Finance Minister rules out defaulting on debt repayment

… the bloated public service can no longer be sustained

By Shyam Nuwan Ganewatte

Finance Minister Basil Rajapaksa said on Saturday that the government would not be defaulting on the country’s debt repayment.

Addressing the media at the Ministry of Finance, the Minister said that various solutions including the halt of vehicle imports had been resorted to, but those had failed to yield a clear solution with regard to the country’s foreign reserves crisis and debt servicing. “We think that this issue will persist next year as well, but we expect to resolve it without obtaining loans,” the minister said.

Sri Lanka has to pay 500 million US dollars in debt repayment in January and one billion US dollars in July next year, said the minister, adding that the country would definitely make both payments.

“The country expects to have foreign reserves of 10 billion US dollars of its own money by 2027. From next year, we expect to contribute one billion US dollars of our own money annually towards forex reserves. So, for the first time by 2024, we will be able to take the external budget into positive territory after many years.”

Minister Rajapaksa said the state sector had become bloated to the point that the country could no longer sustain it anymore.

“I think we don’t need to appease them (public servants) with sweets any further,” the finance minister said, adding that the government was not in a position to allocate more public funds for the state service for another year.

Responding to a query on an allegation by the opposition parties that there was a lack of price reduction of goods via Budget 2022, the minister said: “There are no short-term solutions. This government and its counterparts in other countries have got into difficulty by attempting to do so. The only solution is to increase production. Amid the existing COVID pandemic, I don’t think the price of imported goods will come down within the next year.”

When asked of the relief measures for the tourism sector, the Finance Minister said: “More than enough relief measures have been given to the people in this sector. The biggest relief the tourism sector can be given is making the country safe by vaccination so that tourists can visit without fear.”

Minister Rajapaksa said that the government was doing everything in its power to ensure the revival of the tourism sector. “As the finance minister, I say that the tax from the tourism sector goes to the tourist board and not to the government. The government gets income tax from all other sectors, but they independently collect the revenue and spend it.”