ECONOMYNEXT – Sri Lanka’s current lower reserves have threatened the island nation’s imports as the country is unable to obtain letters of credit, Cabinet Spokesman Bandula Gunawardena said, as the country is still struggling to recover from its unprecedented economic crisis.
President Ranil Wickremesinghe late on Monday said his government has offered Colombo Port’s East Container Terminal (ECT) to Japan and if Japan is not interested, it will be given to others. Click here for the story.
A previous tripartite deal with India and Japan was scrapped unilaterally by former Sri Lanka President Gotabaya Rajapaksa in January 2021 amid strong protest by port-related trade unions against privatization.
Gunawardena said Sri Lanka has little chance to maneuver with the economy.
“With the current situation, if we don’t bring our forex reserves above $ 3 billion, then letters of credit for our import goods will not be accepted globally,” he told the weekly cabinet briefing on Tuesday (06) when asked if Wickremesinghe got the cabinet approval to offer the ECT to Japan.
“So no matter how much fuel and gas we need, we will not be able to buy them. This is the reality of the international payment system.”
Sri Lanka has defaulted on sovereign debts in April this year and since then the country has been facing difficulties in imports due to forex shortage amid lower reserves.
The country’s reserves were at $1.7 billion as of end-October including $1.4 billion Chinese swap in yuan.
“Every one of us – whoever runs the country – should face the reality. If we don’t improve the foreign reserves, if we don’t sell Sri Lankan property and solve this dollar crisis, we won’t be able to do international trade with the global markets,” Gunawardena said.
“So cautiously and responsibly we have to bring down international investors.”
“India, China, Vietnam, Malaysia, and all countries in the world, get investors and they get dollars. But, why don’t we receive dollars? And why do our Sri Lankan entrepreneurs invest in countries such as Bangladesh, Ethiopia, and Kenya?” (Colombo/Dec06/2022)