Dollar crunch: Lanka hints at tough measures

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The debt-trapped island nation has been in a financial crisis, especially with the Covid-19 pandemic, and many foreign imports, including vehicles and food items, have been stopped. …writes Susitha Fernando

Sri Lanka has decided to close three overseas diplomatic missions from December 31 to cut down government expenditure in the face of the on-going financial crisis and dollar crunch.

The Foreign Ministry stated that it has decided to close three of its missions — the Consulate General of Sri Lanka in Frankfurt, Germany, the Sri Lanka High Commission in Abuja, Nigeria, and the Consulate General of Sri Lanka in Nicosia, Cyprus.

“The restructuring is undertaken with a view to conserve the country’s much-needed foreign reserves and minimising expenditure related to maintenance of Sri Lanka’s missions overseas, in the backdrop of the grave economic challenges posed by the global pandemic,” the Foreign Ministry stated.

The activities of the three diplomatic missions are to be covered by the neighbouring diplomatic missions.

Closing down of handpicked foreign missions are expected to save nearly Rs 11 billion or $54 million.

Foreign Ministry spokesman Sugeeshwara Gunaratne had earlier said that the Sri Lankan cabinet took this decision as a measure to help the dollar crisis facing the nation.

The debt-trapped island nation has been in a financial crisis, especially with the Covid-19 pandemic, and many foreign imports, including vehicles and food items, have been stopped.

The central bank has been taking many measures to attract US dollars to the country. On Monday, the central bank directed all local banks to handover 25 per cent of dollars received to the central bank. This is an increase from the earlier ceiling of 10 per cent dollars received by the local banks.

By end of November, Sri Lanka had only $1.58 billion foreign receives and this was a drop from $7.5 billion in November 2019 when President Goatabaya Rajapaksa came to power.

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