'Country all set to overcome challenges':

Eight pc growth in first quarter - SLCB Governor

Charumini DE SILVA

'The country's economy is likely to expand by eight percent during the first quarter of this year. The country would be able to reach slightly over eight percent growth by the end of this year. However, the Central Bank has no plans of revising the expected economic growth of 8.5 percent, Central Bank Governor, Ajith Nivard Cabraal said.

He said due to the floods there was a setback in the agricultural sector during the first quarter. Nevertheless, the production has continued to grow, and has now recovered. "We could expect external shocks in the coming months, yet the country is all set to overcome challenges from the external shocks as we have created more space for them to be handled properly," Cabraal said.

"The foreign remittances to the Northern Province have increased significantly. Soon after the war only US$ 50 to 100 were remitted in banks for consumption purposes. At present all the banks operating in the region which channels remittances have recorded higher numbers. People are more enthusiastic in purchasing agricultural machinery and equipment with these foreign remittances, whereas they slowly enter the main economic stream. This is a good indication to ensure better growth from this region," the Governor said.

Although, many banks have opened their branches in the Northern Province, public are using informal systems when borrowing money, which has a higher risk. Hence, the banking industry has to react to the bureaucracy and encourage the public towards the formal sector. The banks should also reduce their long procedures and relax the rigid lending systems.

Speaking at the opening of the first Regional Development Bank (RDB) in Vauniya, RDB Chairperson, Janaki Kuruppu said that the bank will set up another 10 RDBs in the Northern Province within the next six to nine months. The Vavuniya branch is the 250 RDB branch in the country.