$ 1 billion into the Sri Lanka’s economy on a request by Finance Minister Ravi Karunanayake.
The official foreign reserves stood at US$ 7.29 billion end December 2015, down from US$ 8.21 billion end 2014.
The IMF approved the first SBA for Sri Lanka equivalent to SDR 1.65 billion or about US$ 2.56 billion in July, 2009. (Sandun A Jayasekera)
Camel Economist Thursday, 21 January 2016 05:52 AM
Within a year distroy the economy by yamapalana biggest corrupt bunch with Police State
lal Thursday, 21 January 2016 06:04 AM
ask MR to pay his 4 billion USD debt.
Sri Thursday, 21 January 2016 08:23 AM
What about the mystery man?
Bala Thursday, 21 January 2016 08:27 AM
Blame MR for this legacy when he took loans at high interest and pocketed the high comms. Takes time to correct the trends.
Rav Thursday, 21 January 2016 08:30 AM
Any problem blame MR. No solutions. This will continue for the next 4 years. What has ravi and harsha the so called economic geniuses has done so far. Nothing but stealing without doing anything and unsustainable economic policies.
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