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Post recovery crisis:
Sri Lanka can get advantages - Dr. Srimal Abeyratne
Gayan Kanchana
Sri Lanka should be able to improve its balance of payment and
budgetary position, create a competitive and investment friendly climate
for FDI and a rapid phase of export promotion towards diversified
markets to get the advantages of the post crisis recovery, said senior
lecturer of the Department of Economics, University of Colombo Dr.
Sirimal Abeyratne.
He was speaking at the seminar on the Global economic crisis and its
impact on Sri Lanka which was held recently at the Mahaweli centre. He
said that the country’s fiscal deficit will increase due to three
factors. First Government expenditure will increase because the
Government has to assist people who are vulnerable to the economic
crisis.
Second the stimulus packages have to be given to the affected
sectors. Third the Government will have to spend money for the
rehabilitation and reconstruction of the Northern and the Eastern
provinces. However, lower import prices will ease pressure on the
Balance of Payment (BOP). While expenditure is increasing there is no
way of increasing income. The Government depends heavily on tax income.
The only sector that will be the least affected by the crisis or boost
is the agricultural sector. However, the agricultural sector is not
taxable and it depends on Government subsidies. Industrial production
will be cheap but the demand will remain low.
Lead Economist, Lirne Asia Dr. Harsha de Silva said that the IMF
standby facility of US$ 1.9 billion would in the short term help the
country meet its foreign commitments and achieve its long term
development goals.
The IMF facility will ensure more fiscal and monetary discipline
which will help the country reach its development goals.
The seminar contributed to the discussion on the impact of the
current global economic crisis on Sri Lanka from the micro and
macroeconomic perspectives.
The seminar assessed the global finance and economy crisis, its
impact on the region and on Sri Lanka in particular, and several key
issues with regard to responding to the global economic crisis were
highlighted during the seminar.
It was organized by the Royal Asiatic Society of Sri Lanka.
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