The current escalating inflation, overshooting interest rates, and depreciation of the rupee will stabilize in around three months, said Governor Central Bank Dr. Nandalal Weerasinge.
He however said that inflation will further move up in the next two months and if the current fuel and other key commodity prices do not increase again by a high margin , inflation will stabilize in three to four months. “We also expect better political stability by then and this will help. We are also expecting FDI foreign funding from friendly countries and once again in around three months and when this happens the rupee too would stabilize.”
He once again appealed to the Sri Lankans living abroad to send their remittances through banking channels as the monthly average of around USD 500 million has now dipped by almost half. “We attribute this to the increase use of grey forex market and illegal channels like ‘Hawala’ and ‘Undial’ systems and to correct this we have taken several measures including issuing a special gazette under the Import and Export Control Act making all payments on imports to Sri Lanka compulsory through an authorized banking system and not on Open Accounts.
“We have observed that around 20% of imports come via Open Account terms and future imports will be allowed only on the basis of Letters of Credit (LCs), Documents against Payment (DP) or Documents against Acceptance (DA) terms and any imports other than these three methods will not be cleared by the Customs. We have requested the banks to give priority when people come seeking US dollars for their children’s overseas education and urgent medical needs as these requirements are around $ 5,000 or $ 10,000. if needed the Central Bank will help the banks in meeting this need. We have identified that these are some of the key areas that lead towards creating a ‘USD black market’ and when they are curtailed people will deal with the banking system reducing the ‘gap’ of the US dollar between the bank and the USD Grey market.”
The Governor pointed out that the measures taken by the authorities to address the current situation of the country and to manage the debt obligations will benefit the people medium and long term but funds to increase foreign reserves are urgently needed to import day-to-day essentials such as food, fuel and medicine.
CB requests tourists to pay in rupees
Sri Lanka should go back and ask foreign tourists to pay back in Sri Lanka rupees and not in foreign currency, said Governor Central Bank Dr. Nandalal Weerasinge.
“This is because Sri Lanka rupee is the ‘legal’ trading currency in Sri Lanka. And I also don’t think that there is any country that accepts foreign currency when there is a ‘legal’ currency in circulation. This is another wrong decision taken in the recent past and we will correct this,” he said.