Siyambalapitiya outlines positive economic reforms transforming financial landscape

Acting Finance Minister Ranjith Siyambalapitiya revealed a remarkable turnaround in Sri Lanka’s economic outlook during a press conference held at the Presidential Media Centre on Thursday.

He outlined a series of bold measures that have led to a notable decrease in inflation, a surge in foreign reserves, and a historic shift in the primary account balance.

“Just a year ago, Sri Lanka grappled with a staggering inflation rate of 66.7%. However, under President Ranil Wickremesinghe’s resolute economic reform agenda, inflation has dramatically plummeted to 4.6%. This remarkable feat signifies a stable economic climate crucial for sustainable growth,” he added.

Siyambalapitiya said one of the most striking achievements has been the increase in foreign reserves, which surged from $ 1.8 billion to an impressive $ 3.8 billion over the past year. “This boost reflects a steady improvement in the country’s financial standing and bolsters confidence in country’s economic prospects,” he added.

He also explained that the exchange rate has undergone a significant transformation, standing at Rs. 361 per dollar in August 2022, and now resting at Rs. 321 per dollar in August 2023. The Minister attributed this shift to the natural dynamics of supply and demand, underscoring the rupee’s resilience in the face of economic fluctuations

Interest rates have also witnessed a favourable adjustment, with deposit rates lowering from 14 % to 11%, and loan interest rates decreasing from 15.5% to 12%. These changes are anticipated to stimulate investment and financial activities, further bolstering the economy.

Siyambalapitiya said the primary account balance, which previously stood at a deficit of Rs. 247 billion, has remarkably turned into a surplus of Rs. 27 billion. This surplus, the first of its kind in over four decades, underscores the transformative impact of the government’s economic policies.

Noting tourism as a vital sector for Sri Lanka’s economy, he said it has seen a resurgence, with tourist arrivals soaring from 496,430 in 2022 to a staggering 904,318 in the first two quarters of 2023. “The surge is mirrored in tourism earnings, which have risen from $ 832.6 million to $ 1,304.5 million during the same period, indicating a substantial 56.7% YoY increase.

Additionally, remittances from expatriate abroad have witnessed an extraordinary increase from $ 2,214.8 million to an astounding $ 3,862.7 million, demonstrating a remarkable 74.4% increase.

Siyambalapitiya said the lifting of the QR code system on 1 September 2023 has further contributed to the country’s economic resurgence. The system, initially introduced to manage petroleum demand, led to notable disparities in supply and demand, resulting in increased consumption of diesel and petrol. Its removal is expected to pave the way for unimpeded economic growth.

“President Wickremesinghe’s tenure began with the challenge of a 14-hour power outage that directly impacted the economy. Presently, the Government ensures a seamless and stable supply of electricity, ensuring a conducive environment for economic activities,” he pointed out.