Government struggling to find enough foreign exchange

By Easwaran Rutnam

Finance Minister Ali Sabry told Parliament today the Government is struggling to find enough foreign exchange to finance essential imports.

Making a statement in Parliament, the Finance Minister said that the usable liquid reserves are at negligible levels, severely impacting importation of essentials, including fuel, LP gas and pharmaceuticals.

“I would not hesitate to inform this august assembly that the government is struggling to find enough foreign exchange to finance these essential imports,” the Finance Minister said.

He said there needs to be urgent solutions to restore supply chains on essential items, to address the grievances of the people and to move forward on a reform programme and to work on bridging financing and also to implement medium to long-term growth-related policies.

The Finance Minister also said that political stability and support from all parties including the private sector are vital factors for the Government to implement this much needed reform agenda.

He also said that Parliament must give priority to implement tax reforms to increase Government revenue and rationalize expenditure whilst ensuring public investment in critical areas such as education, healthcare, and social protection.

The Minister said that macroeconomic policy must be tailored towards boosting national savings, channeling public and private investment towards productive sectors, whilst driving productivity and competitiveness in all aspects of the economy.

“We need to take tough decisions in reforming state owned business enterprises, encourage competitive market mechanisms where possible to achieve best outcomes at lowest cost to society. We must learn to harness the immense productive potential of market forces, whilst being fully aware of market failures and providing appropriate intervention to ensure just outcomes for society. We need to build up credible systems to improve public sector efficiency and productivity,” the Minister added.

Speaking further, the Finance Minister said that the continuous budget deficits have led to accumulated public debt, which is now unsustainable.

“In this process, I do not rule out the element of corruption, and this is why we need to emphasize the institutional factors such as an independent judiciary, a credible Central Bank and a strong public service. At present, the Sri Lankan economy is in an extremely challenging situation and this has triggered social turbulence and political instability. This may lead to catastrophic consequences if the fundamental issues are not addressed immediately,” he warned.

The Minister said that officials reserves declined to USD 1.9 billion by end March 2022.

However, the bulk of these reserves, including the USD 1.5 billion equivalent SWAP facility from People?s Bank of China (PBOC), are not usable to settle USD denominated payments. (Colombo Gazette)