Former Deputy Leader of the United National Party, MP Ravi Karunanayake, has predicted that interest rates could be increased further as the Sri Lankan rupee continues to weaken against the US dollar.
Speaking on the recent depreciation of the rupee, the MP said the country may face additional economic pressure despite expected inflows from the International Monetary Fund (IMF).
“At the moment of speaking, the dollar is now at Rs. 338.78. I have calculated that the amount expected from the IMF is around US$350 million. If multiplied by Rs. 335, it amounts to nearly Rs. 117 billion,” Karunanayake said.
He further pointed out that Sri Lanka’s total foreign debt stock currently stands at around US$39 billion and argued that the depreciation of the rupee from around Rs. 293 to Rs. 338 has significantly increased the debt burden in rupee terms.
According to the MP, the government is expected to implement several measures in the coming period, including increasing electricity tariffs, revising fuel prices, further depreciation of the rupee, and possibly increasing interest rates.
“Before it goes any further, interest rates will also increase,” he claimed.
Karunanayake also questioned whether the expected foreign inflows would be sufficient to offset losses arising from currency depreciation and rising debt servicing costs.
He further criticized the role of the Central Bank of Sri Lanka, stating that despite functioning as an independent institution, it has attributed current challenges largely to external factors.
The MP questioned whether institutional independence should also come with greater accountability in managing the country’s economic challenges.
