Economic downturn solely due to global crisis -Minister Siyambalapitiya

The setback in the Sri Lankan economy last year, especially in the fourth quarter of the year is not due to economic mismanagement of the Government as the Opposition allege but totally due to the global financial and economic crisis, said Minister of State Revenue Ranjith Siyambalapitiya.

Minister Ranjith Siyambalapitiya

The last year's annual report of the Central Bank released last week clearly demonstrates this and in all fronts our economy has performed well ahead the targets, he told the `Sunday Observer' .

For instance, last year we targeted a 6.5 per cent GDP growth rate and during the first three quarters we achieved over 6.5 per cent growth rate. However, the fourth quarter growth was slashed to 3.4 per cent and the annual growth rate declined to 6 per cent, he said.

In the export sector, our target was 10 per cent growth. Up to September, we have achieved 10.1 per cent export growth and after September it was reduced to 6.5 per cent.

In foreign remittance, we targeted US$ 3 billion and during the first nine months the remittance increased by 24 per cent and in the last quarter it grew only by 17 per cent and we received only US$ 2.9 billion.

Minister Siyambalapitiya said that up to July the government could maintain the balance of payments above the target. We targeted US$ 400 million surplus and by the end of July the surplus was US$ 515 million. However, due to external factors by the end of the year the BOP deficit was US$ 1225 million.

He said that the government could manage the foreign reserves above the year's target up to July last year.

"Our target was US$ 3.3 billion and by July we had US$ 3.5 billion foreign reserves. After July the short term foreign investments started to flow out due to the global financial crisis.

As a result by December our reserve position declined to 1.8 billion". Siyambalapitiya said that the government has better managed Sri Lanka's debts and government debts have declined. Tight monetary policy of the government achieved the inflation target and today the inflation has declined to a single digit, he said.

(GW)