Tags:
Journalism of Courage
The International Monetary Fund on Tuesday warned Sri Lanka against building foreign currency reserves by borrowing from foreign investors.
Sri Lanka8217;s central bank announced this month that foreign reserves hit a historic high of USD four billion,sufficient to cover over four months of imports.
8220;We don8217;t want Sri Lanka to borrow its way to build reserves,8221; head of the IMF mission to Sri Lanka,Brian Aitken told reporters here after a two-week review of the island8217;s economy.
The bank said reserves were boosted by foreign investors buying rupee-denominated treasury bills and bonds and the government selling dollar bonds.
8220;The central bank has been building a war chest of reserves lately through debt. We would prefer if Sri Lanka built up reserves from exports and from remittances and not by borrowings,8221; Aitken said.
Central bank governor Nivard Cabraal said the bank raised more than USD 1.2 billion in cash by selling government debt to foreigners.
Sri Lanka8217;s reserves fell to cover just over one month8217;s imports earlier this year as security forces pushed their final offensive against separatist Tamil Tiger rebels.
