Sri Lanka awaiting ‘good news’ from global lender within next 24 days

By Sanath Nanayakkare

Sri Lanka, which is having talks with the People’s Bank of China, Reserve Bank of India and China Development Bank, is likely to receive good news from at least two of the institutions this month, Dr. Chandranath Amarasekara, Director of Economic Research of the Sri Lanka Central Bank says.

Dr. Amarasekara said so at a Q&A session as a guest speaker at a webinar, Economy+Sector Review-Outlook 2021, organised by the Ceylon Chamber of Commerce; the event was hosted by HSBC Premier Sri Lanka.

According to Dr. Amarasekera, Sri Lanka had to meet debt repayments of US$ 4.3 billion in 2021 and its foreign reserve levels stood at US$ 5.7 billion as at December 2020.

“We are confident that we can meet our external debt obligations in 2021”, Dr. Amarasekara said.

Asked how Sri Lanka would meet its near term external debt repayments, Dr. Amarasekara said: “This is not a new development for Sri Lanka. In 2019 and 2020 also we honoured debt repayments amounting to US$ 4.5 billion each year. However, the current speculation on the matter isn’t helpful. What is more conducive to the current conditions is making the right moves to benefit from the prevailing positive domestic market sentiment and to drive domestic production to a higher level and boost inflows.”

Asked about the ‘historic level’ of Treasury bills held by the Central Bank, he said:”The Central Bank buys government securities to support the economy and to boost liquidity in line with the Central Bank’s monetary policy. This has been done in the past too. When we can’t buy in the primary market, we buy in the secondary market.

“With the lower global oil prices and current import restrictions in place, we were able to save foreign currency worth US$ 3.9 billion in 2020. If this can be repeated, it will help ease the deficit in our trade account. Yes, there will be losers in the process, but this is a necessary evil.”