Colombo, Nov 13 (Businesshala) – Sri Lanka is confident not to default on its loan repayments and will work on gradually improving the quality of its foreign exchange reserves, Finance Minister Basil Rajapaksa said a day after presenting the 2022 annual budget. Said later on Saturday.
The Finance Minister, in his speech on Friday, had said that the government will reduce its budget deficit to around 8.8% of GDP in 2022. The deficit target for 2021 was revised to 11.1%.
“Sri Lanka has never made a mistake in its history and this record will continue to remain so,” Rajapaksa said.
He said, “Even part of our reserves are borrowed, but we will gradually improve the quality of reserves from next year till 2024. By 2024, we are confident that we will be able to increase the reserves and reach a sustainable level.” but will be able to put the loan.”
Debt repayment is one of the key challenges facing Sri Lanka, with foreign exchange reserves dwindling to $2.27 billion by the end of October.
Rajapaksa said remittances and tourism, which are the top two sources of dollar inflows, have both been hit by the COVID-19 pandemic and it has become difficult to attract investors.
“But we want to reduce borrowing. I guarantee that $1.54 billion will be paid by July 2022.”
Analysts are not convinced that the announcements in the Budget are enough to instil confidence among investors, rating agencies and market participants.
“Overall, the budget is unlikely to help the economy significantly and does not give a strong indication of how it expects to meet its debt obligations going forward or how it will address depleting reserves.” hopes to address,” said Trisha Perries, head of economic research at Frontier Research.
“There is no clear sign of moving towards the IMF, as they are looking for bilateral and multilateral support in line with the Central Bank of Sri Lanka roadmap,” he said. (Written by Swati Bhat; Editing by Jacqueline Wong)