The national economy is increasingly feeling the brunt from the shortage of foreign currency to fuel economic activities. However, the Central Bank expressed confidence in securing enough funds to bolster reserves in the coming months.
Central Bank Governor Ajith Nivard Cabraal said that as a steady inflow of forex is expected in the near future, pressures on the economy will witness some level of easing, and Sri Lanka will avoid a debt default by all means.
Speaking to Bloomberg in an interview on Friday (18), Cabraal pointed out that Sri Lanka’s overall reserves are being buttressed by several swaps, particularly from China, India, and Bangladesh.
“These have been helpful and useful for us to be able to deal with the current situation. But at the same time, we would prefer to have more,” he stressed.
While several discussions are being held to secure more funds, the Central Bank is hopeful of getting inflows that are non-debt creating.
“That’s the key here, where we would like to have new non-debt inflows, particularly through securitisation of our remittances, the sale of certain underutilised assets. Those are now on track,” said Cabraal.
With careful management of the current situation until inflows from tourism kick in, the Governor expressed confidence in “successfully” braving through the ongoing economic challenges.
Sri Lanka is in need of about US$ 2.8 billion in additional funding for the year to repay foreign debt, and the Governor once again said he is “very confident” in raising the required.
Meanwhile, when questioned about the exchange rate of the Sri Lankan rupee against the US dollar, Cabraal said the trading rate at present is a “fair one”.
He pointed out that the current trading rate provides opportunities for all stakeholders.
“People look at it from certain angles and they believe that the interest rate or the exchange rate should be different.
We from CBSL take a holistic view and then as a result, we are able to see that they are reasonably good so that people will be able to do all their transactions in a fair and a really good balance so that they can go forward with greater confidence,” he said.