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Wednesday, June 23, 2010

Bright prospects for Lanka’s economy - IMF

Channa BANDARA WIJEKOON

Economic prospects for Sri Lanka are very bright now and the country must capitalize on it. The process can be accelerated with tourism, tea and garments, IMF Resident Representative for Sri Lanka and the Maldives Dr. Koshy Mathai said.

He was the chief guest at the tenth CIM Annual conference held at Cinnamon Grand hotel on Monday.

Koshy Mathai

IMF is very concerned about Sri Lanka’s fiscal condition which is improving supported by the growth in the world coming out of recession. The Government has brought down the deficit. The Government does tax reforms. All in all, economic management by the Government is good. Thus, conditions are set to develop Sri Lanka, Mathai said.

At present, things are on the right track for Sri Lanka. Banks are now recognizing the upward trend of economy and falling in line. Private sector credits which were at a low level for implications in the macro environment too are now following suit and as a result, private sector credits are growing. The GDP, which is six per cent, now is forecast to hit six point five per cent towards the year-end.

“Now the country must maintain the macro economic stability. The recession hitting the world hard in the fourth quarter of 2008 and oil prices sky rocketing saw a fall in remittances to the country. In the last two to three years, Sri Lanka depended on short-term or external borrowing. As a result, the rupee depreciated,” he said.

In early summer 2008, things changed for the better. Remittances bounced back to the country. End of conflicts in the country opened doors for new opportunities. Colombo exchange market showed a marked improvement. The reserves of the country boosted to one billion dollars in one month alone and went up to five billion dollars in a short period, which was an amazing improvement from last year.

The IMF was concerned about the monetary policy of Sri Lanka. Thus IMF carefully monitored the changes and suggested the Central Bank of Sri Lanka to relax monetary policy, which they did. The inflation that was 30 percent in 2008 came down to seven per cent. Warwick Business School, UK Professor Policy and Marketing Robin Wensley said, the customer judges value we offer to a product or a service against the competitors value offer. Hence, genuine value addition is needed to provide economic value (EVC) to the customer.

Products, organizations or a country as a whole must not be over branded or under branded.
“Sri Lanka can venture into capturing a global market share with top four categories of clothing, fresh food, textiles and electronic components, in addition to conventional product categories,” Wensley said.

source - www.dailynews.lk