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| Sunday, 26 December 2004 |
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| News Business Features Editorial
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Flashback 2004
Year 2004 started with positive business sentiments and with an expectation of continuity of the economic growth. Though there was a set back in the peace process, there were positive expectations as the growth momentum which started in early 2002 was continuing. January- *Political turmoil intensified creating unfavourable environment for the business and economic activities. *Alliance between SLFP and JVP to topple the UNF government. February *Parliament was dissolved. March *Election fever. April *UPFA government came to power with simple majority in the parliament. This position led to continue uncertainty in the business sector and the economy. New economic policies were proposed by the UPFA. May *Signs of another oil shock emerges. June * Gold Quest pyramid scheme was a vexed topic during the period. High ranking officials of banks and private and government sector were involved in this easy money making process. Soon after the media revealed this pyramid scheme the risk and adverse impacts on the economy Central Bank and exchange control officials intervened. That publicity itself was enough to stop the scheme. *Pains of depositors in Pramuka Bank remain in year 2004 too. CB and Asia Capital made an effort to revive the Bank but it did not succeed. July *Sunil Mendis was appointed as the Governor of the Central Bank. * Saliya Wickremasuriya was appointed as the Chairman and Director General of the BOI. *UPFA government unveiled its economic policy in July declaring pro-poor and pro- private sector growth strategies. It was praised by business community and international donor agencies, but they expressed doubts on the implementation and financing of the said projects. * Cabinet approved Rs.4bn for the Colombo Katunayake Express railway. *National Procurement Agency began work. Its aim is improving efficiency and best practices in procurement for government and donor funded development projects in the country. *Tea exports increased during the first half of the year. Tea prices as well as the export volume increased. It was another optimistic signal of achieving expected 5% or more growth rate in the year. External trade statistics released showed for the first five months showed that 9.5% growth in exports and 14% increase in imports widening trade deficit by 45%. *The country celebrated 50 years of relations with the World Bank." *Fertiliser prices increased disturbing the government effort of developing agricultural sector and bringing down the high rice prices. However the government cushioned the price shocks by increasing the subsidies which was a burden on the budget. *WB reiterated that deadlock in the peace process would delay the delivery of aid pledged at the Tokyo donor meeting. *Inland revenue department announced that it will re-open investigations on individuals and companies that evade taxes under the controversial tax amnesty. *Government requested OPEC financial assistance to face the cash crisis arising with the high oil prices. Finance minister and secretary of the Peace secretariat Jayantha Dhanapala visited Opec Fund in Vienna and was able to get six to twelve month grace period to defer the payment of oil bills. *New head of the ADB in Sri Lanka Alexandra Pio assumed duties and called for peace and economic reform to achieve economic growth. August. *Government recruited 41000 unemployed graduates to state service complying with one of its political promises given at the election. But the decision was controversial. *Tourist arrivals increased significantly and the industry was re-gaining its potential. *Oil prices increased to $44 per barrel in the middle of the month and by the end it passed $49. *SMEs cluster of the National council for economic Development (NCED) submitted its action plan to boost SMEs. Government announced implementation of SMEs development project of establishing 1000 industrial villages. September- *CWC joined with government and government got the majority in the parliament. Political stability helped boost the business sentiment and positive development in the economic indicators. *SEMA chairman Mano Tittawella emphasised that government was not going to sell shares of the 12 enterprises under the purview of it. All of these enterprises were listed to be sold off as they were running at a loss. Oil prices passed $50 per barrel mark. October *Government decided to import rice. *Cost of living was continuously increasing. Trade unions started demonstrations demanding Rs.5000.00 salary increase and government assuaged to a fair salary hike from the budget. November *UPFA government's first budget was presented in Parliament by the Finance Minister Dr.Sarath Amunugama on 19th November. The budget proposals were welcomed by all sectors of the people. Business community highly appreciated government tax policies that proposed the tax base. *President appointed tax cluster under the NCED to fast track the implementation of specific revenue proposals of the budget. Dollar crossed the 105 mark. *Joint Apparel Association Forum (JAAF) stated that phasing out of the quota system will be an opportunity rather than a threat and expressed confidence of facing global competition. The country has implemented a five year action plan to improve the quality and efficiency of the industry. December *External trade data and official inflows were encouraging. But Rupee depreciation continued. *Government entered in to number of foreign loan agreements with WB, ADB and some other foreign financial sources. Norway granted $1.13 million to ease Lanka's debt burden. WB provided loans to rehabilitation of houses in North and East. |
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