Sri Lanka’s need of the hour is to work out a comprehensive short-term plan to avert the US dollar crisis and economic setback along with the upcoming debt repayments without looking at it as a short-term liquidity issue.
The present serious fiscal situation has been brought to the notice of the Central Bank Governor Ajith Nivard Cabraal when the opposition firebrand economists and MPs trio Dr. Harsha de Silva, Kabir Hashim and Eran Wickremaratne met him on Wednesday.
It was a rare meeting between the Governor and opposition legislators, often Mr. Cabraal’s detractors on the way the foreign exchange crisis has been managed.
The Central Bank is keeping faith on getting swaps here and there with the Indian assurance of postponing the Asian Clearing Union (ACU) payments for two months etc, Dr de Silva said.
The two-month deferral for US$900 million in payments due this week to the ACU was a blessing in disguise for the Central Bank as its foreign exchange reserves now stands at $400-500 million, he said.
The SJB MP noted that he has told the CB Governor that the liquidity and solvency issue requires analysis of the sustainability of the foreign debt and a restructure.
He disclosed that they discussed the ability to pay for imports and foreign debt in a situation of floating exchange rates, soaring inflation and financial system stability.
The repercussions after the unwinding of moratorium given by banks to COVID-19 affected borrowers and how banks and businesses deal with it were the other major matters discussed at the meeting.
He said that bank officials informed them they were planning to introduce a systematic unwinding process of moratorium loan grace periods.
It has been brought to the notice of the Governor that the failure to extend the moratorium grace periods will create another crisis in the country.
Dr. de Silva revealed that the three SJB MPs, especially parliamentarian Eran Wickremaratne emphasised the need of providing some relief to the poorest of the poor and low income earners due to skyrocketing cost of living.
