Home-grown Solution for Economic Crises, not an IMF Programme – Cabraal
By Rajiesh Seetharam
The road map to the solution for the debt crises, would be made public on 1 October and it would be a home-grown solution taken after consultation with all stakeholders in Sri Lanka, stated Central Bank (CB) Governor Ajith Nivard Cabraal. “During my previous term as Governor (2006 to 2014) Sri Lanka’s GDP increased from USD 24 billion to USD 79 billion.
In 2021 it still remains around USD 79 billion. The Debt through International Sovereign Bonds (ISB) increased from USD 5 billion to 13 billion during 2014 to 2021, this is after paying two billion USD last year. During the last five years, there was an IMF programme, however our debt vulnerability increased. Though I am not blaming the IMF for this, as Sri Lanka did have the freedom to make its decisions. We need to understand that going to the IMF is not always the solution.
We are coming up with a home-grown programme where we service our debts, while ensuring a certain level of reserves and see that cash flows occur within the country. I want to make it clear, we will service all our debts on time, without a debt restructuring programme,” said Cabraal speaking at a forum organised by ICC Sri Lanka. The Governor said one of the main strategies would be to increase non-debt inflows. “We are in the process of monetising certain under-utilised assets so that the funds could be used to retire the debts.
“We are working on replacing certain parts of ISBs with Government-to-Government debt. Our other main target is to increase exports, and see that exports culminate in cash so that there would be new inflows into the overall system. With increasing vaccination, we are looking at opening the USD 4.5 billion tourism industry soon,” he said. It is the CBSL, which is charged with a legal obligation to provide financial system stability, economic and price stability, Cabraal said.
“A consultant who comes from Wall Street may not have that same responsibility. We have local experts, they are more accountable. A home-grown solution with proper discipline can bring more benefits to the country,” he added.