Banking and financial sectors seen as needing urgent strengthening

By Hiran H.Senewiratne

The government should strengthen the banking and financial sectors, with a few banks and finance companies facing some issues. The recent Covid 19 pandemic too caused a lot of issues for these sectors, State Minister of Finance and Capital Markets and Public Enterprise Reform Ajith Nivard Cabraal  said.

‘There are several other local industries and services that have also suffered significantly as a result of the acute fall in local demand due to the lockdown and reduced purchasing power. Those persons too need to be supported by way of cash grants, tax breaks, loan and interest moratoriums, quick release of new loan facilities at concessionary interest rates, Cabraal said after assuming duties as a state minister at the Finance Ministry yesterday.

Cabral said if the export revenue of a country drops due to quality issues or availability problems within the exporting country, then it could be fixed by taking the required management and operational remedial measures to rectify such issues.

‘However, if the export revenue is declining due to decreasing purchasing power of the importing nation’s people and business entities, the problem would be more challenging as it would be beyond the control of the exporter or the exporting country, he explained

Cabraal added – “As is well known, in the case of many export-market collapses experienced in the last few months, it is clear that the decline is due to consumer demand in the importing country declining as a direct result of the COVID -19 situation.

‘In that background, it is likely that the demand would pick up after a few more months and, therefore, what would be important is for the exporting country to remain resilient by following policies that would enable its exporters to keep their factories and businesses intact, and survive until such time the downward trend changes.

‘In the case of exports of apparels, fish, tea, rubber, etc., we have already begun to see an improvement in export revenues. Therefore, it is now time for us to strive even harder to stimulate our existing markets and find new niche markets that would provide us with the opportunity to export more.

‘Further, although we do observe a reduction in remittances due to the purchasing power decline in the Middle Eastern countries, it is likely that once global demand picks up, oil prices would improve, which would be a favourable outcome from the point of view of the oil exporting nations.’