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Anusha Ondaatjie
(Bloomberg) -- Sri Lanka’s foreign exchange pile rose for the first time in five months, likely due to deferment of payments to India under an Asian Clearing Union, even as the nation scrambles for credit lines to ease shortages.
The stockpile rose to $1.92 billion at the end of May, from $1.81 billion the previous month, according to data released by the central bank Tuesday. The figure includes a swap facility from the People’s Bank of China equivalent to about $1.5 billion, which remains largely unusable due to conditions.
The island nation had requested China to lift conditions on the swap but is yet to hear back on its request. President Gotabaya Rajapaksa, in a Bloomberg interview on Monday, said China seems to have shifted its strategic focus to Southeast Asia and Africa and didn’t seem interested in giving as much attention to crisis-ridden South Asian countries.
The country needs nearly $6 billion in the next six months to tackle shortages of essentials from food, fuel and medicines. Last month, Sri Lanka defaulted for the first time in its history after it missed grace period payments on bonds worth $78 million. Officials, last month, had warned that the country had just about $50 million in usable reserves.
Negotiations are underway with the International Monetary Fund for a bailout package and an agreement is anticipated soon. Last week, the country reversed the 2019 tax cuts in a bid to mobilize revenues and meet conditions for the aid. It is also tapping neighboring countries, including India and Japan, apart from China for bridge financing.
Sri Lanka’s currency has lost about 82% over the past year, according to data compiled by Bloomberg. Its headline inflation surged to a record 39% in May amid lingering shortages, a falling rupee and heightened global uncertainty.
(Bloomberg) -- Sri Lanka’s foreign exchange pile rose for the first time in five months, likely due to deferment of payments to India under an Asian Clearing Union, even as the nation scrambles for credit lines to ease shortages.
The stockpile rose to $1.92 billion at the end of May, from $1.81 billion the previous month, according to data released by the central bank Tuesday. The figure includes a swap facility from the People’s Bank of China equivalent to about $1.5 billion, which remains largely unusable due to conditions.
The island nation had requested China to lift conditions on the swap but is yet to hear back on its request. President Gotabaya Rajapaksa, in a Bloomberg interview on Monday, said China seems to have shifted its strategic focus to Southeast Asia and Africa and didn’t seem interested in giving as much attention to crisis-ridden South Asian countries.
The country needs nearly $6 billion in the next six months to tackle shortages of essentials from food, fuel and medicines. Last month, Sri Lanka defaulted for the first time in its history after it missed grace period payments on bonds worth $78 million. Officials, last month, had warned that the country had just about $50 million in usable reserves.
Negotiations are underway with the International Monetary Fund for a bailout package and an agreement is anticipated soon. Last week, the country reversed the 2019 tax cuts in a bid to mobilize revenues and meet conditions for the aid. It is also tapping neighboring countries, including India and Japan, apart from China for bridge financing.
Sri Lanka’s currency has lost about 82% over the past year, according to data compiled by Bloomberg. Its headline inflation surged to a record 39% in May amid lingering shortages, a falling rupee and heightened global uncertainty.