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| Sunday, 9 January 2005 |
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Disaster expenditure will not alter Budget proposals - CB Alhough the government has to incur a large amount of money to rehabilitate the disaster-affected areas, it would not hamper the country's economy and will not alter the government budget proposals and plans, Central Bank Governor Sunil Mendis said addressing a recent press conference. According to initial estimates the tsunami tidal wave that hit nearly two thirds of the costal belt of the island caused nearly US$ 1.3 billion damage to the economy. This cost includes humanitarian aid to the victims and rehabilitation and reconstruction costs. The foreign component of this expenditure will be around US$ 550 million. However, since large amounts of foreign aid is flowing into the country this expenditure would not be a burden to the budget, Mendis said. Infrastructure, housing, fisheries and the tourism sectors are the most affected. However these sectors will recover within a short period. Four thousand hotel rooms in the coastal zones have been destroyed by tidal waves. Of them, 3000 rooms will be repaired within three months. However analysts are not too optimistic about the recovery of the tourism industry in such a short period. Because it is dificult to judge how to restore confidence in tourists to come to Sri Lanka again. The Central bank believes that the fisheries sector will recover within six months. According to fisheries ministry sources nearly 70% of the boats have been destroyed or damaged. Ten out of twelve fisheries harbours have been damaged and the total cost of the destruction is over Rs.1700 million. Damage to the NARA research institute of the fisheries ministry is over Rs.400 million. According to the CB it would take over three years to complete reconstruction of the infrastructure. Despite the disaster, the CB is also optimistic about the economic growth of 2005. The tea and rubber sectors are performing well. The apparel sector grew at 12 per cent in 2004 and the industrialists are very optimistic that this growth momentum would continue even under quota free competitive market environment. Foreign loan facilities have already been received to ease the petroleum import bill payments. Foreign aid and remittance, oil price decline are the other reliefs. Oil reserves have increased due to increased hydro power generation. As a result rupee is restoring its lost value and has started to appreciate. |
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