Time for exporters to deliver: Cabraal

By Uditha Jayasinghe

The detriments of depreciation must be countered by aggressive growth in exports, the Central Bank Governor said yesterday, insisting that impediments to the industry had been removed by the latest Budget.

Speaking for the first time at a 2012 Budget seminar, which was organised by BDO, Central Bank Governor Ajith Nivaard Cabraal pointed out that the time had come for exporters to deliver.

Commending exporters for being productive, he said that exports had increased 20.8% in 2011 on top of 16% growth being recorded in 2010. This is the largest increase in 20 years, he emphasised.

However, due to the depreciation, public debt will increase by Rs. 74 billion and oil bill by Rs. 11 billion in 2012, he remarked, insisting that other sections were paying for the depreciation.

“It is fair now to ask exporters to deliver. People must ask exporters to increase their exports by 33% and hit US$ 14 billion, tourism US$ 1.5 billion and remittances US$ 6 billion. Earlier we never asked anything for return, but now exporters must realise that they have an obligation that they must factor in to their own equations and work towards that.”

Cabraal stressed that depreciation would not continue to be decided by the Budget, but expressed positive sentiments as the move had provided “clarity” to monetary policy.

Insisting that it is time for a broader perspective on the Budget, Cabraal admitted that different views had been expressed regarding the Budget, but noted that the focus had remained on long-term growth.

“People who are stable don’t appreciate their stability. Regional security and food security must be focused on by the Government. We are hoping to reduce debt as a ratio of GDP to 79 per cent this year. This is notable at a time when some countries in the world are looking at 120% of debt as a percentage of GDP.”

He called on the private sector to keep a “positive sentiment” and warned that their detrimental comments could damage them, adding that “then they run to the Government for solutions”.

Banking assets doubling during the next five years is essential to maintain 8% growth, he stated, adding that instruments for growth had been put in place.

“Supporting poverty reduction is important. Sri Lanka has had one of the fastest reduction levels and we will bring it down to 3% within the next three to four years. When we move to be a US$ 100 billion country, we must stop looking for handouts; we must have a ‘can do’ attitude. I had one person tell that we must not compete with Australia. Does that mean we must also not play cricket against them? If their per capita income is 20 times ours, does that mean we should have 20 times as many players in our team? This sense of inferiority must end.”

“Do not be dependent on concessions, nothing is free to everyone,” he said, calling on people to remember that what is given for free is paid for by someone else. A concession for exporters means that someone else is paying for it, he pointed out, but assured balance support would be given.

“We are giving them Free Trade Zones, 14 internal airports and highways. These are not for farmers, it is for the private sector, for the same reason we give fertiliser subsidies to farmers so that the food security of the country is assured. I have never heard a farmer begrudge tax concessions to exporters. So please understand that everyone must get help and one industry is not greater than the next.”

Better infrastructure including roads and power as well as tax concessions will fuel growth. From 2005-2011 the exchange rate depreciated 1.1 times and inflation has been at an average of 7%, which is without concessions, he said.