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Amid worsening economic crisis, Sri Lanka’s Central Bank governor decides to quit

Sri Lanka's economic crisis, a matter of concern

Amid brewing economic crisis in Sri Lanka, its Central Bank Governor Weligamage Don Lakshman has decided to acquit office on September 14. It is not yet clear who would succeed him.

“Getting things done according to my policy perspectives was not an easy task. My plan was to tender my resignation on my 80th birthday coming next month,” Lakshman said at a press briefing.

“The unpleasant events over the last week or 10 days have shortened my intended period by about six weeks,” he added.

News agency Reuters said that the the announcement comes with bonds at nearly half their face value, debt-to-gross domestic product (GDP) levels exceeding 100 per cent more than 80 per cent of government revenues going on interest payments alone and foreign exchange reserves dropping to less than two months import cover in July.

Also read: India– Sri Lanka's 2nd largest trading partner– worried as economic crisis hits the island nation

Sri Lanka’s President Gotabaya Rajapaksa has declared a state of emergency with the aim of preventing hoarding of essential items which includes rice and sugar.

The Covid 19 pandemic has dealt a huge blow to the economy of the island nation, which has been facing challenges for sometime now. By July end, the country’s foreign exchange reserves had dropped to a mere $2.8 billion.

Meanwhile, India is keeping a close watch on the developments in the island nation. As India is Sri Lanka’s second largest trading partner after China, concerns for exporters have risen.

“Exporters are concerned with the recent development in Sri Lanka particularly the sharp depreciation of the currency as well as the tightening of forex requirements,” Ajay Sahai, Director general, Federation of Indian Export Organisation told India Narrative.

Sahai said that Sri Lanka’s current economic turmoil would impact all its trading partners and not India alone.