The Sri Lankan government must explain how the country’s foreign exchange reserves exceeded $ 3 billion from $ 1.58 billion in just one month, the main opposition party Samagi Jana Balavegaya (SJB) demanded on Thursday.
Sri Lanka’s central bank on Wednesday announced that the country’s foreign exchange reserves had reached $ 3.1 billion.
“As per our previous announcements, @CBSL’s #official reserve position has grown to approx. $ 3.1 billion and will remain around this level by the end of 2021 as well, ”Governor Nivard Cabraal said in a tweet.
This was in stark contrast to last month, when official foreign exchange reserves fell to $ 1.58 billion.
“These facts cannot be hidden. Tell us where they are from, ”SJB lawmaker Harsha de Silva said, addressing the press.
Sources said the increase in foreign exchange reserves was supported by a 10 billion yuan ($ 1.6 billion) currency swap deal signed with China on March 21 this year. However, de Silva said reports have surfaced that Sri Lanka can only use the $ 1.6 billion to import goods from China.
He argued that if reserves had inflated as claimed by the Central Bank, then US dollars had to be released to pay for around 1,500 containers carrying essential items currently stranded in the port of Colombo.
Importers said these containers were stranded due to the ongoing currency crisis in Sri Lanka due to the shortage of US dollars.
The announcement by the Central Bank of Sri Lanka comes days after Fitch downgraded Sri Lanka’s sovereign rating to “CC” from “CCC”, claiming there is an increased likelihood of a default in the months to come in light of the worsening of the country’s external liquidity situation underlined by a decline in foreign exchange reserves.
The New York-based rating agency said it would be difficult for the government to meet its external debt obligations in 2022 and 2023 without new sources of external funding. “The bonds include two international sovereign bonds of $ 500 million due January 2022 and $ 1 billion due July 2022,” he said.
(This story was not edited by Devdiscourse staff and is auto-generated from a syndicated feed.)