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| Tuesday, 9 March 2004 |
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Debt Securities Trading initiative will help investors islandwide - Choksy Some privatisation ventures of the government through the Stock Exchange have shown clear evidence of the desire of smaller investors in different parts of the country to invest through the Stock Exchange. Today's initiative will further the process of road-basing the treasury bill and bond market and enable it to reach investors islandwide, said former Finance Minister K. N. Choksy at a launch of the Debt Securities Trading System of the Colombo Stock Exchange last week. In the mapping out of our financial and economic reforms, there has been recognition of the need not merely of empowering the private sector, but also of giving it the essential pre-requisite of confidence in the consistency of our policies, so as to enable the embarking on long-term development programs. This has succeeded. Despite the slow growth of the world market economy in the last year, we nevertheless achieved a 5.6% growth. The fiscal deficit was reduced from 10.8% to 7.8% of GDP and inflation from the high rate of 14% to approximately 6%. Interest rates, which are an important indicator of a country's economic stability, were reduced across the board. Another vital economic indicator, namely, the strength of the country's currency showed improvement for the first time in many years, with the appreciation of the Rupee to Rs. 94 against the US Dollar. The Stock Exchange made an important contribution to these achievements. It surpassed many of its earlier records and blossomed into being the second best performing stock exchange in the world last year. "I am aware of the enlightened criticism by certain political parties, primarily those who are Marxist oriented in their thinking and are opposed to the free-market economy, that the Stock Exchange is the haven of the rich man. This obtuse thinking strikes a deadly blow to the less-well-to-do sectors of our country's population and not to the wealthy, because investments made in the Stock Exchange do not go into bank accounts of companies. It must be realised that such investments led to an expansion of the economy, resulting in greater productivity, more employment, increased wages, and the wider circulation of money. This is established by certain hard facts - the service sector of the country expanded to 6.8%, the industrial sector recorded a growth of 5.8%, and the agricultural sector showed growth rate of 3.4%. Each of these sectors had, however, recorded negative growth rates in 2001 under the policies of the Peoples Alliance Government, he said. Sri Lanka is a country that is heavily dependent on imports of most food items and consumer goods. The increase in international market prices in commodities such as petroleum, therefore has immediate adverse repercussions, causing escalations in prices. This we cannot regulate. The clear solution therefore is to increase the purchasing power of Sri Lankans by giving them increased wages. This will fortify them against price escalations when they occur. The government therefore addressed this issue and from the beginning of this year increased public sector salaries and pensions. Further increases will take place next year. The per capita income has already increased from US$ 841 in 2001 to US$ 953 last year. Wage increases have also taken place in certain areas of the private sector. The ability to increase wages and thereby strengthening the purchasing power of the average citizen can only take place in an economy that is expanding and growing. The Stock Exchange plays an important role in this evolution," he said. |
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