May 12, 2017

CB devises a system to carefully handle foreign inflows

Sri Lanka’s gross official reserves were estimated at US dollars 5.0 billion compared to  US dollars 6.0 billion at end 2016, while the Sri Lankan rupee depreciated by 1.5 per cent against the US dollar during the year up to 05 May 2017.

Under this set up the Central Bank has devised a system to carefully handle foreign inflows including The Hambantota port sale money which is expected in three tranches—US $ 100 million when signing the contract, another US $ 300 million in three months and the balance US $ 700 million before the end of this year.

Sri Lanka is currently in a debt trap with at least US $ 1.9 billion in debt repayments coming up for during the rest of the year out of the total of US $ 2.6 billion due for 2017.

Foreign inflows into the country have been declined the earnings from exports have come down , expenditure on imports rising and the current account deficit of the external account performing worse than expected. The foreign direct investment (FDI) is not forth coming as expected.

Central Bank Dr. Indrajit Coomaraswamy told journalists recently they have lined up at least another US $ 2.4 billion from several sources— US $ 1.5 billion from a sovereign bond issue, US $ 450 million syndicated loan, which could go up to US $ 700 million or even up to US $ 1.0 billion and another US $ 200 million loan from China Development Bank.