Sri Lanka foreign reserves at USD6.6bn; IMF support by mid 2016

Mar 16, 2016 (LBO) – Sri Lanka’s gross official reserves were estimated at 6.6 billion US dollars by today, Special Assignments Minister Sarath Amunugama said.

Speaking at a media briefing Amunugama said it is sufficient for 4 months of imports.

“It is recommended to keep at least 3 months of imports. So we are at a comfortable level now,” Amunugama said.

The Minister said current gross official reserves include 1.1 billion US dollars support received from the Asian region.

Sri Lanka received a 700 million US dollars currency swap from the Indian Central Bank on 08 March 2016 for just four months and another 400 million US dollars from SAARC (South Asian Association for Regional Co-operation).

“After receiving those two funds, our foreign reserves went up from 5.5 billion US dollars to 6.6 billion US dollars,”

Sri Lanka had reserves over 7 billion US dollars but pumped funds to defend the rupee against the US dollar.

“To repay our loans and interests we had to intervene into the foreign exchange market. We need to balance both imports and exports.” he said.

Amunugama expects that Sri Lanka will receive initial proceeds of 1.5 billion US dollars Stand-By Arrangement by mid this year.

Central Bank Governor Arjuna Mahendran recently said by the middle of April they will have an agreement with the IMF.

Sri Lanka is also eyeing World Bank, ADB and Japanese funds after receiving the IMF support.

Amunugama further stated that Sri Lanka’s estimated budget deficit for 2016 narrowed to 5.4 percent from earlier 5.8 percent after adjusting for recent amendments to budget proposals.

Sri Lanka expects to reduce the budget deficit to 3.0 percent of GDP by 2020.