The crisis in Lanka: Foreign exchange reserves rise for the first time in five months

Sri Lanka’s foreign exchange stack has risen for the first time in five months, likely due to the postponement of payments to India under an Asian clearing union, even as the nation seeks credit lines to alleviate shortages.

The reserve rose to $1.92 billion at the end of May from $1.81 billion in the previous month, according to data released by the central bank.

The figure includes a roughly $1.5 billion People’s Bank of China swap facility that remains largely unworkable due to the terms.

The island nation had asked China to lift the terms of the swap but has yet to receive feedback on its request. President Gotabaya Rajapaksa said in a Bloomberg interview on Monday that China appears to have shifted its strategic focus and doesn’t seem interested in devoting so much attention to the troubled South Asian countries.

The country needs nearly $6 billion over the next six months to fix shortages of basic necessities like food, fuel and medicines.

40-year tax break for port cities built in China

Crisis-hit Sri Lanka has decided to give the Chinese-built port city of Colombo a special tax break for 40 years to attract potential investors, as the island nation’s largest foreign direct investment failed to attract investment after the much-hyped project lasted nearly a year was open.

Cabinet spokeswoman Bandula Gunawardana said during a weekly cabinet meeting that the cabinet had decided to offer concessions to the port city to attract more investment to the port city, Economy Next reported (PTI).

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