The Government is considering a quota system for essential imports and a coupon scheme for consumers in buying food and fuel, several ministers and high official sources said.
The quota-based importation system for food and fuel is being discussed to save US$3 billion expected to flow into the country soon, a top official told the Business Times.
Issuing a statement, the Central Bank confirmed that measures being taken at present will ensure that by end of 2021 official reserves will remain above $3 billion.
However a former treasury secretary revealed that foreign reserves will further dwindle following the repayment of $500 million at the beginning of January.
Speaking to the Business Times, Central Bank Governor Ajith Nivard Cabraal reiterated that Sri Lanka is fully confident of repaying all of its sovereign debt in 2022 by resorting to new instruments to tackle the situation effectively. Sri Lanka is expecting an economic package of India amounting to $1.9 billion and another sum of $400 million currency swap from the Reserve Bank of India in the pipeline next year.
A special Chinese top level delegation visiting Sri Lanka recently has assured to grant a Swap facility of 10 billion Renminbi / Yuan equivalent to $1.5 billion but it should be kept as a deposit in foreign reserves as a condition.
This amount cannot be used for repayment of debts or any other activities in dollar terms. These bilateral swap arrangements are denominated in RMB and the currency of the relevant partner central bank.
It only allows the country to access RMB liquidity for short periods at relatively low rates of interest, in return for its own currency as implicit collateral.
In the backdrop of this scenario, a plan of introducing a coupon scheme for food and fuel came to the public domain following a statement by Minister Vasudeva Nanayakkara.
At present the country’s forex is so insecure that Sri Lankan banks Letters of Credit had to be underwritten by foreign banks in some instances, several importers claimed.
Under the quota system, foreign exchange for importers will have to be allocated based on actual requirement and stipulated quantity considering past importation data.
For general imports, dollars will have to be released to traders by the Department of Import and Export Control, based on import quotas, which were determined for groups of relevant food items, the senior official explained.
Sundaytimes
The quota-based importation system for food and fuel is being discussed to save US$3 billion expected to flow into the country soon, a top official told the Business Times.
Issuing a statement, the Central Bank confirmed that measures being taken at present will ensure that by end of 2021 official reserves will remain above $3 billion.
However a former treasury secretary revealed that foreign reserves will further dwindle following the repayment of $500 million at the beginning of January.
Speaking to the Business Times, Central Bank Governor Ajith Nivard Cabraal reiterated that Sri Lanka is fully confident of repaying all of its sovereign debt in 2022 by resorting to new instruments to tackle the situation effectively. Sri Lanka is expecting an economic package of India amounting to $1.9 billion and another sum of $400 million currency swap from the Reserve Bank of India in the pipeline next year.
A special Chinese top level delegation visiting Sri Lanka recently has assured to grant a Swap facility of 10 billion Renminbi / Yuan equivalent to $1.5 billion but it should be kept as a deposit in foreign reserves as a condition.
This amount cannot be used for repayment of debts or any other activities in dollar terms. These bilateral swap arrangements are denominated in RMB and the currency of the relevant partner central bank.
It only allows the country to access RMB liquidity for short periods at relatively low rates of interest, in return for its own currency as implicit collateral.
In the backdrop of this scenario, a plan of introducing a coupon scheme for food and fuel came to the public domain following a statement by Minister Vasudeva Nanayakkara.
At present the country’s forex is so insecure that Sri Lankan banks Letters of Credit had to be underwritten by foreign banks in some instances, several importers claimed.
Under the quota system, foreign exchange for importers will have to be allocated based on actual requirement and stipulated quantity considering past importation data.
For general imports, dollars will have to be released to traders by the Department of Import and Export Control, based on import quotas, which were determined for groups of relevant food items, the senior official explained.
Sundaytimes
