'Lanka should focus on export-oriented growth'
By Lalin Fernandopulle
Sri Lanka needs to improve its direct public investments to boost
economic growth, said International Monetary Fund (IMF) Resident
Representative, Dr. Koshy Mathai at the 47th Annual General Meeting of
the International Chamber of Commerce (ICC) recently.
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IMF Resident Representative, Dr. Koshy
Mathai presents a
memento to outgoing ICC, Chairman, Tissa Jayaweera. |
He said that the country's savings ratio had declined to around 24
percent and added that it should be around 35 percent. Investments from
the private and public sectors should be high.
The government should set the right environment for private sector
investments. Dr. Mathai commended the single digit inflation ratio
maintained by the Central Bank for a considerable period and enabling a
flexible exchange rate.
The inflation rate was 6.30 percent last month. From 1986 until 2013,
the Sri Lanka Inflation Rate averaged 10.5 percent reaching an all-time
high of 28.3 percent in June 2008 and a record low of -0.9 percent in
March, 1995.
“There will be good economic outcome by letting the exchange rate
move naturally. The Central Bank should maintain a flexible exchange
rate for economic stability. Sri Lanka should have the right structure
of policies. The government is taking steps to keep fiscal and monetary
policy at the appropriate level,” Dr. Mathai said.
The IMF Resident Representative commended the efforts by the
government to construct the second international airport in the South,
development of the Colombo South harbour and highways across the country
which are vital to expedite economic growth.
Dr. Mathai said that Sri Lanka should focus on export-oriented growth
by exploring opportunities for export to the region. Sri Lanka exports
around 80 percent of its commodities to the US and European markets,
five percent to India and one percent to China.
He said trade had declined for a considerable period and added that
the drop in exports was due to the high cost of energy and labour.
Exports declined sharply during the past two years due to the drop in
global demand triggered by the economic recession. The drop in exports
has widened the trade deficit. “Sri Lanka should shift from its
traditional Western markets and make inroads into markets in the region.
It should focus on its free trade agreements with countries in the
region to enhance trade,” he said.
Sri Lanka has bilateral trade agreements with India and Pakistan. Sri
Lanka is negotiating with India on the implementation of the
Comprehensive Economic Partnership Agreement that would bring about a
win-win situation for both countries.
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