Swaps and lines of credit from several countries
By Skandha Gunasekara
The government will seek to facilitate currency exchanges as well as lines of credit from several countries, including India and China, Sunday morning learned.
State Finance Minister Shehan Semasinghe said discussions were underway with the Reserve Bank of India, as well as the Central Bank of Qatar.
“When the Minister of Finance visited India, an exchange with the Reserve Bank of India was discussed. We are also working on swaps with the Chinese government as well as with the Central Bank of Qatar. This will ensure that we do not become a defaulting country next year and meet our debt obligations, ”he said, adding that the currency swaps would take place early next year.
He noted that a line of credit from China was also under discussion in addition to that from India.
“The Indian credit line will arrive in January and will be for food, medicine and essentials, as well as materials needed for construction. The Chinese line of credit will come soon after. But as soon as these lines of credit arrive, there will be a positive impact on the trade balance. Right now we have to settle our trade balance and our current account, ”he explained.
The minister of state also revealed that discussions were underway with donors and that the option to approach the IMF was still on the table.
“We work closely with all monetary funds and funding agencies. We have negotiated some issues with funding agencies such as the World Bank, Asian Development Bank (ADB), Japan Agency for International Cooperation (JAICA) and even the IMF, to some extent, where the review periodical has been carried out recently. We have not yet decided whether we are going to enter a program with the IMF or not, but all the doors of the funding agencies are open on our side. We will not close the doors to anyone, ”said the Minister of State.
Regarding foreign currency inflows, he said the government depended on the export sector as well as on foreign remittances to resume.
“Our exports have increased from when there was no pandemic, which shows that our policies to increase exports have worked. More than 200,000 Sri Lankans who lost their jobs abroad have started returning. Therefore, foreign entries will arrive, ”he explained.
Semasinghe also revealed that the government does not rely on tourism for its income, saying, “We cannot rely on income from tourism. This is because even though we are open, if other countries are closed or have travel restrictions, there is no way to enter Sri Lanka. This is mainly due to the new variants of Covid. “