Sri Lanka should learn to manage its economy with the limited foreign exchange reserves, Governor of the country’s Central Bank Nandalal Weerasinghe has said, as the island nation grapples with an unprecedented economic crisis.
Mr. Weerasinghe also commented on the finance ministry’s recently imposed temporary suspension on the importation of over 300 nonessential goods in view of the country's current economic situation.
Sri Lankan government on Wednesday slapped a ban on the import of 300 consumer items like chocolates, perfumes and shampoos as part of the cash-strapped island nation’s bid to tackle its foreign exchange woes.
The decision is between whether the people want to purchase gas and fuel required for basic essentials, or whether one wants to purchase a television, a refrigerator or a car, which are purchases that can be postponed, he said on Friday.
The governor said if the amount incurred to purchase those nonessentials was diverted to purchase essentials that could benefit many citizens, especially during the current economic crisis, newsfirst.lk website reported.
Mr. Weerasinghe said what was important was to use the existing limited resources in a way that benefits all, and the temporary import suspension would be lifted once the situation returns to normal, the report said.
Sri Lanka, a country of 22 million people, is under the grip of unprecedented economic turmoil, the worst in seven decades. The crisis has that has left millions struggling to buy food, medicine, fuel and other essentials.
The country, with an acute foreign currency crisis that resulted in foreign debt default, had announced in April that it is suspending nearly $7 billion foreign debt repayment due for this year out of about $25 billion due through 2026. Sri Lanka's total foreign debt stands at $51 billion.
President Ranil Wickremesinghe and a visiting IMF team on Friday held the second round of crucial talks to finalise a bailout package for the cash-strapped country.
The first round of talks was held on Wednesday. It is the second such visit from the IMF in three months.
The visit comes at a time when Sri Lanka is scrambling to chalk out a staff-level agreement with the Washington-based global lender for a $5 billion programme, which could be the antidote for the country’s current economic travails.
In its latest assessment, the World Bank has said that Sri Lanka has been ranked 5th with the highest food price inflation in the world. Sri Lanka is ranked behind Zimbabwe, Venezuela, and Turkey, while Lebanon leads the list.
The worsening forex crisis caused essential items shortages triggering massive public protests that led to the ouster and resignation of Gotabaya Rajapaksa as the president last month.