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Assigning timeline for recovery of SL economy difficult : CB Governor

24 May 2022 - {{hitsCtrl.values.hits}}      

 pic by kushan pathiraja

  • All depends on the success of measures taken to revive the economy
  • Trying to manage to stabilize the supply of essential items in the coming few weeks
  • Warns that more people in Sri Lanka would become unemployed and be below the poverty line in the near future
  • Level of available liquid reserves isn’t sufficient to finance even a week’s worth of imports at present
  • IMF cannot provide any financial assistance unless debt obligations are brought down to a sustainable level

By Yohan Perera   

It is difficult to give a timeline as to when Sri Lanka’s economy will bounce back as it depends on the success of measures taken to revive the economy such as engagement with the IMF and debt restructuring, Central Bank Governor Nandalal Weerasinghe said yesterday.    


“One can say that the economy will be back on track next year but not a recovery, “ Dr. Weerasinghe said responding to a question raised at a discussion organized by the Press Club last night.   
“We are trying to manage to stabilize the supply of essential items in the coming few weeks and we want to introduce more measures some time later in the year and if these proved to be a success the economy will be back on track next year,” he added.   


The Central Bank Governor predicted that more people in Sri Lanka would become unemployed and be below the poverty line in the near future. “We hope to provide cash grants to the people and other incentives in the future,” he said.   


“One of the major issues was the foreign exchange crisis where the level of available liquid reserves wasn’t sufficient to finance even a week’s worth of imports at present. Sri Lanka’s debt obligations at present stand at $ 6 billion to be paid to seven creditors over the next several years while the current reserves stand at $ 10 billion. Therefore, to prevent hard default on 12 April 2022, the government had to announce a debt standstill to the creditors.

One can say that the economy will be back on track next year but not a recovery, 
- Dr. Weerasinghe

 

 

The government announced that it was unable to service debt obligations of the creditors and requested for more time and relief measures to meet obligations over a longer period of time,” Dr. Weerasinghe emphasized “Debt restructuring is another difficult process but the CBSL has spoken to the creditors to agree to it. IMF negotiations usually last for 2-3 months but this time it’s much more complicated as Sri Lanka’s external debt is not sustainable. As a result, The IMF cannot provide any financial assistance unless debt obligations are brought down to a sustainable level. The CBSL Governor emphasized that Sri Lanka has never restructured debt before and thereby Sri Lanka has no experience in this process,” he said.