Financial Times

Lanka's FDI must double - CB Governor

By Jagdish Hathiramani

Sri Lanka must attract Rs. 2 billion in foreign direct investment, or 5% of its gross domestic product, compared to current figures which are closer to Rs. 1 billion, according to its Central Bank Governor, Ajith Nivard Cabraal. He added that, while on track to meet its estimates of 3% growth this year (a figure officially revised recently by the Central Bank to 3.5%), he believed that the economy could grow by 6% next year.

Meanwhile, he indicated that the government was currently designing programs to bring down poverty to 5%. Mr. Cabraal also pointed to the country's successful curbing of inflation, from an all time high of 18% last year to less than 10% this year, while, at the same time, touching upon the circumstances around Sri Lanka's July acquisition of a US$ 2.6 billion International Monetary Fund loan facility; he commented that the impact of delays in receiving this facility were minimized as a result of a plan being in place to temper possible "shocks" being passed down to consumers. He also indicated that the country's next hurdle would be in achieving a US$ 3,000 per capita level from Sri Lanka's current per capita income of US$ 2,014, up from US$ 1,000 in 2003; a situation which would allow the economy to "reach a new momentum".

Mr. Cabraal made these comments at the 25th anniversary convention of the country's Association of Professional Bankers which he opened in Colombo recently by saying Sri Lanka was "truly on the threshold bouncing back" and "the doors are open." He also urged the assembled group, which included the heads of Sri Lanka's major banks, to provide cheaper credit to customers while at the same time maintaining appropriate controls.

In addition, he used this venue to highlight the government's various development initiatives, from the construction of ports to power generation projects, oil exploration and the setting up of economic zones. While indicating that opportunities for growth and investment existed in sectors such as tourism, IT-BPO, gems and jewelry, agriculture, etc., he stated that the government had already sunk "large amounts of public investment" into village level development.

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