SL’S foreign reserves drop below US$50MN

● Sri Lanka has spent $ 400 million out of the $ 500 million credit line received from India

Whilst stating that Sri Lanka’s useable foreign reserves have declined to less than $ 50million and foreign remittance could decline to $ 3.5 billion , the Minister of Finance Ali Sabry said in Parliament that Sri Lanka has embarked on a successful engagement with IMF with the full backing of countries such as China.

“China was against Sri Lanka going for an engagement with IMF initially, but Chinese Ambassador in Sri Lanka has informed me that it will back Sri Lanka to secure its assistance as a member of IMF. ,” he said. The Minister said Sri Lanka has also begun dialogues with a number of countries for bridge financing.

“Sri Lanka has spent $ 400 million out of the $ 500 million credit line received from India and we have requested for another $ 500 million credit line and we expect some positive response with regard to it,” he added.

The Minister said the government will appoint international legal and financial advisors to restructure the debts in the coming weeks while emergency assistance have been pledged by World Banka , Asian Development Bank. He said World Bank has pledged $ 600 million to purchase medicines.

The Minister accepted that certain mistakes of the incumbent government such as reducing taxes at a time where it should have increased and the late decision to seek IMF assistance has also contributed to the present crisis. “However all governments who have ruled the nation should also accept a share of the responsibility for the financial crisis,” he said.

The Minister said it will take Sri Lanka at least two and a half years to stabilize the economy while securing assistance from IMF will take at least six months.

“It is time to make economic reforms. The budget presented for 2022 by the present government has become redundant. Therefore we will have to present a new budget. We will have to increase income taxes. Those who earn should share a part of their revenue with the nation. Sri Lanka should also move from the status of being a welfare state,” the Minister stressed.

The Minister revealed that Sri Lanka’s total expenditure stood at approximately Rs 3,5 trillion while the revenue stood at Rs 1.4 trillion. Sri Lanka’s tax revenue is currently 8.6 percent of the GDP.