Sri Lanka suffers US $ 500mn foreign outflow in 4Q

• US $ 490mn outflow from government securities; US $ 96mn outflow from stocks 
• Govt. blames political crisis triggered on Oct.26 for outflows
• Says not a single dollar came into country during protracted political crisis 
• Upcoming budget to focus on 10-year plan to develop economy

By Yohan Perera and Ajith Siriwardana 

Sri Lanka witnessed foreign outflows to the tune of US $ 500 million during the final quarter of 2018, the government revealed yesterday. As per the data presented by Economic Affairs Non Cabinet Minister Dr. Harsha de Silva and Finance State Minister Eran Wickramaratne, US $ 490 million worth outflows was recorded from government securities while another US $ 96 million recorded in the equities market.

The two ministers blamed the political crisis triggered on October 26 by President Maithripala Sirisena for this outflow of funds. 

State Minister Wickramaratne said the tourism industry has also lost US $ 250 million during the period. 

He said the budget deficit, which was 5 percent of Gross Domestic Product as at October last year, had increased particularly after the political crisis. 
It was also mentioned that Sri Lanka’s foreign reserves depleted by US $ 1 billion as a result of the crisis. Dr. de Silva revealed that Sri Lanka was unable to bring in even a single U.S. dollar into the country during the protracted political turmoil.

He said he will be joining Finance and Mass Media Minister Mangala Samaraweera, Central Bank Governor Dr. Indrajith Coomaraswamy and Treasury Secretary Dr.R.H.S. Samaratunga in Washington shortly to convince the International Monetary Fund (IMF) to get the suspended IMF loan deal back on track.

Meanwhile, State Minister Wickramaratne said the upcoming budget will focus on a 10-year plan to build the country’s economy while being mindful of the impending election.  

“We will focus on elections when preparing the budget, but we will not forget our obligations towards the people,” Wickramaratne stressed. 

“Budget will focus on Gam Peraliya, Enterprise Sri Lanka, public transport, women and youth,” he added. 

He further said the government will also focus on the country’s tax structure in the budget 2019.

Meanwhile, Dr. de Silva revealed that the Central Bank is considering  plans to go for Panda and Samurai bonds to shore up the country’s foreign reserves.

“We will have to get into these financial markets and see what the appetite would be like, as we will be getting into the Chinese and Japanese markets for the first time,” he said.