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Sri Lanka plans to obtain $1.9 bn to prop up falling rupee

Following weeks of political crisis and falling rupee, which dropped to record levels, the Sri Lankan prime minister today announced a plan to obtain US$ 1.9 billion from 'international sources' to stabilise the currency. 

The bulk of this will be obtained from international money markets, Ranil Wickremesinghe said, whilst, US$ 500 million will obtained from Chinese and Japanese bonds, and US$ 400 million from the Central Bank of India via a SAARC currency swap. 

“Devaluation of the Sri Lankan rupee results in high cost of imported raw materials. This in turn results in high cost of production,” Wickremesinghe was quoted by the Daily Mirror as saying. 

“Stabilising the rupee should be our priority. We have taken several steps in this direction and had already begun discussions with several countries,” he added.

“We also intend to bring down the cost of living,” he said.

"We had to face serious challenges in the economic front this year. Sri Lanka’s debt services will be highest in 2019. The total foreign debt service this year will be US dollars 5,900 million. Sri Lanka will have to settle the highest debt installment of dollars 2,600 million on January 14 this year."

"The government planned to settle debts causing minimum burden to the people. We took several steps in this regard including developing the domestic economy, enhancing exports and increasing investments. We also took steps to stabilize the external economy. Our plans were shattered by the political crisis which took place on October 26. The economic growth slowed down, Sri Lanka lost its high financial ratings and the country could not borrow from any donor agency. It will take some time for the country to regain what it lost during the political crisis. We lost investor confidence and it should be restored. We have to show the world that there is political stability in our country."

“Sri Lankan rupee was devalued by 3.8 percent during the 51-day political crisis. A sum of USD 312.9 million had gone out of the country from October 26 and December 16 last year in the form of treasury bonds and USD 29.8 million in the form of treasury bills. In addition, Sri Lanka’s foreign reserves have gone down by USD 1 billion dollars during the 51-day crisis. We are ready to overcome all challenges that come our way. We will stabilize the economy just like the way we brought in political stability from the turmoil."