Sri Lanka remains deep in the throes of a balance of payments crisis that has crippled the country’s ability to import necessities and make payments on its over $30 billion in foreign debts, Sri Lanka’s finance minister said, WSJ Pro Bankruptcy reported. “Right now if you look at our usable liquid reserves, [they] are running next to zero, we just don’t have it,” the South Asian nation’s finance minister, Ali Sabry, said in an interview. Sri Lanka’s foreign-exchange reserves have collapsed since the beginning of 2020 as it lost key sources of foreign currency due to Covid-19, including both tourism and remittances from Sri Lankans living abroad. Low taxes and high public sector expenses have contributed to the drop-off in available reserves, which measured near $8 billion in February 2020. “Basically we collect [foreign exchange] on a daily basis from the banks and then we try to support the imports,” Mr. Sabry added. Sri Lanka has other reserves, such as special reserves at the International Monetary Fund, special foreign-exchange swap lines and bullion, which aren’t necessarily usable to pay for imports on a daily basis. The nation is hoping to raise between $3 billion and $4 billion in external funding, which combined with funds brought in from tourism, exports and worker remittances, can help the nation afford basic imports of medicine, fuel and food, Mr. Sabry said.
