Nivard says no crisis as some claim; Showcases impressive economic achievements to rebuff critics

Central Bank Governor Ajith Nivard Cabraal yesterday literally brandished the 2011 Annual Report to silence critics and doomsayers, saying that there was no growing economic crisis in the country and was emphatic that Sri Lanka will do well despite challenges.

Referring to editorials, one-sided analysts and political economists, Cabraal said: “There are attempts by some to portray that there is a huge crisis in the country but it is not so. President Mahinda Rajapaksa and his economic team ensured that in 2011 the country achieved an 8.3% economic growth which was the highest in post-independence era. Two successive years of 8% growth is also unprecedented.”

Addressing the launch ceremony of the Central Bank’s 2011 Annual Report officiated by President Mahinda Rajapaksa, Cabraal said that the highly controversial draw down of reserves last year was done “deliberately to ensure stability.”  

"Over the past year we built spaces within the economy and have used those spaces when necessary at times of stress,” the Central Bank Chief said, adding that a similar strategy was a continuous process aimed at better managing risks.

Separately during a post-launch press conference Cabraal said that due to prudent overall economic management, the country has become resilient enough to enjoy a longer period sans frequent adjustments.

In a further step to set the record straight, Cabraal also said that the Central Bank was a professional and competent body with over 100 economists who have qualified from top universities and has successfully delivered its core functions of ensuring economic, price and financial system stability.

In his speech at the ceremony, Cabraal also noted that in the past, the longest period in which inflation was at single digit figures was during 23 months between August 1998 and June 2000 but President Rajapaksa’s government has established a new record with 38 months to date with the same achievement.

“2011 was a challenging year yet we can take comfort that we have delivered record growth. 2012 will be an equally challenging year as well and we are confident of achieving the revised growth rate of 7.2 per cent sans major external shocks,” Cabraal said.

He described the 672-page 2011 Annual Report compiled with information drawn from all stakeholders and specialists in the Central Bank as “historic” and a “prime document” as it would be used when people write history of Sri Lanka.

FT Insight

Highest in years!

Among the many significant achievements of 2011 in the real economy highlighted by Governor Cabraal during his speech were the following:

Services sector recorded its highest growth in 46 years

Fisheries recorded its highest growth in 39 years, except after the tsunami

Industry sector recorded its highest growth in 33 years

Construction sector recorded its highest growth in 31 years

Import trade recorded its highest growth in 18 years

Small industries recorded their highest growth in 14 years

Hotels and restaurants recorded their second highest growth in 12 years except for the post-tsunami year

Manufacturing sector recorded its highest growth in 11 years

Export trade recorded its highest growth in 11 years