CBSL to talk to external quarters, other than IMF, to build foreign reserves

By Hiran H.Senewiratne 

The Central Bank of Sri Lanka (CBSL) will not negotiate with the International Monetary Fund (IMF) any more but negotiations are in progress  with foreign institutions, such as central banks, banks and donor agencies, for rapid financial instruments to strengthen and raise  foreign reserves, Central Bank Governor. Prof. W.D. Lakshman said.

“We have witnessed very little success with IMF programs and those guidelines are not suitable for the country, Lakshman told a media conference on the Sri Lankan economy yesterday. The press conference was held at the Central Bank auditorium, Colombo.

The Governor said that it is the government’s policy to work as much as possible to resolve Sri Lanka’s foreign exchange problems on a self-reliant basis, which in turn will be founded on domestic efforts. The CBSL is to discuss with institutions, organisations and countries that are willing to assist on a relatively non-interventionist basis.

“This is the policy currently adopted and we also have the policy of finding foreign exchange requirements on non-credit increasing arrangements. I think we are going to be relatively successful in the process, as the negotiations we are carrying out with a few countries and international agencies will come to successful conclusions, probably soon, the Governor added.

The Governor added – ‘At present the country has foreign reserves amounting to  approximately US $ five billion. Negotiations are on  with several agencies to generate foreign reserves by way of swaps and other alternative mechanisms which will not burden the economy.

‘The Central Bank will promote a market-oriented economy guided by the government to achieve rapid economic growth in the year 2021 and beyond.

‘Import restrictions on luxury items will continue for some time until the balance of payments issue is resolved.

‘In 2021, we expect economic growth to be more than 6 percent and to achieve that the Central Bank has laid a proper foundation to stimulate the economy and to increase export revenue. Further, many relief measures have been taken to support the tourism sector which was badly affected due to the Covid 19 pandemic.

‘Further, the IT industry was the industry that was affected least and it will bring foreign reserves into the country once normalcy returns.

‘During 2020 the economy experienced a current account surplus, the likes of which was witnessed in 1950/51, 1964/65 and 1977.Therefore, the Central Bank intends to achieve that level in future years.

‘Currently the country’s inflation is around three percent. Inflation on food stuffs has increased but will come down soon.’