Thursday Nov 14, 2024
Thursday Nov 14, 2024
Wednesday, 27 October 2021 00:29 - - {{hitsCtrl.values.hits}}
The Central Bank of Sri Lanka (CBSL) yesterday detailed ongoing measures to shore up foreign reserves post-unveiling of its short-term roadmap on 1 October after questions were raised over timeliness and credibility.
In a statement listing the progress of securing foreign exchange Inflows, the CBSL, in a statement, provided information to investors and the general public on the progress made and the Government in securing foreign exchange inflows as announced in the Six-Month Road Map for Ensuring Macroeconomic and Financial System Stability.
The statement said the CBSL and the Government have commenced a series of direct engagements with other Governments, Central Banks, financial institutions and investors.
Several Memoranda of Understanding (MOUs) have been entered into in relation to development projects in line with the initiative towards monetisation of underutilised and/or non-strategic assets. Expected proceeds in relation to the two transactions involving Chalmers granaries and the property
behind One Galle Face alone amount to around $ 200 million, and an advance payment is
expected shortly. Details of the investment will be announced in coming weeks.
In addition, the $ 650 million investment in the West Container terminal by the Indian Adani
Group, John Keells Holdings as the Sri Lankan counterparty, and the Sri Lanka Ports Authority has
been recently finalised. Another key foreign investment that would transform the energy sector in
Sri Lanka with the addition of LNG to the energy mix is the $ 250 million inflow in relation
to a partial divestment of the West Coast Power Plant to the US New Fortress Energy, and the first
tranche of the investment is expected in November/December 2021.
Negotiations are also underway to expedite the finalisation of foreign currency swap arrangements
with neighbouring Central Banks. Specifically, discussions are being held with the Reserve Bank of
India, People’s Bank of China, and several Middle Eastern Central Banks.
In the meantime, the Government is processing a $ 1.5 billion long-term loan offer from a foreign Government-affiliated agency. In response to the requests for proposals (RFPs) for syndicated loan arrangements by the Government, several proposals have also been received, which are being processed at present.
Among other sectors that have shown notable progress in recent times are:
a) Exports, which surpassed $ 1 billion of monthly earnings during June-September 2021, along with the notable improvement in the repatriation and conversion of export proceeds during the month of October 2021
b) Rapid increase in labour migration, particularly to the Middle East
c) Continuation of the recovery process in tourism with a notable month-on-month increase in arrivals, and
d) Ongoing negotiations on petroleum-linked credit lines from the Middle East and other regional economies. These include an Indian credit line of $ 500 million, and a long-term loan facility of around $ 3.6 billion that is under negotiation.
In the domestic market, yields on Government securities have been allowed to adjust upwards,
thereby easing pressure on the Central Bank to finance the Government's funding requirement.
Behaviour of investors at the weekly auctions indicates that market equilibrium has been achieved
to a great extent, and greater stability in interest rates is likely to be observed in the period ahead.
Domestic investment in the real sector has picked up, as evidenced by the behaviour of the stock market as well as credit flows to the private sector. The All Share Price Index (ASPI) has surpassed
the 10,000-mark for the first time in history. The increase in credit to the private sector by licensed
commercial banks amounted to Rs. 625 billion during the eight months ending August 2021. These
developments also indicate that economic growth close to 5% in 2021 is very likely.
