Sri Lanka is running out of money for imports as delta rages
The Peninsula
Sri Lanka’s dwindling foreign exchange reserves risk spiraling into a crisis that could force the South Asian nation to tighten policy more aggressively and seek an International Monetary Fund bailout.
After meeting a $1 billion debt repayment in July from reserves, the government had only enough dollars to cover less than two months of imports. The nation buys wheat, sugar and milk powder from abroad and, with the Sri Lankan rupee down 7.3% this year, the import bill is soaring, stoking inflation and raising concerns about panic buying and hoarding. "For investors it’s a question of when, not if, they run out of FX reserves,” said Nivedita Sunil, senior analyst for Emerging Markets at Lombard Odier in Singapore. "If you see where the bonds are trading, they are clearly telling you that they are no longer taking a longer term view.”More Related News