Sri Lanka needs FDIs, not loans - Ravi Karunanayake

Sri Lanka needs foreign direct investments instead of loans, Finance Minister Ravi Karunanayake told the Banker magazine following the 49th Annual Meeting of the Board of Governors of the Asian Development Bank in Frankfurt, Germany recently.

Question: In 2015 you inherited a difficult task. The balance of payments were deteriorating and public debt was high. What would you say about the previous regime?

Answer: The former regime governed the country in a dictatorial manner and the result was corruption and no revenue to the government. It basically pumped in billions of rupees to launch mega projects which were political in nature. People have to pay for the billions of rupees that had been taken, which brings us to the debt crunch, where debt service is higher than government revenue.

The new government also has to achieve development which the people anticipated. That was the biggest problem we inherited.

Question: There was a problem of capital outflow from the country. What is the current situation?

Answer: We find that there had been a trail, money has gone out of the country, it went to three or four countries. We have asked them to respond with banking information but there is a stony silence.

Question: The IMF recently agreed to grant US $1.5 billion to Sri Lanka and is trying to lower the balance of payment crisis. Government revenue has to increase and spending has to drop. Are these conditions favourable to Sri Lanka?

Answer: The Government should increase revenue and cut down unnecessary expenses. People should understand this situation.

Question: As the Finance Minister what is the best approach for this dire situation?

Answer: We are basically diversifying the economy and encouraging commercial trading apart from seeking financial aid. We are trying to attract foreign direct investments instead of running after loans.