One has to wait and see whether the claim made by the Central Bank Governor that there was a massive inflow of dollars into reserves is true or false, SJB MP Harsha de Silva said yesterday.
“If according to Cabraal and others, there was this sudden massive inflow of dollars into our reserves’, then the liquidity problem has to be no more. There should not be a black market rate. There shouldn’t be any problem of clearing cargo in the port. The dollar rate has to be normalized, then we will know if it is real, if not, we will see it as a false claim,” Dr. de Silva told journalists.
“When asked from the Central Bank Governor from where the money came from, he said that it is not anybody’s business. He said that discussions were in advanced stage and he chose not to divulge where the money comes from. However, the Chinese swap agreement on March 21 this year, could be a possibility. Both the previous and present Governor of the Central Bank said the government had a swap agreement with China but it had not been drawn down. It will be considered reserves only when it is drawn down. I think what the Central Bank had done is simply drawn down the Chinese swap. Technically, if an amount is to be considered as reserved, it has to be under the full control of the Central Bank. It has to be used to make any payment when it comes to balance of payment, whether it is to pay the debt back or to pay in the form of imports. Are there any encumbrances on this money given to Central Bank from China? Some people are suggesting that this could only be used to import Chinese goods. This is not in US $ but in Chinese Yuan. To what extent this money is going to be useful in debt repayment, we do not know. The Central Bank should tell the country what they have got,” he said.
“Bank of Bangladesh recently announced that they were going to give Sri Lanka $ 200 million SWAP and also Central Bank of Sri Lanka has been buying up dollars from banks and exporters in the recent past. As of December 28, some 25 percent of foreign currency received by banks has to be surrendered to the Central Bank. The Central Bank has been taking away the dollars in the market into their reserves, thereby causing a shortage in the market for dollars. As they say the proof is in the eating, we have to wait and see what happens in the coming days,” he added.