Ruling out default or immediate rescheduling, Finance Minister Basil Rajapaksa yesterday assured the public and the private sector that essential imports would be sourced whilst servicing the country’s debt. 

He said that President Gotabaya Rajapaksa, Prime Minister Mahinda Rajapaksa, and he had taken note of various concerns and recommendations from the leaders of the Ceylon Chamber of Commerce and top economists, as exclusively published in the Daily FT issue of 10 January. 

“We recognise the concerns not only of the private sector but also the general public. However, the President, Prime Minister, and I assure that essential foods and drugs for the public as well as raw material and inputs for the export and local industries will be imported whilst the country honours its debt commitment,” Basil told the Daily FT. 

He pointed to the record $ 21 billion in imports last year despite the challenging foreign reserves situation as well as all-time high exports of over $ 12 billion. 

“The impressive export performance proves that the required imported inputs have been facilitated,” the Finance Minister added. 

Basil’s assurance comes amidst fresh concerns over reliable supply of fuel, especially for thermal power generation, as well as continuous complaints by the private sector that banks don’t have adequate foreign exchange to open Letters of Credit in a timely manner. 

However, the Finance Minister’s confidence appears to stem from his successful online discussion with India’s External Affairs Minister Foreign Secretary Dr. S. Jaishankar on Saturday where the giant neighbour assured forex support to the tune of $ 1.9 billion, as well as the Central Bank boosting reserves to over $ 3 billion by the end of last month. China, as well as Japan, have also assured support to Sri Lanka. 

Of the nearly $ 7 billion total debt repayment scheduled for this year, the $ 500 million International Sovereign Bonds (ISBs) mature today. The CBSL by yesterday had already placed the funds for settlement. Another $ 1 billion worth of ISBs mature in July. 

In last week's exclusive feature (https://www.ft.lk/business/Leaders-of-Ceylon-Chamber-top-economists-speak-out-on-forex-crisis/34-728960) over a dozen business leaders and economists urged the Government to opt for deferment of larger foreign debt repayment via restructuring and rescheduling, and to use existing scarce resources for essential imports.

Sri Lanka repaid $ 2 billion worth of maturing ISBs each in 2020 and 2021 whilst overall debt repayment amounted to approximately $ 6 billion in the past two years. Sri Lanka faces $ 25 billion in sovereign foreign currency obligations until 2026. 

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