Spotlight: Econ Op-eds in Summary (Week ended 10th November '21)
1. Are there prospects of an improvement in the deepening crisis in external finances?
By Nimal Sanderatne
Sri Lankas foreign currency reserves have fallen to significantly low levels this year. The external financial crisis may worsen as the trade balance is widening and the prospect of non-debt inflows of capital, such as tourist earnings, foreign direct investment and aid are small. Remittances too have been slowing down owing to the wide divergence in the official exchange rate and the informal market rate.
An improvement in the reserves could be expected only by foreign assistance in the form of currency swaps, credit lines, aid inflows or other forms of foreign assistance. The Central Bank is optimistic in expecting such assistance, especially a line of credit from Oman to purchase petrol and currency swaps. On the other hand, the Central Bank of Sri Lanka and the Government has ruled out seeking IMF assistance.
However, most economists and financial analysts have pointed out that the wisest and least cost solution to the country’s external financial crisis is to seek the assistance of the International Monetary Fund (IMF).
2. Sri Lanka is heading for a serious crisis
By Dr. Laksiri Ferndnao
Sri Lanka is already in a serious crisis in people’s living conditions, in the economy, foreign reserves, political system, public administration, foreign relations, and Government’s day-to-day decision-making processes.
What affects the people in general and their living conditions at present is the thumping inflation in essential commodities. This is felt even more given the limited relief measures and stagnant salaries in both the public and private sectors.
Making matters worse, was the complete ban of chemical fertilizer imports which affected tea and vegetable cultivation. It will also negatively affect the population of rural areas that depend on agriculture.
(Compiled by: Promodhya Abeysekara, Malik Nazahim & Mariyan Perera)
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