Sri Lanka economy strong enough to withstand bombings: Fin Min
Apr 24, 2019 18:42 PM GMT+0530 | 0 Comment(s)
ECONOMYNEXT – Easter Sunday’s Suicide bombings in Sri Lanka will affect tourism and could have short term impacts on foreign direct and portfolio investments but investors should look at strengthened economic fundamentals, Finance Minister Mangala Samaraweera said.
The economy was on a steady path of recovery following a series of natural disasters in the form of droughts and floods in 2016/2017, and a man-made disaster, the political crisis of 2018, he told parliament Wednesday.
“We had stabilized the economy as inflation was brought down to 2.9% by March 2019, the trade deficit declined to its lowest level in over 5 years in February, accordingly the rupee has appreciated by 4.5% - the 3rd best performing currency in the world in 2019.”
Sri Lanka’s foreign reserves stand at 7.7 billion dollars - covering over 4 months of import requirements.
“Interest rates have declined by over 100 basis points this year as fiscal consolidation delivered results with a 0.6% primary budget surplus in 2018,” Samaraweera said.
“It is clear that we had laid a sound foundation for the economy to withstand shocks of the nature that we faced on Sunday. Nonetheless, there will be an impact on the tourism sector even though it is now off-season.”
Samaraweera said the island’s tourist industry has had long experience of protecting visitors through the 30-year Tamil Tiger separatist war.
“ . . . there is no doubt the sector will bounce back. We have taken significant measures to support tourism through policy interventions in the budget, and also outside of the budget such as the visa waiver,” he said.
“We will discuss with the industry to identify further measures to support them through this challenging period.”
Samaraweera said Sri Lanka “could also see some stresses in FDI and portfolio investment in the short term.
“In both instances, I urge investors to focus on the macroeconomic fundamentals which are, as I have outlined, very sound. Sri Lanka’s investment proposition remains very compelling.”
(COLOMBO, April 24, 2019-SB)