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Cabinet Co-Spokesman and Minister Bandula Gunawardena
By Charumini de Silva
Cabinet Co-Spokesman and Minister Bandula Gunawardena yesterday said no political leader will be able to provide a solution to the dire economic strait and the only way Sri Lanka could survive is by boosting the foreign exchange inflows.
“Sri Lanka is going through the most decisive period to overcome this economic crisis. The top global rating agencies like Moody’s and Fitch Ratings have downgraded our economy numerous times. Against these ratings, no politician can give a solution to the economic crisis. Irrespective of who rules the country it all boils down to the availability of foreign reserves to continue the international trading,” he said at the post-Cabinet meeting media briefing yesterday.
Cabinet Co-Spokesman said the ability to import depends on the net foreign assets of an economy reserve.
“Generally, an economy should at least have net foreign assets sufficient for three months to import. Some of the developed economies have multiple folds of net foreign assets than what is required for international trade and we don’t have,” he added.
“The only way to overcome the dearth of foreign reserves is by improving foreign exchange earning sectors, minimising the foreign currency outflows, reducing the burden on the balance of payments and expanding foreign assets. There is no other political solution Sri Lanka has at this juncture,” he explained.
He warned that there is a risk of Sri Lanka not being able to supply essential imports such as fuel, medicine, fertiliser and food to continue the day-to-day economic activities if the debt restructuring process is not completed properly.
At present the two expert firms appointed by the Government ─ Lazard Institute of France and Clifford Chance LLP are working on a debt restructuring program, he added.
“Whether we like it or not we need to resume international trading and for that, we need to ink more free-trade agreements (FTAs) with economies as much as possible. For example, Vietnam, Singapore, Malaysia, and China have many FTAs from which their economies are benefiting. If Sri Lanka doesn’t sign more FTAs our exporters will not have markets competitive to boost the foreign exchange inflows,” he insisted.
Gunawardena also highlighted that this is why the Cabinet of Ministers approved signing a protocol with China to export seafood.
“Exports are the only hope that can pull Sri Lanka out of the vicious cycle and put the economy back on a sound economic growth path. If we can increase our export earnings from the current $ 12 billion to $ 20 to $ 25 billion, we can at least survive this economic crisis,” he added.
