Sri Lanka foreign reserves dip below $50 million, minister waves red flag

Sri Lanka finance minster Ali Sabry told the Lankan parliament declining liquid reserves - which have plunged below $50 million - reflected immediate danger levels for the island country.
A demonstrator holds Sri Lanka's national flag as he takes part in a protest against the economic crisis in Colombo. (AFP)
A demonstrator holds Sri Lanka's national flag as he takes part in a protest against the economic crisis in Colombo. (AFP)
Updated on May 04, 2022 06:52 PM IST
Copy Link
By | Edited by Chandrashekar Srinivasan

Sri Lanka finance minister Ali Sabry on Wednesday waved a metaphorical red flag in parliament as the troubled nation's usable foreign exchange reserves dropped below $50 million, increasing worry over its ability to provide food, fuel and other essential goods for citizens, and repay massive foreign debts. Sabry - who quit April 4, a day after being appointed, only to return - warned 'we have been over-spending two and a half times'. "In 2021 total income was 1,500 billion (Sri Lankan) rupees… expenditure was 3,522 billion rupees… we were living (beyond) our means…" he said, cautioning lawmakers that aid from the World Bank or the IMF would not solve deep-rooted problems. 

"The IMF is not Aladdin's magic lamp," he said.

Sri Lanka is on the brink of bankruptcy and has suspended payments on foreign loans, which total over $50 billion with an estimated $8.6 billion due this year.

READ: Sri Lanka to default on external debt of $51 billion pending IMF bailout

Foreign exchange reserves were an estimated $2.31 billion in February. By March it had dropped to $1.93 billion. 

Overall reserves have crashed by 70 per cent in two years, Reuters reported.

READ: Sri Lanka reserves drop to $1.93 bn in March, $8.6 bn due this year

Last week the World Bank said it would provide $600 million in aid to help Sri Lanka meet payment requirements for essential imports.

The World Bank said it would release $400 million 'shortly'. This is well below the $3-$4 billion estimated in bridge financing to meet key expenses.

The Sri Lankan government has sent out a general SOS, to which India has responded generously. China - a major creditor - is also in talks to give aid.

Sabry has hailed India for its support during talks with the IMF. 

Addressing the Lankan parliament today, Sabry - who led those talks - said he met Nirmala Sitharaman and that she had offered her government's support.

Sitharaman last month said India would 'try to extend all possible cooperation' to Sri Lanka to help it emerge from this crisis. The Indian government also spoke to the IMF on behalf of Sri Lanka and the global financial body's chief, Kristalina Georgieva, later said she appreciated India's assistance.

READ: Sitharaman assures support to Sri Lanka, IMF praises India's help

India has committed over $3 billion in loans, credit lines and swaps since January. And on Monday it extended a further $200 million - over and above two earlier tranches of $500 million - of fuel. Sri Lanka today also sought fertilisers, as well as deferral of a $2.5 billion to the Asian Clearing Union.

The crisis has triggered a shortage of essential goods - food, fuel, and medicines - and skyrocketing prices for what little remains on shelves. 

It also triggered violent clashes between police and furious Lankans demanding the government led by president Gotabaya Rajapaksa be held responsible.

Sabry's comments come a day after the main opposition party introduced a no-confidence motion against Rajapaksa for mishandling the country's economy.

With input from ANI, PTI, Reuters

SHARE THIS ARTICLE ON
  • ABOUT THE AUTHOR

    Follow the latest breaking news and developments from India and around the world with Hindustan Times' newsdesk. From politics and policies to the economy and the environment, from local issues to national events and global affairs, we've got you covered.

Close Story
QUICKREADS

Less time to read?

Try Quickreads

  • Other places from which Google will not store location data include fertility centers, addiction treatment facilities, and weight loss clinics.

    Google to delete user location history on US abortion clinic visits

    "If our systems identify that someone has visited one of these places, we will delete these entries from Location History soon after they visit," Jen Fitzpatrick, a senior vice president at Google, wrote in a blog post. "This change will take effect in the coming weeks."

  • Professor Ajay Agrawal, who was honoured with the Order of Canada in the 2022 list. (Credit: University of Toronto)

    Two Indo-Canadian academics honoured with Order of Canada

    Two Indo-Canadian academics, working on research to advance the betterment of mankind, have been honoured with one of the country's most prestigious awards, the Order of Canada. Their names were in the list published by the office of the governor-general of Canada Mary Simon. Both have been invested (as the bestowal of the awards is described) into the Order as a Member. They are professors Ajay Agrawal and Parminder Raina.

  • SpaceX founder and chief engineer Elon Musk.

    Elon Musk's Twitter hiatus, in 2nd week now,  generates curiosity 

    The world's richest person, Elon Musk, has not tweeted in about 10 days and it can't go unnoticed. The 51-year-old business tycoon has 100 million followers on the microblogging site, which he is planning to buy. Since April, he has been making headlines for the $44 billion deal and his comments and concerns about the presence of a large number of fake accounts on Twitter.

  • A Taliban fighter stands guard at a news conference about a new command of hijab by Taliban leader Mullah Haibatullah Akhundzada, in Kabul, Afghanistan.

    Taliban's reclusive supreme leader attends gathering in Kabul: Report

    The Taliban's reclusive supreme leader Haibatullah Akhundzada joined a large gathering of nationwide religious leaders in Kabul on Friday, the state news agency said, adding he would give a speech. The Taliban's state-run Bakhtar News Agency confirmed the reclusive leader, who is based in the southern city of Kandahar, was attending the meeting of more than 3,000 male participants from around the country, aimed at discussing issues of national unity.

  • James Topp, a Canadian Forces veteran who marched across Canada protesting against the Covid-19 vaccines mandates, speaks to supporters as he arrives at the Tomb of the Unknown Soldier and the National War Memorial ahead of Canada Day in Ottawa, Ontario, on Thursday. (REUTERS)

    July 1: Canada to mark 155th anniversary of its formation

    As the country prepares to celebrate the 155th anniversary of the formation of the Canadian Confederation, Canada Day, the traditional centre of festivities, Parliament Hill in Ottawa, will be off limits as protesters linked to the Freedom Convoy begin gathering in the capital for the long weekend. Various events have been listed by protesters including a march to Parliament Hill on Friday.

SHARE
Story Saved
×
Saved Articles
Following
My Reads
Sign out
New Delhi 0C
Saturday, July 02, 2022