The ongoing bond issue, appointment of a new finance minister and other political issues in Sri Lanka won’t have a negative impact on foreign investors, said David Mann, Chief Economist, Asia, Global Research, Standard Chartered Bank.
“They consider these developments as a black cloud which disappears soon.”
He said that what the foreign investors are concerned about are good governance, carrying on the good work with regard to reforms and consistent policies laid by the government.
Mann said that they have observed that some of the top international companies who did not look at Sri Lanka before are looking at Sri Lanka now with renewed interest.
He said that the government’s plan to have more private-public partnerships too is being welcomed by the international business community.
“However the country only has two FTAs with India and Pakistan and we feel Sri Lanka must have more which in turn would help to increase exports.”
He also said Sri Lankan FDI is currently low but is expected to pick up in 2018 1Q and really accelerate in the third quarter on 2018 onwards. “The Port City project, proposed financial centre, as well the Hambantota Harbour project too would draw ‘big time’ investors to Sri Lanka,” he said.
Mann also said that they believed the government debt management direction was heading in the right way. Around US$ 900 million from the Hambantota Prot deal too would be diverted in this direction by next January.
Commenting on the latest events impacting the global outlook going into the second half of 2017, he said that the global economy is expected to pick up.
“However we feel that the enthusiasm and optimism that was seen for US President Donald Trump before the election is now fading away as people feel that promises he made before the elections are not being delivered.”
Meanwhile Saurav Anand, Economist Financial Markets, Standard Chartered, said that despite the GSP Plus advantage, Sri Lanka’s exports are yet to pick up at a healthy rate. He said that the Central Bank has brought in several meaningful steps including the increases of credit card interest rates in a bid to discourage imports.
“We also feel that the currency depreciation is at a manageable level.”
However he said that the Board of Investment’s revamping progress is taking a longer time than expected.
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