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Ravi warns IMF reserve push could burden households
Colombo, Sept. 12 (Daily Mirror) - UNP MP Ravi Karunanayake today cautioned in Parliament that Sri Lanka’s push to raise foreign reserves to USD 7.2 billion by December 2025 under the IMF’s Extended Fund Facility (EFF) could come at a heavy cost to households and small businesses.
He noted that official reserves stood at USD 6.1 billion at end-August, requiring an additional USD 1.1 billion within four months—a target he said raised serious questions about feasibility and sustainability.
Karunanayake asked the Finance Minister to clarify whether the buildup would come from genuine inflows such as exports, tourism, remittances, and foreign direct investment, or from short-term borrowing, swaps, and speculative inflows that could create a “reserve illusion.”
He warned that temporary financial engineering could push up interest rates, restrict credit to SMEs, and add to the burden of families already struggling with high living costs. He further pressed for transparency, urging the Central Bank to publish a clear breakdown of gross versus net usable reserves, including forward liabilities and swap obligations.
The MP also raised concerns that import compression or tighter monetary policy could be used to protect reserves, potentially damaging growth and consumer welfare. He demanded clarity on contingency plans if the USD 7.2 billion target is not achieved, cautioning that failure could trigger further IMF conditionalities and credibility risks.
Karunanayake stressed that Parliament must ensure the reserve target reflects a genuine path to recovery, rather than a cosmetic exercise aimed at appeasing external lenders.
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