By:Staff WriterColombo (LNW):Sri Lanka’s ongoing dollar crisis is still persisting even amidst the receiving the US$333 million first tranche of $ 3 billion IMF Extended Fund Facility.
Sri Lanka‘s business tycoon MP Dhammika Perera has charged that the island nation is yet to create a stable path for the inflow of dollars into the country.
Speaking at an event in Middeniya, Hambantota, and the business tycoon attributed the ongoing tax crisis in Sri Lanka to the shortage of dollars.
He explained that owing to the lack of dollars, Sri Lanka’s imports have reduced significantly, thereby directly affecting the income earned through the Customs tariffs and duties.
“In order to earn the money lost from Customs tariffs and duties, other taxes are being increased. The preliminary problem behind this is the lack of dollars.
There is still no proper way through which we can earn dollars”, he said in this regard adding that.he has laid out a 12- point Dollar earning strategy for crisis-hit Sri Lanka.
The Sri Lanka businessman turned MP says his action plan is aimed at generating an additional inflow of US$8 billion per annum from 12 key strategies.
Dhammika Perera further said the government will not incur any additional capital investment by implementing the suggested 12 strategies.
The action plan of Dhammika Perera which was proposed some time ago is now receiving attention, as he has now joined the government in a possible bid to implement his strategies.
Sri Lanka’s foreign reserves grew 2.2 percent to 2,755 million US dollar in April 2023 from 2,694 million US dollars in March, central bank data showed.
Sri Lanka’s rupee appreciated from around 360 to the US dollar to 320 and has since been at that level.
Sri Lanka has to increase net international reserves by 710 million US dollars by June 2023 under an International Monetary Fund deal.By April gross reserves have risen by around 859 million dollars.
To buy reserves from inflows (central bank has to take in deposits in dollars against rupee) Sri Lanka has to keep interest rates high enough so that that the rupees are not invested or spent and can be mopped up (domestic investment has to be curtailed).
Sri Lanka in the first quarter had liquidity shortages to absorb the rupee and prevent their loaning by banks.However the liquidity shortages are easing, through private credit demand is negative
Sri Lanka’s remittances from official channels rose to 454 million US dollars in April 2023, up 82.9 percent from a year earlier, as more expatriates use formal banking networks to send their earnings, the central bank revealed.
Sri Lanka’s monthly remittances coming through official channels ranged between 500 to 600 million US dollars a month
The remittances in the first four months of 2023 also jumped 81 percent to 1,867.2 million US dollars compared to 1,031.5 million in the same period last year.