Sep 26, 2018

Govt. successfully faced Sri Lankan Rupee’s devaluation Featured

Finance minister Mangala Samaraweera claims the government has been successful in facing the depreciation of the Sri Lankan Rupee (SLR).

He stresses that the SLR will be stabilized and Sri Lanka will be made a rich country by 2025.

Making a statement to the media yesterday (26), he refuted claims by certain politicians that with the devaluation of the SLR, the country was on the path to an economic crisis.

|Impact from the US

He said that in 2008, most US and western investors looked to developing countries like Sri Lanka, India, Indonesia and the Philippines to invest their dollars following the crisis in the banking sector in the US.

But, since this year, the US economy has been regaining and with the high interests being paid for deposits, those investors have started taking their investments back to the US, said the minister.

As a result, the US dollar strengthened, while Sri Lanka and other developing nations have been facing this currency issue for the past few months.

When compared to the SLR, the Indian Rupee’s depreciation is much higher at 11 per cent, he said.

Repay borrowings of the Rajapaksas

The government released its reserves, but with caution, as money is required to pay back the borrowings of the Rajapaksas.

This year alone, Rs. 1.9 trillion has to be paid and next year it will be Rs. four trillion, according to him.

The former president is trying to show that the SLR did not devalue like this before.

How, the SLR devalued during the Rajapaksa regime

But, in 2012, also as the finance minister, he could not prevent the depreciation of the SLR by 14 pc, said Samaraweera.

That happened despite the releasing of 4.1 billion US dollars from foreign reserves.

After more than 60 years, the government has been able to show a surplus in the primary account this year, he said.

The highest ever exports were recorded last year and so did the foreign direct investments, while the latest statistics show the growth rate increasing from 3.1 pc to 3.7 pc, said the minister.

The devaluation of the SLR causes certain difficulties, but those who send foreign remittances to the country and exporters stand to gain, he said.

Restriction on luxury goods

This will give a boost for the export-oriented economy, and will affect the importations only.

During this period, the use of luxury goods, including vehicles, has to be restricted in order to stabilize the SLR, said Samaraweera.