Lanka can face impact of financial crisis - Governor CBSL

Hiran H.Senewiratne

The Government encourages normal economic activities to take place by introducing policy stimulated packages to compound the effects of the global financial crisis, Central Bank Governor Ajith Nivard Cabraal said.

“If economic activities are maintained at a normal pace it will stop the economic depression to a greater extent,” Cabraal said at a seminar on the Current Global Financial Crisis and its Implication to Sri Lanka, organised by the Strategic Enterprises Management Agency (SEMA). He said with the crisis, Government spending will not come down. It will not hamper the growth of the country in this crisis situation. “Therefore, we will introduce new ways and innovative methods to arrest the situation,” the Governor said. Cabraal said they are planning to increase foreign remittances and productivity improvement in the country. The Sri Lankan Diaspora will bring foreign currency as a part of the growth stimulating package. He said China has introduced a US $ 700 billion stimulated package to salvage from the crisis.

He said last year the CBSL opened Treasury Bill/Bonds to the world and therefore US$620 million was absorbed into the country’s economy.

Another guest speaker Sriyamal Gamage said the International Monetary Fund (IMF) which overseas the global economy, warns that potential losses from the credit crunch could reach US$ 1,000 billion and may be even higher.

She said the effects are spreading from sub prime mortgage assets to other sectors such as commercial property, consumer credit and company debt.

Dr Ranjith Bandara attached to SEMA said that if the global crisis continues although Sri Lanka will not be able to totally avoid, its consequences, if certain steps are taken we can avoid a great impact and also will be able to develop the economy.

Dr Bandara said as Sri Lanka has only a minor relationship with the financial institutions that have got into difficulties particularly in USA, there would not be a significant direct impact on our economy.