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Finance Minister Ravi Karunanayake announcing a fresh
$ 1.2 billion line of credit from the Asian Development Bank at a press conference yesterday – Pic by Lasantha Kumara
By Channa Fernandopulle
Finance Minister Ravi Karunanayake yesterday stated that the Asian Development Bank (ADB) was prepared to double its annual funding to Sri Lanka up to an estimated $ 1.2 billion in a bid to support the new Government’s development agenda.
Karunanayake emphasised that the proposed line of credit was being granted to Sri Lanka based on independent reviews of the national economy carried out by the ADB and not, he stressed, as a result of any appeals or requests on the part of the Sri Lankan Government.
He added that the funds would be utilised towards supporting the Government’s development initiatives, budgetary allocations, capacity development and debt relief.
“We appreciate the support of the local ADB authorities who had debriefed in detail the current situation of Sri Lanka to the top brass at ADB headquarters, which made it a lot easier for us as they were able to quickly identify Sri Lanka’s issues and requirements,” Karunanayake stated.
He further stated that issues of debt servicing and Sri Lanka’s precarious position relative to the new Government’s obligations to repay outstanding short-term debt contracted by the previous regime were among the key issues covered during a productive three-hour discussion with ADB officials.
Karunanayake’s announcement about the ADB line of credit came in the wake of a recent decision by the bank to downgrade Sri Lanka’s 2015 GDP growth forecast from a previous 7.5% down to 7%.
“Due to the prevailing political uncertainty, investments would be affected and it is very difficult for us to make an economic growth prediction,” ADB Senior Country Economist for Sri Lanka Tadateru Hayashi had stated.
However, Karunanayake dismissed critics, including those in the Opposition; highlighting slowing growth insisting other dimensions of the economy are performing well. The Minister was quick to point out that fighting corruption and improving regulations was worthwhile even if it would temporarily reduce growth, as it laid the foundation for sustainable development. He particularly focused on the bond market, pointing out it was performing well despite investigations into alleged procedural failings involving the Central Bank Governor.
The Minister also praised currency stability insisting the rupee is stable “without fear” and waved off concerns over defending depreciation.
“One cannot compare the activities of a decade-old Government to one that is just a few months old. It is easy to say things are not getting done but one has to dwell into the specifics. Some challenges will take time but there has to be an element of reasonable evaluation,” he added.
