Dec 03, Colombo: Sri Lanka major opposition United National Party national organizer Ravi Karunanayaka, MP, says that the evaluation of the rupee by 3 percent has resulted in the increase of the per capita loan installment by Rs 330.
Speaking at a media briefing held at the opposition leader’s office yesterday he said that prior to the rupee being devalued two months ago, the Central Bank had bought US$ 2 billion to make the rupee strong.
However, without consulting the Central Bank the government hastily devalued rupee by a budget proposal, the UNP MP said.
President Mahinda Rajapaksa, who is also the Finance Minister, in his budget presentation last month proposed a 3 percent devaluation of the rupee aiming to increase the competitiveness and exports out of the country.
The International Monetary Fund commended the devaluation and said the move to devalue the rupee will help boost exports and conserve foreign-exchange reserves.
Competing nations’ currencies have depreciated this year while, before the devaluation, the Sri Lankan currency had strengthened 0.5 percent. The Indian rupee has slumped 14.2 percent against the dollar in 2011.
The economists say the depreciation of the currency increases the rupee value of foreign debt repayments and with the high debt payments to foreign agencies the government will have to pay a huge amount of rupees.
However, they point out that with the depreciation the revenue side will also increase making the government a net gainer.
Karunanayaka said the totality of Sri Lanka’s loans has increased by 300 percent since 2005 although income has not increased proportionately.