SL set to overcome economic imbalances

Sanjeevi JAYASURIYA

Sri Lanka is taking corrective steps to fix economic imbalances, senior economists said.

Sri Lanka has taken corrective steps to counter a balance of payments crisis triggered by a credit bubble worsened by energy price manipulation and state enterprise losses, economists at an interactive forum on 'Flexible Exchange Rates' organized by Ceylon Chamber of Commerce held on Tuesday in Colombo said.

While endorsing the recent policy decisions on exchange rate, fuel pricing and interest rates, Economist Dr. W.A. Wijewardena said that the tightening of monetary policy is necessary for the country to move forward.

This will be a painful path for the exporters. However, attention should be paid to continue current policies despite their challenging nature. This will ensure beneficial results that policy changes are expected to bring to the economy, he said.

The export fraternity should take these changes in to consideration especially the cost of electricity and fuel price increases and adjust themselves. These will payback in the long run as massive adjustments are necessary on the cost front, he said.

In February authorities allowed the rupee to fall to match underlying loose monetary conditions and raised both energy prices ending price deceptions and also interest rates.