SL not constrained by IMF agenda : Cabraal

COLOMBO (News1st): Sri Lanka will not be constricted by the agenda of the International Monetary Fund (IMF), state minister Ajith Nivard Cabraal has said. "They (the former government) handed us an economy with depleted reserves, one which has more imports than exports," the state minister of money and capital markets said. He noted that the import restrictions would be eased when the country's reserves and revenue increases. But Dr Harsha De Silva, a Samagi Jana Balawegaya parliamentarian said, that the government is only left with the alternative of seeking the support of the IMF. He also pointed out that the government had resorted to printing money after a central bank treasury bill auction aimed at raising Rs 40 billion only generated Rs 13 billion. "The printing of money only increases the demand for the dollar. Then, the USD increases in value against the rupee," De Silva noted. The opposition parliamentarian observed that Sri Lanka has only Rs 5.1 billion in reserve despite having to pay debts amounting to more than Rs 6 billion in debt. "Over the next 6 months, we have to pay 1 billion USD in ISB, 980 million USD in Development bonds, USD 482 million in interest payments and so on," he pointed out. "How are we going to locate funds for these repayments". Meanwhile, Sri Lanka's government bonds tumbled 40 percent below their face value signifying rising default fears, according to Nasdaq. The Nasdaq Stock Market is a stock exchange based in New York where it is ranked second on the list of stock exchanges by market capitalization of shares traded, behind the New York Stock Exchange. The report has been compiled by Nasdaq, together with contributors from Reuters and the Morgan Stanley multinational investment bank. The report said that Sri Lankan government's failure to extend a USD 400 million currency swap line with India and the apparent lack of appetite for a new deal with the International Monetary Fund has renewed worries its finances may not cover its upcoming debt bills. According to the calculations of the analysts at Morgan Stanley, Sri Lanka faces USD 4.6 billion worth of bond redemptions this year alone plus another USD 500 million payment in January 2022. The report added that a tumbling currency, credit rating downgrades, debt-to-GDP levels nearing 100 percent and almost 70% of government revenues being spent on interest payments alone have been the main causes of the crisis at hand. As a solution, the report suggested that the USD 1.5 billion currency swap line with China and gain breathing space if the IMF gets the green light to increase its Special Drawing Rights.