Lanka’s int’l confidence level increasing -CB Governor

International confidence levels on Sri Lanka were increasing and this was evident from the recently concluded bond issue to raise US $ one billion, the largest ever share offering for the country, said Ajith Nivard Cabraal, Governor Central Bank.

Speaking at the annual general meeting of the Sri Lanka Shippers’ Council he said that investors have committed themselves and they have shown the interest and the appetite they have on Sri Lanka. That can be seen in the way they responded to the bond issue. “It has been oversubscribed in 12 hours to the extent of ten times that is ten billion dollars. This is a huge endorsement of confidence,” he said.

“Just last month the IMF and the Sri Lankan government concluded the first SBA which is the first time ever in the Sri Lankan history that the country was able to go through a multi period programme with IMF.”

He said that Sri Lanka is on the right economic track getting all its fundamental right. “Some of the other key factors of the economic scenario like unemployment have come down to a level of about 4.2 %, the lowest in our history. The poverty levels have reduced sharply. Our foreign reserves are today in the excess of four months as far as import cover is concerned again a very comfortable number. Some of the people forget that for a long time, until 2006 we had only about two months of reserves.”

“Today, when we have three and a half months or four months, people still think it is yet not enough. And I can assure you that there is sufficient reserves for us to make sure that all our balance of payment are taken care of and that we can approach the world with a lot more confidence than we did in the past. We did see some rupee depreciation as well as the change in our interest rate which pushed up. We also brought in a kind of an overall barrier as far as credit growth is concerned. All these were put in place to ensure that our growth is lot more stable and lot more sustainable.”

“One of the most significant features that we have been able to deliver to you as a government and also as the Central Bank is that we have been able to maintain inflation at single digit numbers for the past 42 months.”

The government has cooperated very closely last year thus the fiscal deficit was brought down to 6.9 %.

“When you think about the numbers that you had in the past of 10 %, 11 %, it is a very tight number of 6.9 %. And this year the government has committed themselves for a fiscal deficit of 6.2 % and they are so far on track to deliver that.”

“Our debt to GDP ratio has reduced. I am telling you this because that there is quite a lot of hype about Sri Lanka’s debt level, I can assure you that for the first time in the last 30 year period our debt to GDP ratio which is the normal measurement of debt level anywhere in the world has come down to below 30 %. For the past 30 years it has been over 80 % and in the 2003 and 2004 it had been as high as 104 %.”

“Particularly the last few years we have been treated if I may use that word, on a regular basis to new turmoil, new crises almost on a day today basis. You have the Euro zone crisis, you have the fiscal cliff, you have the downturn in economies in the hitherto joined economies.”

Raising finances in different countries has been challenging that has also put a lot of pressure. Flight to safety which was something that people took as a given today no longer in the same mode as in the past.

There is an intense difficulty in retaining competitiveness that the outgoing chairman also referred to. So in that competitive and difficult world we still have to grow. It would have been very easy for us to say let’s now go to sleep, it is too difficult out there and let us not try to do anything really constructive. It would have been very easy and tempting also. But that is not the approach that we should take. We should take the more proactive approach to see how do we still grow in these really tough conditions. That is something that we ourselves face daily. We need to energize ourselves in a daily basis in the face of many of these challenges as to how we would continue on the growth path that Sri Lanka had been given to chart in the last few years.”

“In the the past two years we had one of the best growth periods in our history. Over 8 % growth-on- a year on year basis that has never been achieved in the past. And this year too, although we have taken certain measures to some extent to reduce that growth which is to ensure that the growth is a lot more moderate, we still would end up with a 7.2% growth. And that in the context of the worldwide condition would be a growth that perhaps other countries would sell an arm and a leg to achieve.”

“It has been a very challenging task to do that but if you look at it in the context that in the past the only time the longest time that Sri Lanka has been able to maintain single digit inflation was that uninterrupted period of 23 months only. So this is the longest ever period and we have taken a lot of steps to ensure that, that particular effort is sustained.”

“It is going to be tough in the next few months particularly because we have had some pressure from the supply side.”

“Five ports were been constructed simultaneously,along with an international airport, 14 other domestic airports. These are all very costly projects which are taking place simultaneously.”

“We would have been sometimes forgiven even if we had phased these out for a longer period of time. May be over 30 years. But the President has been keen to ensure that entirety of development activities are taking place simultaneously.”

And that has put a lot of pressure but at the same time you can see the transformation on a much better scale today. You can see roads constructed, even if you travel for three or four hours today you will probably not hit a road which is probably not maintained. If you look at the city you can see the development that are taking place in.”

“The construction of the Mattala airport, about 50 % to 60 % of that also has been completed. So a lot of work in all these areas is taking place in order to give you a platform, to do your business there. If you look at the airport the Bandaranaike International Airport is having a new facelift with a completely new terminal. It is for businesses, it is for people. So that you can be in position to do your activities a lot better. So that is the price that we need to pay to ensure that the infrastructure is being maintained and being delivered to you. That has been taking place.” (SS)