SL announces $1 billion relief plan amid crisis
The Sri Lankan government on Tuesday announced a $1.2 billion economic relief package amidst a severe foreign exchange crisis even as Finance Minister Basil Rajapaksa claimed that the country will not default on its international debt despite the projection of rating agencies about its inability to meet the obligations.
Sri Lanka would duly pay the $500 million international sovereign bond payment due in a fortnight, Finance Minister Rajapaksa told reporters here.
He said that 229 billion Sri Lankan rupees ($1.2 billion) would be spent to accommodate the new economic relief package which includes, among other measures, a special allowance of Rs 5,000 ($24) per month to 1.5 million government employees, pensioners and differently-abled soldiers from January 2022. On the country’s debt obligations, the minister said that the International
Sovereign Bond holders would be invited to renegotiate.
“We have to repay $1,000 million in July, they will be asked if they would be willing to reinvest,” Rajapaksa said.
“We have high debt from three countries -- China,
Japan and India. The total outstanding for this year would be $6.9 billion,” the minister said.
“People owning land below one acre would be given 10,000 rupees ($49) subsidy to cultivate food crops,” Rajapaksa said.
For the plantation sector employees, each family would be given 15 kgs of wheat every month, he said. Agriculturists have warned that the island would be facing a severe food shortage due to import controls over the foreign exchange crisis and a government decision to ban chemical fertilisers.
The government has faced public protests over the high cost of living and worries in the farming community due to the loss of harvest caused by the chemical fertiliser ban.
Inflation hit double digits in November, the highest in 13 years.
Rajapaksa said that the relief package will not contribute to further inflation as all expenditure will be within the budget.
“There won’t be any new taxes or anything,” he assured. Rajapaksa said the government has not made any decision yet to seek a bailout package from the International Monetary Fund (IMF). Sri Lanka is currently facing a severe foreign exchange crisis with falling reserves.
The government said negotiations are underway with India and Oman to work out credit lines for fuel purchases.