Sri Lanka set to come out stronger State Minister Cabraal

By Hiran H.Senewiratne

Sri Lanka will come out stronger with more resilience with an exuberant private sector that can withstand shocks, State Minister of Money and Capital Market and State Enterprise Reforms Ajith Nivard Cabraal said.

“Local investors and the business community have faith in a turnaround of the economy and in Sri Lanka’s fortunes, as the new government has already set these in motion. The government will implement in the future favourable measures and policies,” Cabraal told an investor forum titled, “Twenty 21 and Beyond”, organised by Softlogic Stockbrokers. The event was held at Movenpick Hotel on Tuesday.

Post-COVID-19, Cabraal said, exports have bounced back to near-normal, remittances were back on track and a lower oil bill was compensating for zero earnings from tourism. “I will say the external account today is not as bleak as it looked during COVID-19,” Cabraal said. “We have put and are putting in place the building blocks for high growth, despite challenges. We want the private sector to brace itself for a take-off, rather than losing hope, because there are plenty of positives of late, the state minister said.

Cabraal said the government is confident of high growth in the next five years, despite the challenges.

Cabraal said that between 2015 and 2019, the country suffered stagnant growth, rising unemployment, a dwindling rupee, low reserves with the export sector struggling and market capitalisation halving from $ 25 billion to $ 12.5 billion.  “This wasn’t an aberration, but real, and everyone felt it,” he said. “These achievements are things which we couldn’t be proud of, but the resilience of the private sector, which is a hallmark, ensured Sri Lanka survived,” Cabraal said He said the previous government budget showed Rs. 2.2 trillion government revenue, but in reality the actual collection was Rs. 1.8 trillion, reflecting a Rs. 400 billion shortfall. “This was due to the downfall of the economy, and everyone felt it,” he opined. 

Cabraal said that following the election of Gotabaya Rajapaksa as the President in November 2019, the new administration set its sights on key priorities, including stabilising the rupee (which fell from Rs. 131 to the dollar to Rs. 185 between 2015 and 2019), reducing interest rates and taxes etc. This was critical, though Sri Lanka and the rest of the world was impacted by the COVID-19 pandemic in early 2020. He said that post-COVID-19, the government had to take difficult steps and make a call whether to default on its sovereign debt, versus curbing forex guzzling jobs and lifestyle-impacting imports. “We opted for the latter, because we wanted to send a positive message to the rest of the world that we are a responsible government.