Sri Lankan finance minister says to defend exchange rate

EconomyNext – Sri Lankan Finance Minister Ravi Karunanayake said Wednesday he believed the rupee could stay at current levels as international lenders and investors knew the new government was committed to fiscal discipline and consistent policy.

He said the government had enough foreign exchange reserves and support from multilateral lending agencies.

"The rupee is strong. We can hold it for as long as we like," he told reporters, in reply to a question about whether the local currency was under pressure. "We have enough reserves."

He said his talks with the International Monetary Fund earlier this month went well and the new government was assured of IMF support.

"That’s the reason the rupee is strong. The IMF knows that the government is committed to fiscal discipline although we inherited a lot of debt," Karunanayake said after a meeting with former finance minister Ronnie de Mel.

The government has said it wants to issue sovereign bonds of up to 1.5 billion US dollars and was also seeking a facility of around four billion dollars from the IMF.

Karunanayake said he expects IMF funding by April without conditions, noting: "What is good to be done for the economy will be done. They don’t need to be prescribed to us."

Other countries had also offered funding support if the government was committed to a consistent economic policy and fiscal discipline, he said.