President speaks about Forex crisis, Imports ban & local production

President speaks about Forex crisis, Imports ban & local production

President Gotabaya Rajapaksa has expressed confidence that deals with India and China will help ease the forex crisis in Sri Lanka.

The President has told the Daily FT he was optimistic that the ongoing foreign exchange and reserves crisis will ease with the earmarked inflows materialising shortly.

“I am confident of foreign reserves improving,” the President told the Daily FT on the side-lines of a luncheon meeting with a select group of editors. He pointed to several bilateral arrangements, including with India and China, coming to fruition shortly, and with other inflows, reserves would be above $ 3 billion.

Separately, he told editors that despite the unprecedented pandemic and its impact, including the loss of $ 10 billion in tourism earnings, Sri Lanka successfully serviced debt worth $ 12 billion in the past two years.

Rajapaksa listed priorities from his vision were boosting local economy thereby minimising imports, rapid transformation to greater reliance on renewable energy and a green sustainable agriculture, Daily FT reported.

He said that considerable progress has been made already in these three areas despite challenges and he is determined to realise the full vision in the next three remaining years.

Rajapaksa said that the global pandemic and its consequences were beyond his or the Government’s control. Nevertheless, the Government was successful in its vaccination drive thereby averting a worse disaster in terms of deaths and infections.

As of yesterday, the country’s cumulative COVID-19 case count rose to 584,107 of whom 559,684 have recovered. Death toll from COVID has risen to 14,901.

The President implied that with COVID situation under control prospects for revival in the economy, tourism as well as foreign reserves were better. “We had the highest tourist arrivals for a single day amounting to nearly 5,000 on Christmas day,” Rajapaksa said, adding that December is likely to finish with around 75,000, a record for a post-COVID month.

Speaking on the foreign exchange crisis, the President explained that when he took office the reserves were around $ 7 billion and Sri Lanka had debt servicing worth $ 6 billion per annum. “Every successive government has rolled over debt and for servicing foreign exchange receipts were used.

“However, no one saw the pandemic coming and the end result was the country losing $ 10 billion in foreign exchange earnings due to the collapse of tourism for two years. Additionally, our remittances declined too whilst exports faced a setback in initial months,” he recalled, according to the Daily FT.

In this context as a measure to save foreign reserves, he said unnecessary imports including vehicles and luxury items, had to be suspended.

“In parallel, we also focused on discouraging import of items which can be produced or grown locally,” the President said, citing several products including tiles, ethanol and saffron. “Due to this move, the local sugarcane farmers are benefitting and sugar mills are active. The income of dairy farmers and growers of minor agriculture crops have increased. All these people form a large community and no one is highlighting these benefits,” the President opined.

He also said that more companies have begun manufacturing tiles and sanitaryware. “I understand the shortage which is due to the suspension of imports. However local industry also must step up capacity and production since a favourable environment has been created,” President added.

It was also pointed out that favourable policies of the Government as well as resilience of the private sector have led to exports rebounding to record levels. (Colombo Gazette)