The government has taken proactive measures to address much of its major external debt obligations for 2019 despite the possible negative impact for Sri Lankan economy, owing to recent Easter Sunday attacks in Sri Lanka.
Finance Minister Mangala Samaraweera said, that investors must understand that the fundamentals of the economy have not substantively changed negative short term impact for both FDI and portfolio investment.
Minister Samaraweera said the government has taken measures to address the challenging debt repayments in 2019. Accordingly, the external financing objectives were front loaded enabling the government to raise US$ 2.4 billion at favorable rates in March.
“Sri Lankan government has successfully met much of its major external debt obligations in 2019 including sovereign bond repayments in January amounting to US$ 1 billion and US$ 500 million in April - thus eliminating another key economic risk in the short term.”
However on the fiscal side, there will be a fiscal cost of the payments for damages and compensation, Minister said adding that this has not as yet been quantified but it is not expected to be an unmanageable cost.
The response to the attacks will also require some re-alignment of defense expenditure, he noted.
Minister Samaraweera also revealed that just prior to the attacks, the Ministry of Development Strategies and International Trade was about to finalize a US $ 1 Billion FDI agreement.
The Minister also said, the economy of the country was on a steady path when the Easter Sunday attacks occurred in Sri Lanka. He also made a request to those foreign investors who were planning to invest in Sri Lanka to go ahead with their projects rather than reversing them.
To this end, the government will provide security and other host of benefits to foreign investors, he said.
“The motive of the attackers was to destabilize the economy, but it won’t happen. We are confident that Sri Lanka economy will bounce back to normalcy soon.” he said.
Speaking further Minister Samaraweera said the government was able to stabilize the economy as inflation was brought down to 2.9% by March 2019, the trade deficit declined to its lowest level in over five years in February, accordingly the rupee has appreciated by 4.5% becoming the third best performing currency in the world in 2019.
“Our foreign reserves stand at US$ 7.7 billion, covering over four months of import requirements. Interest rates have declined by over 100 basis points this year as fiscal consolidation delivered results with a 0.6% primary budget surplus in 2018,” Minister Samaraweera said.
“Furthermore, exports and FDI reached all time high in 2018,” he said.
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