The Central Bank of Sri Lanka says measures are being taken at present, to ensure that by the end of 2021, official reserves will remain above USD 3 billion.
Issuing a statement, the CBSL said, despite the headwinds of the economic impact of COVID-19 and challenges posed by adverse developments in the external sector, the Sri Lankan economy showed resilience throughout 2021.
It added, Sri Lanka also successfully met its debt obligations by repaying foreign loans, including the payments of International Sovereign Bonds.
Since the beginning of the year, both the Central Bank and the Government have been actively pursuing possible avenues to replenish official reserves, with an emphasis on encouraging non-debt flows, so that the existing foreign debt could be managed in a sustainable manner.
The CBSL said it is expecting major foreign exchange inflows to the Central Bank that include SWAP facilities with Middle Eastern and other regional central banks amounting to about USD 2 billion.
Authorities are also in the process of securing government to government financing, syndicated loans as well as loans from multilateral organisations.
In addition, the expected foreign exchange facilities that were negotiated during the high-level visits abroad made by authorities are also progressing well.
In its statement, the CBSL noted that the interventions made by the Central Bank on several facets of the foreign exchange market, such as incentive scheme introduced for workers’ remittances, and the repatriation and conversion requirements on account of exports proceeds will improve the liquidity in the domestic market, thereby enabling the Central Bank to build up official reserves further.
It added, with the recent rise in departures for foreign employment and exponential growth observed in tourist arrivals, the external sector is expected to recover well in the period ahead and the pressures observed at present are expected to moderate with increased inflows to the economy.
The Central Bank of Sri Lanka stressed that the government and the CBSL remain confident that these expected inflows will materialise and the reserve position will remain at comfortable level throughout the year 2022.