COLOMBO (Reuters) – Sri Lanka will introduce new legal guidelines to attract investments over the following three years whereas insurance policies to develop exports, tourism and remittances will probably be fast-tracked in a bid to rebuild foreign exchange reserves, President Gotabaya Rajapaksa stated on Tuesday.
In a speech to parliament, Rajapaksa stated a debilitating scarcity of foreign exchange was inevitable except expenditure was managed properly.
“If we fail to management our spending, there will probably be a foreign exchange downside within the close to future,” Rajapaksa added.
“There needs to be main growth within the areas of foreign forex to develop exports, tourism, remittances, and data and communication know-how.”
The island nation is up to its neck in debt and although the central financial institution confirmed to Reuters it had already launched $500 million to repay a world sovereign bond maturing on Tuesday, most of it was nonetheless left to repay.
In the remainder of 2022, Sri Lanka wants to repay debt value $4 billion, with the following tranche of a $1-billion worldwide sovereign bond maturing in July. Official reserves stood at a meagre $3.1 billion on the finish of December.
Reserves had been topped up final week through a $400 million swap with neighbouring India, and Sri Lanka is negotiating an additional $2.5 billion by way of credit score traces from India and Qatar.
However, ranking businesses have downgraded Sri Lanka a number of instances in latest months over issues of potential debt default. The authorities has stated it’s dedicated to assembly all debt repayments however has dominated out searching for help from the International Monetary Fund (IMF).
“Sri Lanka’s foreign exchange problem is a symptom of bigger structural points in its financial system so focusing solely on bettering inflows is not going to be sufficient,” stated Dhananath Fernando, an financial analyst at Colombo-based suppose tank Advocata.
“The authorities should commit to bigger reforms on state enterprises, tax reforms and market-led changes to the rupee to resolve its monetary disaster, or we will probably be consistently fire-fighting.”
(This story refiles with sequence quantity in headline tag).
(Editing by Swati Bhat and Clarence Fernandez)