CB Governor: Constructions costs kept unconscionably hight

By Rathindra Kuruwita

The cost of construction in Sri Lanka had been high compared to other countries of the region even before the current crisis, and that was because certain industries had managed to limit or prevent imports without boosting productivity, Governor of the Central Bank of Sri Lanka, Dr. Nandalal Weerasinghe said yesterday, addressing a forum organised by the Ceylon Institute of Builders.

The price of raw materials- tiles, steel, cement, bathware, etc., were too high, he said. That was because some companies had managed to make the government discourage imports with higher taxes, he said.

“As a result, Sri Lankans are not paying market prices for material needed for construction. Everyone is paying extra to protect certain companies. Those in the construction industry have to pay higher prices to purchase the material they need, and the average Sri Lankan has to foot the bill finally. Even before the crisis, Sri Lankans paid a lot more than others, in the region, for housing, and now the numbers are astronomical,” he said.

Dr. Weerasinghe added that the economy must stabilize, and the wages have to rise for the average Sri Lankan to purchase a house.

“We will have to wait some time until the economy stabilizes, and income goes up. Then people will demand housing again, but this will take time. It will also take time for the government to invest in construction. The government needs to invest in construction and must build infrastructure, but this is not a priority right now. The government has been a big player in the construction industry for a long time and the industry leaped forward because of the government involvement. However, this can’t happen until we have fiscal stability and debt sustainability,” he said.

Dr. Weerasinghe said that the government would be able to stabilise the economy next year.