Recovery from Easter attacks exceeds expectations: Mangala

Friday, 30 August 2019 00:00 -     - {{hitsCtrl.values.hits}}

 Finance Minister Mangala Samaraweera - Pic by Sameera Wijesinghe


  • Counters criticism of economic fallout
  • Says tourism has rebounded faster than expected, only 10% shortfall projected 
  • Optimistic SL will record 3.2% growth in 2019
  • Argues Govt. has managed to deliver development while focusing on fiscal consolidation
  • Eran appeals to banks to reduce lending rates to avert CB cap

By Uditha Jayasinghe 

Finance Minister Mangala Samaraweera yesterday paid kudos to the resilience displayed by the Sri Lankan economy in the aftermath of the Easter Sunday attacks, describing the recovery as having exceeded expectations. 

Samaraweera, together with State Minister of Finance Eran Wickramaratne, emphasised that unlike countries such as Egypt and Tunisia, which took about two years to recover from similar terror attacks, Sri Lanka was able to minimise impact on tourism, as well as manufacturing and services sectors, in a matter of months. 

Referring to projections released this week by the Sri Lanka Tourism Development Authority (SLTDA), which said Sri Lanka is likely to only experience a 10% fall in tourists to 2.1 million in 2019, sharply lower than the 30% loss initially estimated, Samaraweera said their growth projections for this year remained largely unchanged. 

“The expected impact to tourism has not materialised, and we see this as extremely good news. We expect Sri Lanka to grow by about 3.2% this year on this faster-than-expected recovery. To all those who are saying that the Government has allowed the economy to fall, I would like to point out that we have done the exact opposite. We have reduced the trade deficit, increased exports, improved investment, and also spent a great deal of money on development projects. We have also brought inflation numbers to historic lows of about 2.2%, and we will continue to provide fresh policies and avenues for growth,” he said. 

State Minister Eran Wickramaratne stressed that the Government will proceed with plans to impose lending rate caps on loans. As already outlined by the Central Bank, lending interest rates have failed to reduce in line with reductions in deposit interest rates, and Wickramaratne supported calls by the Central Bank to financial institutions to voluntarily work to reduce interest rates and avert imposition of a lending rate cap. Acknowledging a rate cap could result in market distortions, he appealed for banks be proactive in adjusting lending interest rates. 

“Monetary policy rates have been reduced twice this year, but even though deposit rates have reduced by 263 basis points, the lending interest rate has only been reduced by 53 basis points. So we need to bridge this gap, and I appeal to banks to do this by themselves and not wait till the Central Bank imposes rate caps.” 

Samaraweera went onto highlight the development projects carried out under the Gamperaliya program, which has allocated Rs. 45 billion for 99,882 projects, with work progressing well in all areas of the country. The Finance Minister argued that under this Government, Sri Lanka has seen more infrastructure development at village, district, and national level than was seen under the former administration. He pointed out these funds were allocated for development while implementing a challenging fiscal consolidation program. 

“We have done everything from fixing people’s roofs, to plastering their houses, to building toilets, to repairing hundreds of religious institutions, developing community-level organisations, and building highways. In the next seven months, the Government will complete and open three highway projects, the last phase of the Southern Expressway, the final stretch of the Outer Circular Highway, and the second phase of the Central Expressway. None of these projects have been stopped, and we will return to continue this work.” 

The Finance Minister also outlined plans for the next Enterprise Sri Lanka exhibition, to be held in Jaffna in the first week of September. He commended efforts to take the Enterprise Sri Lanka program to unbanked communities in the North, and said the program has been welcomed by many as it offers loans at lower interest rates.