Sri Lanka Crisis, Sri Lanka Economic Crisis, Sri Lanka Debt: “Sri Lanka must take

'Sri Lanka will take at least 6 months to repay its loan': Central Bank

Sri Lanka’s foreign exchange deficit is at the heart of the current crisis.


Sri Lanka will take at least another six months to start repaying its loans, the central bank said on Thursday because the government has closed schools due to fuel shortages.

Central Bank of Sri Lanka Governor Nandalal Warasinghe has said that no lending services will be provided until the country is able to restructure its $ 51-billion external debt.

“We hope to be able to reach an agreement with our lenders in about six months,” he said.

“Our position is very clear. Until they (a) come to restructure (the agreement), we will not be able to pay.”

He said the violence that killed nine people last week and the government’s failure to finalize a finance minister under a new cabinet could delay talks with lenders and the IMF.

The governor said bailout talks with the International Monetary Fund were under way, but a finance minister had not yet been appointed to approve a final deal.

Prime Minister Mahinda Rajapaksa resigned last week amid mounting economic hardships facing a population of 22 million.

His successor, Ranil Wickremesinghe, has tried to form a “unity cabinet”, but has included only four ministers, all from President Rajapaksa’s SLPP party, and none from the opposition.

Bikram Singh on Thursday told state sector workers to stay home on Friday and go on a long weekend as the country was facing acute shortage of petrol.

The government has also closed public schools since Friday due to the energy crisis, which has created mile-long queues for scarcity of fuel at several pumping stations.

Only a few taxis were running while most were lined up at a few pumping stations that still deliver rations of petrol.

To improve the liquidity of the dollar in commercial banks, the central bank on Thursday declared it a crime for Sri Lankans to hold dollar notes for more than two weeks.

Existing laws allow Sri Lankans up to $ 15,000 for three months before being deposited in a bank or cashed at the official exchange rate.

Within two weeks, the limit would be lowered to 10,000 10,000, and the amount of time the currency could hold was reduced to two weeks, Waresinghe said.

Sri Lanka’s foreign exchange deficit is at the heart of the current crisis, forcing the government to stop importing much-needed goods.

This has led to rapid inflation, sharp deficits and power blackouts in Sri Lanka’s worst economic crisis since independence in 1948.

(Except for the title, this story was not edited by NDTV staff and was published from a syndicated feed.)

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