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Monday, 10 December 2012

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SL need to tighten fiscal policy- Mathai

Sri Lanka is a petroleum importing country and has to find a way to finance the increased prices of petroleum said, Dr. Koshy Mathai, IMF's resident representative in Sri Lanka and Maldives.

Speaking at the Sri Lanka, Italy Business Council of the Ceylon Chamber of Commerce hosted luncheon meeting titled Sri Lankan Economy-some ideas about the future for its members and non members he said that imports in the economy have fluctuated to an unparalleled degree and from a macro economic perspective, however useful imports were, they have to be finance-able. "The Current Account deficit is growing and measures need to be taken to stop this growth in the current economy and to reduce the financing need, there may be a need to slow down economic growth, let exchange rate weaken, make imports more expensive and exports more competitive, tighten monetary policies so that bank credit doesn't keep growing at 34 % as it was last year," said Dr Mathai.

He also pointed out that Sri Lanka may also need to tighten fiscal policy, perhaps through increasing energy prices which will put a dent in consumer pocket books and help to restrain their disposable income and therefore their propensity to import.

He also noted that there is large scale machinery being imported for various industries and that Sri Lanka needs capital goods to come into the economy and we should not slow that down.

The Council will have a series of luncheon meetings in the coming months, affording an opportunity to its members to listen to speakers of repute on topics related to economy, current affairs, business etc making their membership meaningful.

The Sri Lanka Italy Business Council was formed in October 1998, under the aegis of the Ceylon Chamber of Commerce.

The speaker Dr. Koshy Mathai previously served as IMF's mission chief for Fiji.

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