ECONOMYNEXT – A new administration headed by newly elected President Gotabaya Rajapaksa is ready to tackle Sri Lanka’s economy, which has seen growth slow as the currency fell amid rising debt, an official said.
“We know the responsibility and the challenges ahead,” Nivard Cabraal, central bank governor under an earlier administration headed by Mahinda Rajapaksa, and a key member of Gotabaya Rajapaksa’s Viyathmaga policy think tank said.
“We have kept track of the economic developments over the last 4.5 years. So we know what to do.”
“There won’t be any time wasted in coming to grips with the current situation.”
Sri Lanka’s economic growth slowed to 1.6 percent in the second quarter of 2019, in the wake of currency collapse in 2018 from 153 to 182 to the US dollar which hit consumption and credit, and suicide bombing in April by which hit tourism and consumption.
“People can expect a professionally managed, well planned economic strategy to be implemented under the GR-MR (Mahinda Rajapaksa – Gotabaya Rajapaksa) government,” Cabraal said.
Officials of Rajapaksa party are calling for new parliamentary elections. Current Prime Minister Ranil Wickremesinghe can remain in office unless he resigns or is ousted in a no-confidence motion.
The new President can dissolve parliament in March, unless a resolution with two thirds majority is passed in parliament.
In the wake of the currency collapse, bad loans reached 4.8 percent in the second quarter of 2019, and is rising, while private credit has slowed.
Sri Lanka however has seen higher levels of bad debt after previous currency collapses of the island’s soft-peg with the US dollar.
Cabraal has said that a credit information bureau rule would be relaxed to help distressed firms access new debt and a moratorium will be offered.
He has also said it will re-negotiate a deal with the IMF, which is in its last stages.
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Sri Lanka’s credit usually recovers about 18 months after a currency collapse.
Rajapaksa is due to take oaths in front of Ruwanweli Seya, an ancient dagoba built by during the reign of King Dutugemunu, who defeated Elara, a Chola ruler. (Colombo/Nov18/2019)