CBSL rejects claim that Sri Lanka is at risk of a foreign exchange rate crisis

Colombo (News1st): Central Bank of Sri Lanka has refuted claims that the nation is at risk from a foreign exchange rate crisis. Earlier, the Financial Times and many other international media publications reported that Sri Lanka is leading the list of countries that are at risk of an exchange rate crisis. In a report compiled by Nomura Holdings Inc. Sri Lanka, South Africa, Argentina, Pakistan, Egypt, Turkey and Ukraine have been identified as countries most at risk with Sri Lanka leading the pack. According to the report "Sri Lanka had the worst outlook due to still-weak fiscal finances and a very fragile external position.” The report added “With foreign exchange reserves of less than five months of import cover and high short-term external debt of $160bn, its refinancing needs are large. And Political stability also remains an issue.” Responding to these publications Senior Deputy Governor of the Central Bank of Sri Lanka Dr. P. Nandalal Weerasinghe pointed out a serious anomaly in the Nomura report. He stated that Sri Lanka's debt is nowhere near the US $ 160 billion figure quoted by Nomura. Dr. Weerasinghe also pointed out that the actual figure is estimated at US $ 14.3 billion. Analysts noted that whilst Nomura Holdings appeared to have made a mistake in reporting the total debt component, Sri Lanka's total debt component including that of the private sector borrowings total approximately US $ 55 billion.