Central Bank Governor, Dr. Indrajit Coomaraswamy yesterday said, Sri Lanka should maintain tight financial discipline over the next few years to strengthen the country’s financial situation and take the country forward as the Easter Sunday bomb attacks have already taken its toll on the economy. However, he said but Sri Lanka has been able to manage the negative impact in the aftermath of the attacks.
The governor was speaking at the Sri Lanka Forward: CIMA-Acclivity-Leo Burnett Forum on Business revival post terror attacks at the CIMA auditorium yesterday.
The governor named tourism and foreign direct Investments as the two key sectors that were affected due to the blasts. “However with the toning down on adverse travel advisories by several foreign countries including China, India and Europe by this week, the negative impact seems to be getting lesser.”
He added some of the foreign families (American families) who had left soon after the attacks also are returning while other European countries too are considering toning down on adverse travel advisories. “Since this is the lean season, tourism is likely to pick up towards the last quarter of the year.”
The revenue projection from tourism was around USD 5 billion for 2019; but with the issues following Easter Sunday attacks it will come down to around USD 1.3 billion.
Similarly, the governor said, the foreign direct investment target would be around USD 700 million.
He also said the Easter Sunday attacks were carried by a group of religious extremists who wouldn’t have the support of their own community. “This is the reason that the security forces are getting the support to curb the situation and I am confident this scenario would not be repeated.”
Dr. Coomaraswamy said, the IMF extended its financial facility on May 13 and this also gives endorsement that Sri Lanka is on the right economic track.
He also said that debt servicing is on track and there are more financial mechanisms to borrow more if needed via Samurai and Panda bonds from Japan and China and also from the World Bank.
This is because Sri Lanka has very good track record as a country that has never defaulted on its foreign debt repayment. Sri Lanka once again has to think about debt servicing only in mid 2020.
The Governor also said that due to prudent measures that were taken, Sri Lanka is saving foreign exchange via the import of motor vehicles, gold and also manageable oil prices.
He however said that there would be challenges in financial front. “This is due to the highest expenditure that will need for security and also to pay compensation and earning of less revenue via Tax holidays that are offered.”
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