Cabraal assures biz community that good years will come!

While reassuring the commitment to maintain policy consistency, State Minister of Money & Capital Market and State Enterprise Reforms, Ajith Nivard Cabraal appealed investors and businesses community to stay on course without losing vigour and giving into short-term constraints of the on-going ‘consolidation period’ as better years are ahead. 
“This is a consolidation period. I see this as a holding period. This time is to ensure that we stay on course without losing our vigour. Make decisions, looking at the long-term, don’t constrain to the short-term. COVID-19 will be a thing in the past. 

Good years will come. You will have to hold on. During war, we have to prepare for peace and during peace, you prepare for war. In this COVID period, we need to prepare for the post COVID-19 era,” said Cabraal, who was the guest speaker at the CEO Forum titled ‘Debt Situation of Sri Lanka: What is ahead of us’, organised by CA Sri Lanka.

He highlighted that the government is holding on to the belief that private sector’s role is the engine of growth in the country as reflected by the prevailing low-interest rate regime, efforts to stabiles the rupee as well as maintaining the current tax regime.  

“We are still keeping the hope that private sector, and SMEs will drive the economy to a higher level. You must help us to help you,” he stressed.

“Can we tax the people more? I don’t think so. At this stage when you once again try to make growth to happen, do you want to put a damper? Whether we tighten our policy rates or not, it’s a call that the CB has to make. However, if we go on like this, the growth will occur. We have to maintain policy consistency,” he elaborated. 

The State Minister expects the second quarter GDP growth to jump by double digits mainly due to the low-base effect.

In order to address current shortcomings in the external account, he noted that the government is taking steps to ensure new non-debt creating foreign exchange inflows into the country as well as preparations to restart the tourism industry.

In particular, he emphasised that where and how such inflows are going to make sustainable inflows would be a key factor in addressing external account issues. 

Commenting on the efforts to restart the tourism industry battered by the pandemic, he was optimistic that the current vaccination drive would enable the country to restart tourism shortly. 
“These are all-inter connected. That’s why you see a sense of urgency in procuring and administering vaccines. It’s not an easy task, there’s huge amount of work going into that,” he added. 

Speaking on the government’s debt management strategy, he was confident that the country would be able to manage external debt servicing commitments without the assistance of an IMF programme. 

“I know what it is to go to the IMF. This time around, people are asking IMF to restructure our loans, although, we have been honouring our debt servicing commitments on time with our foreign exchange inflows,” he said. 

Further, he ruled out borrowings from foreign capital markets until the country’s GDP reaches US$100 billion.

“I think we shouldn’t borrow more from foreign sources. We might have to change within. The total debt stock shouldn’t increase until we increase our GDP to debt to US$100 billion,” he added.

Moving ahead, he urged the private sector in particular has to play its role in supporting the economy.

“Everyone is talking about what someone else should do. We are told what to do. But if you are put on the hotseat, I’m sure you won’t do things much differently. Importers need to import what’s necessary and shouldn’t make import decisions based on speculations on future rupee exchange rates,” he added.