Govt. to obtain USD 1.9 bn to stabilize rupee: PM

Published : 9:16 am  January 11, 2019 | No comments so far |  | 

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  • USD 400 mn from SAARC Swap programme, USD 500 mn from Chinese Panda bonds, 1 bn USD from global money markets
  • Lankan rupee depreciated by 3.8% during 51-day period

 

image_1547152894-baa9845444By Yohan Perera and Ajith Siriwardana   

Outlining the steps government intends taking to stabilise the rupee, Prime Minister Ranil Wickremesinghe yesterday announced a plan to obtain US dollars 1.9 billion from international sources.  

Making a special statement in Parliament, Mr Wickremesinghe said the Central Bank of India had agreed to provide US dollars 400 million under the SAARC currency swap program. The Prime Minister also announced plans to obtain US dollars 500 million from Chinese Panda bonds and from Samurai bonds in Japan. In addition he said the government also intends obtaining US dollars one billion from international money markets. He said Finance Minister Mangala Samaraweera will leave for the US soon to work on this.   


“Devaluation of the Sri Lankan rupee results in high cost of imported raw materials. This in turn results in high cost of production” the Prime Minister said.   


“Stabilizing the rupee should be our priority. We have taken several steps in this direction and have already begun discussions with several countries” he added.   


The Prime Minister said the government intends to stabilize the rupee as one of several steps it had taken to elevate the economy to greater heights than bring it to a better position than what it was prior to October 26 last year.   
“We also intend to bring the cost of living down,” he said.   


“We had to face serious challenges on the economic front this year. Sri Lanka’s debt services will be highest in 2019. The total foreign debt service this year will be US dollars 5900 million. Sri Lanka will have to settle the highest debt installment of dollars 2600 million on January 14 this year.   


“The government planned to settle debts causing minimum burden to the people. We took several steps in this regard including developing the domestic economy, enhancing exports and increasing investments. We also took steps to stabilize the external economy. Our plans were shattered by the political crisis which took place on October 26 . The economic growth slowed down, Sri Lanka lost its high financial ratings and the country could not borrow from any donor agency. It will take some time for the country to regain what it lost during the political crisis. We lost investor confidence and it should be restored. We have to show the world that there is political stability in our country,” the Premier said.   


“During the 51-day period from October 26, the Sri Lankan rupee depreciated by 3.8%. When the currency value of other countries increased, Sri Lankan rupee continued to depreciate. Within the period from October 26 to December 16 last year, Treasury Guarantees worth USD 312.9 million, Treasury Bills worth USD 29.1 million and Treasury Bonds worth USD 29.8 million flowed out of the country,” the Premier said.   


“Sri Lanka had US$ 7,991 million in forex reserves when the October 26 “conspiracy” started and it ended with US$ 6985 million, thus losing US$ 1 billion.  


I would like to recall some points which I came up with when I highlighted on October 27, 2016. I said on that day that we should focus on global economic situation and the opportunities and strengths which Sri Lanka possess. We all have personal ideologies and political aspirations. However I request that we should think of our country first rather than out personal expectations. It is not possible create a brighter future by blaming the past. It is not possible to build up a future by lamenting about the wrong decisions with regard to borrowings. It is essential to devise sound plans . We are committed to this task,” he said.   

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