Central Bank Governor Prof. W.D. Lakshman speaks via video at the virtual Economic Summit of the Ceylon Chamber of Commerce yesterday

• Praises Govt.’s 2021 Budget; stresses fiscal and monetary stimulus as key to minimise impacts from COVID
• Says strong political stability will lead to policy consistency and coherence, pushing up investor confidence
• Calls on all economic stakeholders to play their vital role
• Tells Ceylon Chamber membership to move away from traditional “buying and selling” mindset  
• Says time for SL to move up from conditions of merchant capital dominance to industrial capital dominance

Central Bank (CB) Governor Prof. W.D. Lakshman yesterday expressed confidence in a growth rebound next year, given the policy initiatives in the Government’s 2021 Budget and other measures, even though the COVID-19 pandemic dented the economy this year. 

“2020 may be a lacklustre year for Sri Lanka, but guided by the Budget 2021 and the farsighted array of policy measures put in place by the CB and the Government, Sri Lanka possesses the potential to emerge as a stronger and more resilient economy in 2021, and to begin to progress on a high growth path thereafter,” Prof. Lakshman told a virtual session of the Ceylon Chamber Economic Summit yesterday. 

This optimism, however, was after noting that the disturbances caused in the fourth quarter with the rise of the second wave of COVID-19 from October continue to hamper the revival of the economy. “While the ongoing second wave of COVID-19 appears to be a stumbling block to the economy’s rapid recovery, we believe that with its containment, the economy will record a sharp rebound in the not-so-distant future, as it did after the first wave by the end of May/early June,” he said. 

Prof. Lakshman stressed that fiscal and monetary stimulus measures will help ensure that the adverse economic impact of the second wave is short lived, particularly with the likelihood of trying out some experimental measures in the most heavily-affected sector, namely tourism. 

The CB Chief said strong political stability conditions will lead to policy consistency and coherence, and push up investor confidence. 

“Investments of private capital, both domestic and foreign, are expected to begin expansion. Despite the spill-overs of global and domestic disruptions stemming from the COVID-19 pandemic, the Government is steadfastly progressing with its agenda of socio-economic development,” he said. 

Noting that the 2021 Budget presented recently has affirmed the Government’s commitment to a people-centric economic policy, Prof. Lakshman said the policy framework highlighted in the Budget statement points towards several novel alternative features. ‘Domestic production economy’ has taken the centre stage.

It was pointed out that as the Government spearheads the recovery process in collaboration with the CB, all economic stakeholders have a vital role to play. 

“The need of the hour is to develop the Real Sector – to revive our industries, expand our businesses, and shift the focus away from imports, whenever it is doable and effective. This will contribute to not only the recovery of the economy, but also strengthen its resilience to shocks like these,” the CB Governor said. 

“We hope our Chambers of Commerce will also encourage their members, whether in production or service sectors, to move away from the traditional “buying and selling” mindset. To put it in different words, it is time the country moves up from conditions of merchant capital dominance to those of industrial capital dominance. An approach to generate profits through improving value addition in production processes is urgently needed,” Prof. Lakshman told the virtual CCC Economic Summit session titled ‘Post COVID-19 Economic Recovery’. 

The CB Governor also pointed out that Sri Lanka was facing a unique window of opportunity to shape the direction of the economy.  “These unique circumstances give us an opportunity for alternative thinking through retrospection and introspection. As the global economy is undertaking the ‘Great Reset,’ we also must take this opportunity to reset our thinking and our perspectives,” he stressed.

It was emphasised that in the current fiscal and monetary environment, there are a myriad of opportunities for everyone, be it in the field of agriculture or technology, education or finance, commercial or socioeconomic well-being. 

“On the back of Budget 2021, the economy will embark on a fresh start, leaving behind the various structural weaknesses that had been crippling it for many decades. 

“As we reorient our economic strategy and focus on elevating the economy to an innovative production economy, let me reiterate the need for one and all to partake not only through investments, but also knowledge transfers, enhanced productivity and simply through challenging the status quo,” the CB Chief told the Virtual Economic Summit of the Ceylon Chamber.  

Key business leaders positive of export thrust, economic revival