Lanka targets US $ 2 b FDIs

CB Governor highlights key sectors for 2012:

Ramani KANGARAARACHCHI

The Sri Lanka’s economy has achieved a high growth path in almost all sectors last year and it will further raise the bar in 2012, Central Bank Governor Ajith Nivard Cabraal said. Presenting the monetary and financial sector policies for 2012 and beyond (‘Road Map’) he said the country will make enormous changes in the next few years if it is positioned itself properly.

Governor Ajith Nivard Cabraal

He said the country’s external sector will further undergo more fundamental changes making export inflow US $ 12.5 billion in 2012.

The tourism industry is expected to bring US $ 1.2 billion, workers’ remittances will bring US $ 6.5 billion and foreign direct investment is set to reach US $ 2.0 billion.

Cabraal said the major FDI projects in the pipeline are expected to play a key role with the US $ 500 million Colombo Port expansion project, Shangri-La Hotel Colombo and the Hambantota hotel project worth of US $ 400 million and US $ 400 million worth Sampur Coal power plant. The other projects include Cairn Lanka project for oil exploration which is valued to US $ 125 million and US $ 300 million worth Sheraton Group hotel project.

Another 15 investment projects worth US $ one billion also have been identified which include a sugar refinery plant, the petrol chemical plant and a fertilizer storage plant.

He said the Central Bank now has greater confidence in its ability to face new challenges and adopt new frameworks of monetary policy and therefore will move to a more advanced monetary policy framework from the traditional.

The bank will also give recognition to the major structural changes that have taken place in the economy and display a policy shift that shows greater consideration of such factors.

Meanwhile the major contributions towards growth in 2012 are expected from three sectors namely agriculture, industry and services.

The Colombo Port. Picture by Saliya Rupasinghe

The agricultural sector is expected to expand at 7.3 percent compared to 2.0 percent in 2011 with expected expansion in new cultivation in the North and East.

Another 9.8 percent growth in fishing is expected due to favourable weather conditions and improvement in marketing and infrastructure facilities.

The industry sector is expected to expand at 9.0 percent compared to 10.1 percent in 2011.

A 12.2 percent growth is expected in the construction sector in infrastructure development work by the government and the tourism sector.

An 8.2% growth is expected in domestic trade due to growth in domestic and agricultural sector. Financial services will expand by 8.2 percent owing to the expanding economic activities.

“It is also expected that Sri Lanka’s macro economic conditions and policies will be fashioned to support high growth in 2012 with prudent macroeconomic management to maintain benign fundamentals.

“Investor confidence will be strengthened and promotion of agricultural and industrial products for both traditional and non traditional export markets will take place,” he said.

The Central Bank also expects the fiscal deficit to decline to 6.2 percent of GDP from less than 7 percent of GDP in 2012.