Sri Lanka confident of managing imports with existing inflows until IMF deal comes through

„CB says tight monetary policy helped in crushing demand and curtailing imports in parity with exports

The Central Bank expressed confidence that Sri Lanka could continue to manage its imports with what it earns from exports and remittances in the interim until the International Monetary Fund (IMF) deal comes through as its activation could get delayed till next January from a December target.

The country and its people were forced to undergo innumerable hardships and misery, having to stay in days-long queues for fuel, cooking gas and other essentials with prices of everything going through the roof since the economy plunged into its worst crisis in March after the country ran out its foreign currency reserves.

However, the officials managed to take the situation largely under control from mid July when they could allocate the foreign currency receipts from exports and remittances into imports, which were brought down quite significantly due to the ultra tight monetary policy, restrictions on imports through open accounts and outright bans on certain imports before gradually relaxing such controls later.

Assuaging any concerns surrounding Sri Lanka’s ability to meet its import needs amid a potential delay in the activation of the IMF deal, Central Bank Governor, Dr. Nandalal Weerasinghe expressed confidence in managing the situation without letting it to deteriorate.

“We could manage the situation for five months since July without any significant inflows, I don’t see any reason why we cannot do that going forward,” Dr. Weerasinghe said.

Although there hasn’t been any significant bridge financing during this period, he said there were some small amounts received from the Asian Development Bank and the World Bank.

He emphasised how the tight monetary policy helped in curtailing the import bill, making the Central Bank’s job relatively easy in meeting the importer dollar requirement from the inflows.