Sri Lanka's Finance Minister Basil Rajapaksa has stated that loan payments in excess of USD $1.5 billion dollars due next year will be paid and that "there is no need to worry", despite low foreign reserves and a slashed credit rating but acknowledged economic turmoil will persist through 2022.
The minister spoke during the first discussion organised by the Government Information Department on the ‘Budget-2022’ on Saturday and noted that he would ensure the repayment of a USD $500 million loan due in January and a USD $1000 million loan due in June. Rajapaksa noted that although "foreign reserves have dwindled, measures are being taken to repay the loan instalments", Daily News reports. He added that the country's current reserves are loans given by other countries but assured that by 2027 he would ensure that the country has its own stable reserves.
Rajapaksa stressed that the government "needs more remittances" to pay for fuel, raw materials, food and medicines in the country. Commenting on avenues to increase foreign reserves the Finance minister commented on the impact of tourism and the ill-effect the pandemic has had on the industry, he added, "the over 4.5 billion per year tourism trade came to a standstill... The foreign employment income flowing into the country from overseas also stopped this year".
Rajapaksa's comments come as the regime continues to preside over a deepening economic crisis in the country which has seen protests across Sri Lanka and the North-East. In recent months banks have been blacklisted by the Chinese government for failing to make payments on imports and leading credit rating agencies have slashed and downgraded the country's debt rating.
Moody's recently downgraded the country's debt rating, stating the island was at risk of default as it lacked a clear debt repayment plan.
“The decision to downgrade the ratings is driven by Moody's assessment that the absence of comprehensive financing to meet the government's forthcoming significant maturities, in the context of very low foreign exchange reserves, raises default risks,” said a Moody’s press release. “In turn, this assessment reflects governance weaknesses in the ability of the country's institutions to take measures that decisively mitigate significant and urgent risks to the balance of payments.”
Read more at the Daily News.