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Sri Lanka says economy recovering with exceptional Coronavirus control

ECONOMYNEXT – Sri Lanka’s domestic economic coming back to pre-Covid-19 levels with exceptional Coronavirus control while exports are also doing well, which has not been accounted for when its sovereign credit was downgraded, officials said.

Sri Lanka’s economy could grow as much as one percent in 2020 though the central bank was expecting ‘breakeven’ or near zero growth, Money and Capital Markets Minister Nivard Cabraal said.

Sri Lanka has exceptional Coronavirus control with no virus in the community and the domestic economy is operating almost normally, Minister Cabraal said.

Other than tourism which has been hit by the closure of commercial flights, manufacturing activities, agriculture, exports, remittances port services were back to normal, he said.

“In the case of tourism 600,000 Sri Lankans who usually travel abroad are not going,” Cabraal said.

“Instead domestic tourism is picking up. During weekends hotels are occupied.”

Minister Cabraal said Moody’s Investor’s Service had not taken the factors into account when downgrading Sri Lanka’s sovereign credit to Caa1 (CCC+) and it was unwarranted.

Both Fitch and Standard and Poor’s downgraded Sri Lanka by one notch to B- when money was printed in March and April sending the rupee close to 200 to the US dollar and credit spiked.

Moody’s put Sri Lanka on rating watch at the time and downgraded in September by two notches.

Central Bank Governor W D Lakshman said they had protested to Moody’s.

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He claimed there was published research to show that Mood’ys did not adhere to their own methodology.

Minister Cabraal said rating agencies had also downgraded Sri Lanka after the end of a 30 year war but investors had taken a different view.

He said the stock market was doing well, though foreign investors were selling now and domestic investors were buying stocks, showing there was depth in the market.

Foreign direct investments would also come after laws relating to Colombo Port City is passed in parliament later in 2020, he said.

Treasury Secretary Sajith Attygalle said tax revenues had bounced back to 144 billion rupees in August, a little below 150 billion average of 2019, showing activities were coming back to normal.

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