Written by Staff Writer
02 Jan, 2020 | 10:03 pm
COLOMBO(News 1st) – Sri Lanka must repay USD 4.8bn, as external foreign debt, this year and this is thus far, the largest debt repayment in the history of Sri Lanka.
Responding to questions raised by journalists, State Minister of Development Banking and Loan Schemes Shehan Semasinghe shared his thoughts.
Journalist: There is an impact on the value of the Rupee and also there is an impact on the local interest rates. Has the government or will the government take any measures to minimize the impact?
Shehan Semasinghe stated that the hit on the economy was the shortage of local and foreign investments lead to the depreciation of the Rupee. He added that they intend to create an investment favoured atmosphere to attract investments and will focus on investments over foreign loans.
Journalist: How will the repayment of loan this year impact the currency and the domestic interest rates of the country?
Sanjeewa Fernando, Economist:
“What we expect is the currency to depreciate by 3-4%, given that according to the Marshall–Lerner theory, that Sri Lankan imports and exports have elasticity so the currency will depreciate around 3-4% per year.
When it comes to the interest rates that we are expecting interest rates to sightly decline in the first quarter because the Central Bank has adopted a soft monetary policy as of now.
But given the recent tax cuts are likely to drive consumer growth and credit growth also as a result. We expect interest rates to have some pressure from the second quarter itself.”
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