Economy facing challenges with limited foreign reserves: Basil

Finance Minister Basil Rajapaksa  

• Asserts milk powder, vehicle imports, State sector recruitment will be curtailed
• Points workers’ remittances have dropped sharply this year

 Finance Minister Basil Rajapaksa yesterday said the economy is facing great difficulties with the looming foreign exchange crisis and drastic measures would have to be taken.

Given the current situation of the country’s foreign reserves, the Minister said the Government would have to curtail imports of milk powder, vehicles and State sector recruitments.

“Next year is critical for us in terms of our foreign exchange situation,” he said at an event organised by the Agriculture Ministry to develop strategies on the production of liquid dairy milk, a step towards self-sufficiency in the country.

“If we can stop the imports of milk powder from next year, it will be a great help to save a large sum of foreign exchange. If we still have to import milk powder, then we will have to stop another essential item,” he explained.

In that context, the Finance Minister said that steps would be taken to reduce the foreign reserves allocated for the importation of milk powder as a means of supporting the Government next year..

Rajapaksa said the Government has already banned the importation of vehicles, tiles, and 17 crops that can be grown in Sri Lanka.

“We are trying to add more items to the list of goods, but the Ministers are opposing it. Even now, the Agriculture Minister requested $ 25 million to import corn for animal feed, but we can’t afford it. For me, as the Finance Minister, whether it is imports of corn or chicken — both are foreign currency outflows which cannot be allowed,” he added.

Minister Rajapaksa pointed out that the Government does not want the country to fall into a period of famine and would ensure food security.

The Finance Minister also said that during all discussions, even with the President, requests were made to import vehicles and to recruit employees to the State sector.

“Some of the Provincial Councils do not have sufficient chairs for employees and but the productivity of those agencies has not improved. Thus, I have requested not to recruit staff to State sector organisations,” he stressed.

Although the economy observed a rebound in foreign inflows last year, Rajapaksa said the workers’ remittances this year have dropped sharply, attributing to the current aggregated foreign exchange crisis.