Foreign reserves are there to be used in emergencies like now where there is a global downturn due the COVID-19 Pandemic. Not only in Sri Lanka but in the world over reserves are used when there are limited foreign inflows, State Minister for Finance, Capital Market, and State Enterprise Reforms Ajith Nivard Cabraal told Al Jazeera.
He however said that these reserves would once again be injected in even bigger numbers with several new initiatives that are put into place. This is similar to what a surgeon is doing to save a life by taking tissues or veins from part of the body and doing a successful life saving surgery.
“One of the main obstacles Sri Lankan economy faced was the lockdowns that crippled the country and with the smooth vaccination process, the country is opening up and already there is increased economic activity. Asked to comment on rating downgrades, he said that this is done to 129 other countries as well, after the C-19. “Technically they are right, but if you explore deeper, business confidence is picking up and there are serious FDI inquiries by global investors and these will refute Fitch and Moody’s stance against Sri Lanka. In-depth study on Sri Lanka by them will show that the rating agencies’ negative comments are not the ‘gospel’ truth!”
“Tourism which brought in around 4 billion is once again opening up, foreign remittances are on an upward trend while exports from gems and most importantly FDIs are increasing with special interest coming from the Colombo Port City, Hambantota Economic and Parma zone. Currently Sri Lanka is facing a situation like what a cricket team is facing when there are several wickets down for a low score.
“The batsmen then consolidate (without losing wickets) and don’t go for ‘sixes’ and this is exactly what the government is doing. We have curtailed only unwanted imports but whenever there is an import that contributes to an export (such as raw material) there are no restrictions. “Sadly Agencies have not even looked at curtailing imports with a border prospective.”
The Government has laid out long term plans and doesn’t need to rush to the IMF in panic. “While we respect and seek technical assistance from the IMF we have observed that ‘some prescriptions’ offered to countries that sought financial assistance have gone the wrong way.
“With several other fundamental measures put in place to increase economic activity we anticipate a 5% economic growth for 2021 and 6% onwards from 2022 and do not need to work to a different agenda or on other priorities dictated to us by donors.” Answering a query on the issue of limited flow of dollars in the country he said that this is true to some extent.
“However, the banks have not said ‘no’ to any transactions but say to hold on. We have ‘cash in hand’ to pay for oil imports and others and there is nothing to panic. This is a temporary setback and with the vaccination process and tourism revenue coming back along with FDI’s this will ease.”
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