Impact on tourism inevitable; short-term hit on FDI and portfolio investments expected: Mangala

Mangala Samaraweera

Finance Minister Mangala Samaraweera says that the impact on the tourism industry from the Easter Sunday bombing would be inevitable while a dent in foreign direct investment (FDI) and portfolio investment are also anticipated in the short term.

Addressing Parliament yesterday, Samaraweera stated that there would be an impact on the tourism sector even though the country is in off-peak at the moment and the government will discuss the measures to be taken with the industry stakeholders to revive the industry.

“Our tourist industry has had long experience of protecting our visitors even through a 30-year war and there is no doubt the sector will bounce back. We have taken significant measures to support tourism through policy interventions in the budget and also outside of the budget, such as the visa waiver. We will discuss with the industry to identify further measures to support them through this challenging period,” he elaborated.

Meanwhile, the minister urged the investors to focus on the country’s sound macroeconomic fundamentals when making their decisions.

“We could also see some stresses in FDI and portfolio investment in the short term. In both instances, I urge the investors to focus on the macroeconomic fundamentals, which are, as I have outlined, very sound. Sri Lanka’s investment proposition remains very compelling,” he said.

Samaraweera noted that the country’s economy was on a steady path of recovery, following a series of natural disasters in the form of droughts and floods in 2016/2017 and a man-made disaster, the political crisis of 2018.

He highlighted that the country’s inflation was brought down to 2.9 percent by last month while the trade deficit declined to its lowest level in over five years in February, supporting the rupee to become the third best performing currency in the 
world in 2019.

Hence, he insisted that the government was succeeded in stabilising the country’s economy, prior to the incident.

“We have taken proactive measures to refinance the external debt in the first quarter of this year and have already completed large external debt repayments in January and April.

Our foreign reserves stand at US $ 7.7 billion – covering over four months of import requirements. Interest rates have declined by over 100 basis points this year as fiscal consolidation delivered results with a 0.6 percent primary budget surplus in 2018,” he added.