Deputy Minister of Finance and Planning Dr. Anil Jayantha says the recent depreciation of the Sri Lankan Rupee against the US Dollar is not the result of any government policy or wrong decision, but rather a consequence of the global crisis triggered by the ongoing conflict in the Middle East.
Speaking at a special media briefing held today (22) at the Department of Government Information, the Deputy Minister stated that the global crisis had led to a sharp increase in fuel prices, as well as higher costs for gas, fertilizer, shipping, and insurance rates.
He noted that the dollar prices of imported goods had risen significantly in recent months, while export prices had not increased at the same rate, placing further pressure on the country’s economy.
Dr. Anil Jayantha also pointed out that global efforts to strengthen and stabilize the US Dollar had increased demand for the currency, causing investments to shift towards the US Dollar and making it stronger against other currencies worldwide.
He also stressed that the government has not taken any decision to shrink the economy or impose import restrictions under the current circumstances.
The Minister further stated that fuel prices had risen sharply during the months of March and April, and that payments for fuel purchased at those elevated prices are scheduled to be made in May. He added that, as of May, the country’s fuel import bill has increased from around USD 120–200 million to USD 521 million.
“Accordingly, demand for the Dollar has increased while the supply available to meet that demand has become limited in the short term. As a result, the exchange rate rose abnormally and exceeded Rs. 350 yesterday.”
However, he stated that the International Monetary Fund’s (IMF) Executive Board is set to consider the combined Fifth and Sixth Reviews under the Extended Fund Facility for Sri Lanka on May 27, and expressed confidence that both tranches would then be released.
He further noted that in addition to this, Sri Lanka is also expected to receive financial assistance from the Asian Development Bank (ADB) and the World Bank.
Further commenting on the matter, Deputy Minister of Economic Development Dr. Anil Jayantha stated:
“However, I have good news for those concerned about the country. At present, the midpoint in the interbank foreign exchange market has come down to around Rs. 330. The buying rate is around Rs. 327 while the selling rate is around Rs. 332. I believe this is encouraging news for people who care about the country.”
“On May 27, the IMF Executive Board is to decide on two tranches totaling USD 700 million to be released, and we strongly believe those funds will be received. In addition, Sri Lanka is expecting financial assistance of up to USD 480 million from the Asian Development Bank, USD 150 million from the World Bank by the end of June, and a further USD 50 million from another affiliated institution, “ he added.
