OECD should reflect on improved conditions in country ratings - CB
Governor
Sri Lanka's Central Bank Governor Ajith Nivard Cabraal has called on
the Organization for Economic Cooperation and Development (OECD) to
reflect Sri Lanka's improved conditions in their country ratings.
In an address to the European Institute for Asian Studies (EIAS) on
the theme "Sri Lanka's Economic Resurgence and Future Prospects", held
in Brussels on Tuesday (8 March 2011), the Governor described the
current OECD overall rating of Sri Lanka, as being a constraint to
facilitate businessmen of the OECD countries to trade with and invest in
the country, due to the higher risk premiums in obtaining credit
insurance. The Governor said that in his meetings in Brussels with
Belgian authorities, he had also made representation to make this
adjustment.
Governor Cabraal who described Belgium as having been an "early bird"
in availing of the new economic opportunities that had opened up in Sri
Lanka since the end of the conflict, noted that its 50 member business
delegation to Sri Lanka in November 2010, the revision of the short-term
political risk rating on Sri Lanka substantially, and relaxation of the
travel advisory, had shown tangible results in boosting Belgian trade,
investment and tourism with Sri Lanka. He hoped other OECD countries
would emulate this, and mutually benefit from Sri Lanka's economic
resurgence.
In his wide ranging address, Governor Cabraal emphasized that the
current pace of economic development in Sri Lanka was not fortuitous. He
said more than two years before terrorism was defeated in May 2009, the
Government of President Mahinda Rajapaksa had set the stage for the
economic resurgence that followed, by placing the economic fundamentals
of Sri Lanka on a correct footing. The reduction of the budget deficit,
inflation, unemployment, and high economic growth had helped the country
in taking full advantage of the peace dividend which followed. Unlike
many other countries which were unable to bounce back following a period
of conflict as the conflict had sapped their energies, Sri Lanka was
well positioned to take off, due to the prudent fiscal and monetary
policies adopted by the Government. This had been reflected in the vote
of confidence received by the Government in successive elections held
since the conflict ended.
The Governor who detailed the current economic status of Sri Lanka
and the mega projects being undertaken by the Government in constructing
ports, airports, highways, hotels and power, said high priority was
being given to development of the Northern and Eastern provinces, where
very little development had taken place over the last 30 years due to
terrorism. Having resettled over 95% of those who had been originally
displaced and helping in providing them livelihoods through
encouragement given to individuals as well as through the private
sector, the Government had already invested several billion US dollars
over the past 3 years with a view to rejuvenate the economy in these
areas. He said the increasing economic opportunities and the decline in
poverty levels, would serve as an important catalyst in ensuring
reconciliation.
Questioned as to the economic impact following the withdrawal of the
EU-GSP+ tariff concessions in August 2010, the Governor Cabraal said Sri
Lanka had prepared for this eventuality over time and consequently the
impact of its loss has been minimal. He said the exaggerated fear that
it would lead to massive job loss and reduction of exports had not
materialized. In fact, trade to the EU countries had grown by 38% in the
last 4 months of 2010. He said Sri Lankan products no longer needed
concessions to compete in the international market, and was fully
capable of doing so on the basis of its quality and improved
productivity.
The Governor noted that Sri Lanka had succeeded in drawing
investments from all parts of the world and that different countries
have shown different appetites in the manner in which it wanted to
engage the Sri Lankan economy. He said while around 75% of the 2 billion
dollar investment in the government international bonds had been by
funds from the US and EU countries, over 1 billion dollars had been
invested by Malaysia in the telecommunication sector, while around 800
million dollars had been loaned by China towards the power and ports
sector, and hundreds of millions of dollars had been invested by India
in building the railways and oil exploration.
Earlier in the day, Governor Cabraal met with Guy Quaden, Governor of
the National Bank of Belgium and Dirk Achten, Secretary General of the
Ministry of Foreign Affairs of Belgium, as well as other senior
officials from the economic sector of Belgium. Ravinatha Aryasinha, Sri
Lanka's Ambassador to Belgium, Luxembourg and the EU, C.J.P.Siriwardana,
Assistant Governor, D.M.Rupasinghe, Director/Financial Intelligence Unit
of Sri Lanka and R.D.S. Kumararatna, Minister (Economic & Commercial)
were associated with Governor Cabraal at these meetings.
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