Sri Lanka has never defaulted on its loan repayments and it is among the very few countries that has been able to recover speedily after the COVID-19 pandemic and recommence its exports to the pre-COVID level, said State Finance Minister Ajith Nivard Cabraal.

He said that the Government had to make a choice on whether they are to skip the debt repayments or curtail imports. “Sri Lanka has never defaulted on its debt repayments before. Hence, we had to opt for the curtailing of imports.”

Addressing a media briefing at the Finance Ministry yesterday, he noted that the government was compelled to impose certain import restrictions as a measure to safeguard the foreign exchange reserves. However, he said that a Committee has been appointed under the leadership of Finance Ministry Secretary, S.R. Attygalle to look into relaxing these restrictions.

The State Minister noted that except for the tourism sector, all other sectors have recorded notable development. He said although there was a slump in the economy towards the beginning of this year due to the COVID-19 pandemic, every sector has shown a remarkable recovery so far.

“We are confident that by the end of the year the country would be able to achieve the same targets as last year. The foreign exchange of the migrant workers which had declined during the first two quarters of this year has now increased.

The migrant foreign earnings for August and September this year, is in fact, higher than the same period last year. This is clearly notable when comparing statistics. Accordingly, we would be able to reach the same foreign earnings targets as last year by the end of the year,” State Minister Cabraal said.

Cabraal also noted that while foreign direct investment had been down during the first part of this year, but by now it has bounced back and by the end of the year Sri Lanka would receive a considerable number of foreign investment. He said that new Foreign Direct Investments (FDI) are expected to flow into the country through the Colombo Port City project, adding that the government intends to present the required legal framework to parliament and have it approved in the near future in order to facilitate such FDI’s.

He also noted that the rupee has now stabilized and the Central Bank has been able to boost its foreign exchange reserves through inflows since May.

“Even after Moody’s had downgraded Sri Lanka on Tuesday, the Central Bank was able to boost its foreign exchange reserves by another $30 million,” he added.

According to Cabraal, during the tenure of the previous government from 2015 to 2019, the debt burden had increased considerably. In 2015 the country’s debt burden was at 71% of GDP and by the end of the Good Governance regime in 2019, it had increased to 91% of GDP. “However, the government’s aim is to reduce the debt to around 70% by 2025,” he said