Trade deficit only problem: Basil

• Says that economic growth still among the highest in the world, insists that external events will not affect trade

By Uditha Jayasinghe

As the rupee hit an all-time low, Economic Development Minister Basil Rajapaksa yesterday strived to bolster confidence in the economy terming the trade deficit the country’s “only problem”.

With the rupee at an all-time low, Economic Development Minister Basil Rajapaksa seems to be seeking assistance from a higher power during a press conference to announce the upcoming Expo 2012 trade fair. He is flanked by Industry and Commerce Minister Rishad Bathiudeen and Export Development Board Chairman Janaka Ratnayake – Pic by Daminda Harsha Perera

Speaking at a press conference to announce the record number of foreign delegates at Expo 2012, the largest trade fair to be organised in Sri Lanka in decades, the Minister was insistent that neither the US$ 9.7 billion trade deficit nor possible fuel shortages due to the US sanctions on Iran would dampen the economy.

“Right now our problem is the trade deficit. In fact I would say it is our only problem,” he said, emphasising that the Eurozone crisis would not affect garment exports and that the current US resolution on Sri Lanka at the UN Human Rights Council would also fail to adversely affect exports.

“Sri Lanka growing at 7.2% is not bad. It is actually the second highest in Asia after China. That means we will be in the top five countries in the world for the highest growth when most other economies around the world are struggling,” he stressed.

He also echoed sentiments expressed by Central Bank Governor Ajith Nivaard Cabraal that the rupee would stabilise, but declined to comment on when and at what rate that would be.

He continued to paint a rosy picture by presenting the third phase of the ‘Divi Neguma’ programme as an example of the steps taken by the Government to reduce the cost of living. The Economic Development Ministry has expanded the programme to reach 14,000 Grama Sevaka Divisions and Rajapaksa outlined plans to export the surplus of fruits and vegetables to help increase farmer incomes.

“We are concentrating on getting households to grow fruit and vegetables as well as concentrate on businesses such as ornamental fish farming and horticulture. The expectation is that within six months these products will not only reduce the cost of living, but also find a lucrative market overseas. We are already working on providing gathering places for direct export and have built over 3,000 greenhouses for rural farmers.”

However, Rajapaksa refused to give details as to how this would bridge the large trade deficit, but was warm in his assurance that the “Government would take steps” to maintain a stable economy.

Meanwhile, over 350 delegates from China are part of around 1,000 officials from 45 countries expected in Sri Lanka later this month for the largest post-war trade exhibition.

Expo 2012 has been billed as the largest trade exhibition to be held by Sri Lanka in decades, said Export Development Board (EDB) Chairman Janaka Ratnayake, pointing out that this is the most number of foreign businessmen and ministerial delegates to attend any trade fair in Sri Lanka.

He asserted that the number of participants had increased by 500 from last week, when only 700 had registered to nearly 1,000 at present, with more expected before the kickoff on 28 March 2012.

India, Sri Lanka’s closet neighbour, is weighing in with over 150 delegates and large contingents are expected from many other regional trade partners. Political delegations from Korea, Bangladesh, Pakistan, Maldives and Germany will also attend the event.

“There are more visitors than we expected,” he commented, adding that representatives from global retailers including H&M, Marks and Spencer, Wal-Mart and Ikea are part of the expected arrivals.