Key short, long term strategies to overcome current economic crises – Ali Sabry
Sri Lanka will resort to three key short and long term strategies, to take the country away from the current economic crises, said Finance Minister Ali Sabry in a special interview from Washington DC on Friday.
He said that firstly they will get emergency funding to meet the current issues and secondly look at bridge financing and thirdly implement measures for economic growth trajectory.
Minister Sabry said that to achieve short term funding they will talk to countries like India, China, Japan and also to donor agencies like Asian Development Bank, (ADB) International Monetary Fund, World Bank, Parris Club, UNDP and other similar organizations.
“World Bank has approved around USD 2.7 billion projects and as grants in the renewable energy solar and wind power projects and other sectors and steps should be taken to get the dollars to Sri Lanka.”
Through the Asian Clearing Union we hope to arrange bridge financing until January 2022 to the value of around USD. 1.4 million due to India and India has agreed in this regard.”
Sri Lanka has only used around US$ 200 million from the US$ one billion Credit Line from India and the balance US$ 800 million too would be utilized to purchase other essential items. He also said that they will also talk to some other countries to raise around USD 1 to 2 billion within the next few months “This will be directly channeled to the Central Bank so that it would help to strengthen the rupee.”
Sri Lanka has debt repayment of USD 500 million in April, USD 500 million in June and USD 1 billion in July and due to the current economic crisis we are unable to settle this. Sri Lana total debt is around USD 51 billion.
“This is why we opted for a temporary default. However, we assure that these would be honored in the future adopting several new tools and via restructuring them through the appointment of new financial advisors and negotiators which would be done in the next seven days. Our monthly import bill for fuel which was around USD 175 million increased to around 450 million due to the Russia-Ukraine war. (US$ 35 per barrel to 100.) This also worsened the country’s financial crisis along with the C-19 pandemic, drop in tourist revenue and delay in going to the IMF and other issues.”
In addition, internally Sri Lanka loses around Rs. 600 billion revenue due to tax restricting and this will be corrected and tax would be raised from current average 8% to 12%. The Minister said that this is a time to unite and overcome the challenges, not to be divided and look for individual gains and also appealed to people to send in more dollars to the country.