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

Sri Lanka's Prime Minister Ranil Wickremesinghe arrives with flowers to receive blessings at the Gangaramaya Buddhist Temple, Colombo, Sri Lanka on Wednesday 4 April 2018. On wednesday (4), Wickremesinghe survived a no-confidence motion in the Sri Lankan parliament with a 46 vote majority after a 12-hour debate with 122 MPs voted in his support while 76 MPs voting to remove the prime minister. (Photo by Tharaka Basnayaka/NurPhoto via Getty Images)

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