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Sri Lanka facing worst financial crisis due to COVID-19 induced economic curbs: Minister

Sri Lanka facing worst financial crisis due to COVID-19 induced economic curbs: Minister
outlookindia.com
1970-01-01T05:30:00+0530
Colombo, May 28 (PTI) Sri Lanka is facing the worst financial crisis in the country’s history due to the economic curbs imposed after the coronavirus outbreak that has killed 10 people and infected 1,453 others, a senior minister said on Thursday.

“We are facing the worst foreign exchange crisis in history. The government decision to curb imports imposed since the COVID-19 pandemic was based on reality,” Bandula Gunawardena, who is the minister for Information and Communication and the government’s spokesperson, said.

The statement by the minister came as Sri Lanka early this month said it is yet to receive any monetary foreign assistance in its fight against the coronavirus pandemic despite signing an agreement with the World Bank for USD 127 million assistance.

Sri Lanka in April restricted imports of non essential goods in its bid to save foreign currency reserves.

“Due to COVID-19 many of our exports are down. About 5 billion dollars of exports come from textiles. Tourism revenue is also down. Remittances are also down,” Gunawardena said.

He said if the government allowed outward flows of money through imports the local rupee would further fall.

The rupee hit a record lowest of 190 plus against the US dollar due to the pandemic.

“If it goes to 250 to 350 (to the dollar) we will not be able to live in this country. There will be a cost of living which no one will be able to bear,” Gunawardena said.

He said the import controls are needed to keep the rupee afloat, promote import substitution and domestic agriculture.

“It is done on the need to stop imports flowing in freely and the need to build a domestic economy,” Gunawardena said.

With economic woes in sight, Sri Lanka opted to seek help from India through currency swap arrangements.

Sri Lanka had already secured a 400 million dollar swap from India through the SAARC arrangement.

This week President Gotabaya Rajapaksa spoke to Indian Prime Minister Narendra Modi over the phone and asked India to provide a special USD 1.1 billion currency swap facility to boost the country''s draining foreign exchange reserves in view of the economic slowdown due to the coronavirus pandemic.

To boost the tourism sector, which is among the main sources of revenue for the island nation, Sri Lanka is mulling the idea of opening its airports from August 1.

Tourism accounts for about five per cent of the economy, with Britain, India and China the main markets.

The number of international tourist arrivals in Sri Lanka declined in March 2020 by 70.8 per cent in comparison to a year ago as the tourism industry has been hit hard by the coronavirus outbreak.

The tourism sector of Sri Lanka has been in bad shape since last year when the country was jolted by the Easter Sunday attacks, which killed over 250 people including Indians.

Till Thursday, Sri Lanka has reported 10 deaths and 1,453 infections of the coronavirus. PTI CORR RUP RUP

RUP


Disclaimer :- This story has not been edited by Outlook staff and is auto-generated from news agency feeds. Source: PTI

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