Governor of the Central Bank Dr. Indrajit Coomaraswamy Wednesday allied with Commander, Security Forces – Kilinochchi, Major General Vijitha Ravipriya at a business forum held at CIMA Sri Lanka to defuse the anxieties of many Sri Lankan business leaders who still remain skeptical about the future of their businesses after the Easter Sunday carnage.
Major General Vijitha Ravipriya assured the business community that the national security establishment is working in unison. “The Army, Navy, Air Force, Police, CID, STF and TID which were operating more or less as separate entities before the carnage are working together today, and we are on top of the situation. If you do not overreact to fear and hate speech spread across via social media, an environment conducive for day-to-day life has been created, he said.
Delivering the keynote speech, Central Bank Governor pointed out that the approval of the fifth review of the extended fund facility of the IMF was an economic endorsement the country has received from the global lending agency.
The CBSL chief added – “This substantiates the fact that our macro economic fundamentals are in acceptable shape. Also, they have indicated confidence in Sri Lanka that it may not face difficulty in refinancing its debts and would meet its debt obligations.
“65% of the external debt for the year has already been paid. As Sri Lanka has never missed a single loan repayment even after the 52- day constitutional crisis, our access to financial markets won’t present any problems. On the back of it, there is the possibility for getting up three backup swaps with China, India and Qatar amounting to $ 3.1 billion. Further, there are assurances from friendly countries that they would help us when we need to raise funds in the international bond market.
“Japan Bank for International Cooperation and People’s Bank of China have offered guarantees to raise Sakura bonds and Panda bonds respectively. The World Bank is also willing to give us assurance to borrow up to $ 1 billion on a policy-based guarantee.
“They said that they would consider the reforms that we have already implemented as well as the ones we are in the process of completing in order to make us eligible for this guarantee. This guarantee will cover a certain amount of the loan exposure. It appears that this is about $ 250 million which can be leveraged about four times over, so that would be a billion dollars. This will enable us to borrow from an international bank. Thus we will have the ability to borrow up to $ 1 billion on the World Bank’s AAA guarantee”.
“The country is in ‘okay shape’ despite a slowdown in the economy from a growth rate of 3.4% in 2017 to 3.2% in 2018 due to the contraction in the construction industry by 2.1% during the year. This year the Central Bank forecast was set for 4% with the IMF forecasting 3.5% growth”.
“Everybody’s concern is about the government’s official reserves. The reserves are currently at $ 7.5 billion. Pre-Easter Sunday attack projection for the year-end was $ 8.2 billion, expecting Sri Lanka would borrow $ 2 billion from the markets abroad. Even in a worst case scenario where Sri Lanka keeps on taking an adverse hit on tourism on a longer term, the country will be able to maintain its official reserves at $ 6.3 billion. That won’t be a wonderful level of reserves but that won’t be anywhere near crisis levels. The country is on a stable footing where the business community can have confidence to do their business in.”
Notably, Dr. Coomaraswamy pointed out that a large segment of the economy still remains untapped which needs to be exploited productively.