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By Nisthar Cassim
Prime Minister Ranil Wickremesinghe on Sunday revealed there has been a Rs. 300 billion cash infusion to the economy following a host of recent measures taken to address the liquidity issue.
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Prime Minister Ranil Wickremesinghe at COYLE event - Pic by Sameera Wijesinghe |
Speaking at the 20th anniversary of Chamber of Young Lankan Entrepreneurs (COYLE), the Premier said the Treasury has been requested to release Rs. 60 billion to settle part of the dues to construction contractors and more will be released. Secondly, Central Bank’s relaxation of statutory reserves ratio twice has released Rs. 150 billion to the market.
“Under the Enterprise Sri Lanka program, Rs. 60 billion has been lent and under the Gamperaliya initiative, Rs. 6 billion was released late last year and there will be more in the pipeline,” he said.
The Premier also said the removal of 200% cash margin for vehicle imports another Rs. 22 billion will be released to the market.
“The Treasury and the Central Bank feel this is sufficient but if further need arises we will inject more cash to boost the liquidity,” Wickremesinghe said, adding that low inflation is helping the economy as well and infusion is based on future investments, revenue and growth forecast.
Blaming the cash crunch over the 52-day Constitutional coupe, during which period the country lost $ 1 billion, the premier said money circulation has been a problematic issue in the country.
“We have and are addressing the lack of liquidity in the system,” he said whilst noting last year saw the highest rupee debt burden to be serviced.
He also told the COYLE forum that the Government has managed to stabilise the economy midst global and local challenges after “a difficult period for everyone”.
It was noted that stabilisation was critical to serve the large debt burden on the country as well as create a conducive environment for private sector growth.
The Premier also used the COYLE forum to highlight some key achievements of the Government during the past four years whilst meeting the debt service challenge.
Among those listed were increasing the Government revenue to 63.5% of GDP in 2015 to 75%; primary balance which was a negative 2.8% of GDP or Rs. 302 billion in 2015 will be a positive 1.5% or Rs. 225 billion in 2019.
The current account balance which was a negative 2.8% of GDP (Rs. 256 billion) in 2015 will be a positive 0.2% (Rs. 36 billion) this year. It will be first time Sri Lanka will have both a positive primary balance and current account balance after 70 years. The Budget deficit has been reduced from 7.5% of GDP or Rs. 829 billion in 2015 to 4.4% or Rs. 685 billion in 2019.
“This is good economics,”emphasised the PM, adding that merchandised and service exports have been increased to over $ 18 billion in 2018’s first nine months and will be around Rs. 19 or Rs. 20 billion.
“However the potential is greater,” Wickremesinghe said and pointed out that the Government was focusing on the next six years to strengthen the long term ability to repay Sri Lanka’s debt.
Endorsing COYLE’s outgoing Chairman Dinuk Hettiarachi’s goal taking COYLE members global, the PM stressed Sri Lanka needs to go global.
“In the past 10 years, many companies have invested and set up operations abroad such as Bangladesh and Africa for various reasons such as low wage advantages. This is good. We want more Lankan companies to go global and Sri Lanka too must become global as we expand our exports, which is critical to boost reserves and service foreign debt. We are keen to help Sri Lankans capturing global markets,” Wickremesinghe added.
He also emphasised that to ensure higher socio-economic growth, Sri Lanka needs more foreign and local investments to boost both exports and domestic markets. “We are improving the investment climate with a host of measures including faster approvals and better ease of doing business,” he said.
He admitted the Government and the country needs to do more hence infrastructure is being improved for investments in manufacturing and tourism sectors.
He said there are 600 acres vacant in existing zones and recently work started on a 1,200 acre zone in Bingiriya and a 700 acre project close to the Central Expressway.
With regard to Hambantota, he said the Cabinet last week approved an oil refinery complementing the previously approved LNG plant. The Mattala airport will be revived under a Public Private Partnership with Indian assistance.
The Premier said efforts are underway to make Sri Lanka a shipping hub with support from ADB for a master plan inclusive of southern port and north port in Colombo thereby enhance capacity to 25 million TEUs by 2050. This is in addition to Hambantota and Trincomalee port expansion, he added.
Noting that tourism was a low-hanging fruit and newly launched global campaign will help the industry’s prospects.
“We need investments and people. In the software sector, there is a 10,000 shortage of skilled personnel and the 2019 Budget has offered initial support. We have requested the vocational training authorities to come up with a joint program than competing and work with the private sector to ensure market-oriented training is offered,” the PM added.
Wickremesinghe also made a rallying call to the 100-member plus strong COYLE. “Now that the 2019 Budget has been presented, we have attempted to stick to Budgetary and fiscal discipline despite difficult times. We need to pull it through. Let’s get together and become world class by going global. The Government is there to help the private sector for Sri Lanka to make it again globally,” the PM said.
Making up of Rs. 300 b
Good economics
302 billion in 2015 will be a positive 1.5% or Rs. 225 billion in 2019
(Rs. 36 billion) this year
billion in 2015 to 4.4% or Rs. 685 billion in 2019.
