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Govt. slammed for failing to build foreign reserve buffers

18 November 2021 01:21 am - 8     - {{hitsCtrl.values.hits}}

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  • Opposition MP Imthiaz Bakeer Markar points out how other SA nations, except Afghanistan, beefed up foreign reserves despite pandemic
  • SL foreign reserves dipped to US $ 2.3bn by end-October, from US $ 2.7bn in September
  • Says flawed CB’s exchange rate policy has pushed migrant workers to move back to informal channels to send money 
  • Questions where promised inflows in six-month road map presented by CB Governor Cabraal are

In the absence of policy guidance, the government has failed miserably to build up its foreign reverses in contrast to other South Asian governments, which have beefed up reserves to meet the external challenges, a senior Opposition lawmaker charged. 


“All South Asian nations, except Afghanistan, have been able to increase their foreign reserves, despite the pandemic; even foreign reserves of Pakistan have risen. Meanwhile, our gross official foreign reserves have depleted to record levels and net foreign assets of our Central Bank (CB) have turned negative,” Opposition MP Imthiaz Bakeer Markar said in taking part in the 2022 budget debate in Parliament yesterday.


The country’s foreign exchange reserves dipped to US $ 2.27 billion by the end of last month, from US $ 2.7 billion in September.


Markar noted that the country’s net foreign assets held by the CB turned negative in August, as the foreign liabilities exceeded the foreign assets.


He argued that the pandemic should not be an excuse, given the other South Asian nations, except Afghanistan, have been successful in beefing up their respective foreign reserves.


Commenting on the recent decline in remittance inflows, he noted Sri Lankan migrant workers are moving back to informal channels to transfer the funds back to Sri Lanka, as the CB continues to hold the exchange rate artificially high. He pointed out that this has also contributed to the decline of the country’s foreign exchange reserves.


Although the newly-appointed CB Governor Ajith Nivard Cabraal in his ‘Six-Month Road Map for Ensuring Macroeconomic and Financial System Stability’, unveiled in October, pledged to bring fresh US $ 10 billion in fresh foreign exchange outflows over the six-month period, Markar highlighted that the CB is yet to bring any additional inflows.

 “The CB Governor mentioned of credit lines from India and Oman. However, one and half months have elapsed, we are yet to see any foreign exchange inflows,” he added.


In this backdrop, he noted that all three major global credit rating agencies downgraded the country’s sovereign credit rating beyond junk bond rating and they now expect the country to default International Sovereign Bond (ISB) repayments falling next year.


In the absence of future-oriented policy framework, Markar warned that Sri Lanka is heading towards a similar restrictive environment seen in 1970s, where both economic and political freedoms of the people were severely restricted.

 


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  Comments - 8

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  • Chux Thursday, 18 November 2021 10:05 AM

    Cabral PB and the political thugs are responsible for this mess

    Seb Thursday, 18 November 2021 11:52 AM

    Borrowing from other countries and printing extra rupies seems to be the practice these days.

    Jay Jay Thursday, 18 November 2021 01:00 PM

    The blame is on every Government since independence. You cant put the blame on this Government as they had to deal with the Pandemic and the resulting economic crisis.

    june macapagal Thursday, 18 November 2021 01:33 PM

    What he states is absolutely correct. The country is heading towards bankruptcy and will anyone with common sense come and invest their valuable money into a country heading towards bankruptcy.

    sach Thursday, 18 November 2021 05:48 PM

    Money was spent for paying yahapalana ISBs

    Dee Thursday, 18 November 2021 07:40 PM

    Keep quiet! We are formulating policy with Afghanistan to grow medicinal herbs like proposed by a Hon female MP. After that we will get loads of $!

    Kamal Thursday, 18 November 2021 09:33 PM

    Give the proper value to usd if you want us foreign workers to send money to Sri Lanka through banks. Real value of usd likely close to 300

    Ara Friday, 19 November 2021 12:55 AM

    Ewa yahapalanyata kiyanna, Ranil ruined this country's economy


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