Sri Lanka's reserves get boost after forex swap from India

COLOMBO: Sri Lanka's foreign exchange reserves rose to $6.6 billion following currency swap deals with India and SAARC, the government has said.

"The gross official reserves were estimated at $6.6 billion and it is sufficient for four months of imports," Special Assignments Minister Sarath Amunugama said yesterday at a media briefing.

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

Sri Lanka, which has been facing a balance-of-payments crisis, received $700 million currency swap of dollars for Sri Lankan rupees from Reserve Bank of India on March 8 and another $400 million from SAARC.

"After receiving those two funds, our foreign reserves went up from $5.5 billion to $6.6 billion," he said.

Amunugama said the government was hopeful of receiving initial proceeds of $1.5 billion IMF loan to boost foreign exchange reserves by mid this year.

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

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

Prime Minister Ranil Wickremesinghe last week blamed the previous Mahinda Rajapaksa regime for leaving behind a massive Rs 9.5 trillion debt burden on the country.

Wickremesinghe informed the Parliament that the government's debt burden was Rs 9.5 trillion and could further rise.

He said the government has been compelled to revise the 2016 budget and raise taxes to increase revenue and keep the budget deficit and debt under control.