Basil provides essential imports while servicing debt

Ruling out any default or immediate rescheduling, Finance Minister Basil Rajapaksa yesterday assured the public and private sector that essential imports would be purchased while servicing the country’s debt.

He said that President Gotabaya Rajapaksa, Prime Minister Mahinda Rajapaksa and himself had taken note of the various concerns and recommendations of the leaders of the Ceylon Chamber of Commerce and eminent economists, as published exclusively in the issue of the Daily FT from January 10.

“We recognize the concerns not only of the private sector but also of the general public. However, the President, Prime Minister and I assure that essential food and medicine for the public as well as raw materials and inputs for export and local industries will be imported while the country honors its debt commitment” , Basil told the Daily FT.

He pointed to record imports of $21 billion last year despite the difficult foreign exchange reserve situation as well as record exports of more than $12 billion.

“The impressive export performance proves that the required imported inputs have been facilitated,” the finance minister added.

Basil’s assurance comes amid renewed concerns over the reliable supply of fuel, particularly for thermal power generation, as well as continued complaints from the private sector that banks do not have enough foreign exchange to open letters of credit in a timely manner.

However, the Finance Minister’s confidence appears to stem from his successful online chat with India’s Foreign Minister, Foreign Minister Dr S. Jaishankar on Saturday, where the giant neighbor assured forex support to the tune of $1.9 billion, as well as the strengthening of the Central Bank. reserves to more than $3 billion at the end of last month. China, as well as Japan, have also pledged their support to Sri Lanka.

Of the total debt repayment of nearly $7 billion scheduled for this year, the $500 million of International Sovereign Bonds (ISBs) mature today. Yesterday, the CBSL had already placed the funds for the settlement. Another billion dollars of ISB matures in July.

In last week’s exclusive article (https://www.ft.lk/business/Leaders-of-Ceylon-Chamber-top-economists-speak-out-on-forex-crisis/34-728960), more of a dozen business leaders and economists have urged the government to opt for the postponement of greater repayment of external debt through restructuring and rescheduling, and to use scarce resources existing for essential imports.

Sri Lanka has repaid $2 billion of ISB maturing each in 2020 and 2021, while overall debt repayment stood at around $6 billion over the past two years. Sri Lanka faces $25 billion in foreign currency sovereign bonds until 2026.

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