Sri Lanka built foreign reserves to use during tough times: CB Governor

Standing left to right – Mr. Dinesh Jebamani (Chief Manager Liability Product Management and New Age Media – Seylan Bank), Mr.Sudesh Peiris (Senior Manager – Digital Banking Channels – Seylan Bank), Ms. S.Senevirathne (Representative of the Revenue Department – Western Province), Mr. Tilan Wijeyesekera (Deputy General Manager – Retail Banking – Seylan Bank) and Mr. Malik Wickremanayaka (Deputy General Manager – Operations – Seylan Bank)

De 02, 2011 (LBO) – Sri Lanka built up foreign reserves as a buffer to be used during tough times, Central Bank Governor Nivard Cabraal said, as reserves came off record highs seen in August 2011. “We have thought through carefully and built up are reserves carefully in order to ensure that we are able to meet challenges as and when it occurs,” Cabraal told a forum of non-bank lenders in Colombo.

“Sometimes people talk about reserves lost. I think many of those people have not been told about the story of the ant which used to gather food for the winter.

“The food was put in place in order to ensure that he would be able to consume it at the time that it is needed.”

From the time a balance of payments crisis ended in May 2009 with a float of the rupee in April, Sri Lanka has been building up reserves helped low credit growth and strong external borrowings.

By August 2011, Sri Lanka’s reserves peaked at 8,055 million dollars shortly after selling a bond in international markets.

Cabraal said the central bank had behaved like the proverbial ant in Aesop’s tale in hoarding reserves.

“In the same way the central bank has taken steps to ensure that we bring in additiona