Foreign reserves not enough to settle external liabilities - Eran

Even if the government were to sell all its foreign reserves it would not be able to settle the external liabilities, UNP MP and Financial analyst Eran Wickremeratne said yesterday.He told that while the Central Bank Governor Ajith Nivard Cabraal kept contradicting himself frequently, the reality was that the country’s liabilities exceeded foreign reserves by about 25 per cent.


"So, even if we sell all our foreign reserves, there would be no escape from the deteriorating economic situation," the MP observed.

Wickremeratne said that in 2012 Cabraal had told the local media that there would be a balance of payment surplus this year, but shortly afterwords he wrote to the IMF saying "the economic fundamentals were healthy, but there were emerging signs in the third quarter of 201l that the balance of payments was coming under pressure."

Either the Governor of the Central Bank was foreseeing a balance of payments crisis which was untrue or he was not keen on revealing the actual situation regarding the Current Account, he noted.

The Central Bank was duty bound to advise the people, including the business community, of the true state of the economy regardless of the pluses and minuses, the MP said, while observing that playing with terminology would be counter productive in the long term.