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Growth to reach 5% this year – Cabraal

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2022 reserve cover to reach 4 months of imports:
CBSL Governor Ajith Nivard Cabraal

Central Bank Governor Ajith Nivard Cabraal noted that the country expected to witness a 5 % growth rate in 2022. This coupled with the resumption of tourism and the return to normal from remittances is expected to bring the country back into a more comfortable position in terms of foreign exchange.

Cabraal called on the critics of the current government to realize that a large amount of the debt had been revolved at the existing rates and that only the ISB debt had been paid down as it was imprudent borrowing.

Cabraal attending a TV show on January 17 acknowledged that there were concerns but called on the critics to look at the global scenario wherein even leading industrial powers like the United States were facing record levels of inflation.

Concerning the downgrades, Cabraal noted that in the recent past over 100 countries have had their credit rating downgraded. Cabraal said that certain vested interests were trying to sabotage the government by fear-mongering on the state of the finances of the country. He noted that as a direct result of the fear-mongering, foreign suppliers had curtailed their supplier credit and the country was not benefiting from the usual 180 day credit periods on essential imports.

Cabraal noted that the critics had initially forecast that the country would be unable to make the recent ISB maturity and have now changed their view completely calling on the country to default on the debt. He noted that the lack of consistency and flagrant disregard for the creditworthiness of the state had caused undue hardship on the economy.

Cabraal noted that in 2021 the country had import expenditure that was broadly in line with figures with those of 2020. He further highlighted that certain traders were actively looking to make large sums of money by selling produce at higher prices by scaring consumers into thinking there is going to be a shortage.

Cabraal highlighted that for instance in the mobile phone market there had been importation that was 40% higher than in previous periods.

There is serious consideration by the Monetary Authority of Sri Lanka to resume the importation of vehicles so long as all costs are borne in foreign currency to let the market value of vehicles settle at more realistic figures.

Cabraal highlighted that despite severe macro-economic challenges the government had succeeded in maintaining projects like the Central Expressway.

Cabraal’s data suggests that despite the fuel price hike there was no cut back on travel by the populace as was witnessed by travel data during the last long weekend. On the dual exchange front, Cabraal noted that due to restrictions and illicit activity there might be a few transactions happening at a parallel exchange rate of Rs 230 to the dollar but that the vast majority of transactions were occurring at the Central Bank exchange rate of Rs 200.

Cabraal also highlighted ongoing developments in the Port City, the West Terminal, and the broader Hambantota industrialization drive.

Wednesday, January 19, 2022 – 01:00

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