More adjustments for stability on the way: CB Chief

Tuesday, 31 July 2012 02:09 - - {{hitsCtrl.values.hits}}

By Cheranka Mendis

Noting that the year 2012 has seen a number of adjustments in the economy, Central Bank Governor Ajith Nivard Cabraal on Friday said more were on the way.

“We did see rupee depreciation as well as changes in the interest rates, which brought in an overall barrier as far as credit growth is concerned. However, these were all put in place to ensure that growth is stable and sustainable. You will see adjustments taking place this year; some have taken place already and there is a little more to come,” Cabraal said, addressing the 42nd AGM of Sri Lanka Shippers’ Council.

“However, these will place us on a sound macro footing going forward from 2013 onwards. Sometimes you need to take measures to slow down in order to go faster later on.”

Assuring that all changes had been made to ensure an easy business environment for local as well as foreign investors and businessmen, he noted that the industries that would spur growth over the next few years would be port activities, airports, power sector, telecommunication and banking.

“One of the most significant features we have been able to deliver to you as a Government and as the Central Bank is that we were able to maintain inflation at single digit numbers for the past 42 months, the longest-ever period to remain at a single digit. Measures have been taken to sustain this,” he said.

The Government has cooperated in creating a sound business environment by bringing down the fiscal deficit to 6.9%, and further committing to bring it down to 6.2% this year. Debt to GDP ratio has also reduced to a point below 80%. Infrastructure development and rural electrification is also underway.

“Confidence in the country is rising,” he said, speaking of the current bond issues which fetched US$ 1 billion, a 12.5% increase from the country’s largest share offering (US$ 80 million). “Investors have Sri Lanka on their radar, which is why our bond issue was oversubscribed to US$ 10 billion within 12 hours.”