The Central Bank is projecting that foreign inflows will outpace outflows for year 2021, said Central Bank Governor Prof. W.D. Lakshman.
He noted that there were politically motivated attacks on the state of Government finances. There are currently negotiations ongoing to secure credit lines with the rate of borrowing between 6-7% and tenure between 1-8 years.
Prof. Lakshman criticised models that forecast default on the basis of the level of reserves and upcoming commitments. He said these forecasts were based on unfair extrapolations of the economy with 2020 figures that were hampered due to the COVID-19 outbreak. Prof. Lakshman was speaking on February 12 at the Central Bank of Sri Lanka on a webinar on the state of the economy.
In 2021, the Central Bank forecasts Port City leases to bring in US$ 1 billion, remittances US$ 7.5 billion, merchandise exports US$ 13 billion, tourism US$ 1.75 billion, and IT/BPO US$ 1.75 billion. Merchandise imports are projected to be US$ 17 billion. With import restrictions, the Central Bank forecasts a small current account surplus in 2021.
The Governor noted that financing through the IMF would bring in undesirable conditionality. The governor provided assurances that the secured financing would not be tied even tacitly to favourable terms on other agreements.
