Economy on right track for more growth - Mathai

H.D.H Senewiratne

IMF Resident Representative, Maldives and Sri Lanka Dr Koshy Mathai said that the Sri Lankan banking sector has been doing well and had made profits during the last few years but still need to develop further to become globally competitive.

“The country’s interest rates should come down to make funds available to the manufacturing sector, because that sector needs some assistance to develop from medium to long-term perspective,” Mathai said at the Sri Lanka Chamber of Small and Medium Industries, Golden Jubilee Celebrations and Industry Excellence Award 2013, held at Waters Edge.

He said that industrial sector is the bedrock of most of economies, but in Sri Lanka, SME sector has an issue gaining access to finance due to higher bank interest rates and other reasons. Therefore, to make a structural transformation manufacturing sector should be systematically developed, he said.

Mathai said that Sri Lanka’s fiscal situation has to be improved by reducing the country’s debt ratio. He said things seem to be in right track to achieve higher economic growth. But to achieve those targets the country has to fulfil certain requirements such as improving the balance of payment and to reduce inflation further.

The IMF Resident Representative also said that Sri Lanka’s revenue should be improved, which was 11.5 percent of the GDP.

But there is no balance between indirect and direct tax when it comes to personal and corporate income taxes.

Matahi said that Sri Lanka should make it a point not to award tax holidays to various entities. Senior Minister of International Monetary Co-operation and Deputy Minister of Finance and Planning Dr Sarath Amunugama said Sri Lanka’s manufacturing sector has to be looked at more carefully, because during the past it has not grown to expected level.

The Senior Minister said that small and medium sector has not grown as expected because of the high cost of production and not having an entrepreneurial spirit among the persons involved in the sector.

To stimulate the SME sector our SME sector should expand to huge Indian and Chinese markets by way of joint ventures, which has great potential to become top class business ventures, he said.

Deputy Minister of External Affairs Neomal Perera said that with the end of the war several sectors including banking and shipping were developing at a rapid pace. He said that Commonwealth Head States meeting which was scheduled to be held in Sri Lanka in November will have immense potential to promote Sri Lanka tourism and Ceylon tea.