Sri Lanka's exports to Asia is low, even relative to those of other countries, according to the International Monetary Fund's Asia Pacific Director, Anoop Singh.
Further, alluding to the fact that the country's exports focused on USA and Europe to the tune of 59% of all exports and that the current recession was the most severe the world has seen since the 1930's great depression, and especially impacted USA and Europe; he suggested that Sri Lanka look to the still growing Asian economies to rebuild the nation's export share back to where it was 10 years ago. He also spoke of the need for export diversification beyond tea, garments and industrial products, which encompass the major component of current exports.
Mr. Singh also noted that, although local foreign currency reserves were ‘healthy’, when looked at in relation to short term debt, better recovery could be achieved. He also indicated that, compared to other emerging nations, local reserves were ‘much lower’.
In the same vein, he added that, while inflation and interest rates have gone down ‘significantly’, when they were considered in relation to other emerging countries, there was room for ‘inflation to fall further in Sri Lanka and interest rates to lower as well’.
He also opined that the local economy was ‘rebounding’ as a result of growth in private sector credit, saying that ‘compared with other emerging economies Sri Lanka’s economic recovery and private sector credit growth is significant’.
According to Mr. Singh, even though the country's budget deficit is in excess of those in other emerging nations as indicated by the debt to Gross Domestic Product (GDP) ratio, which is in excess of 80 %; Sri Lanka's fiscal policy was ‘turning around’ with significant reductions in the budget deficit already planned for 2011 and 2012, when the budget deficit was expected to reach 5% of GDP. However, he also suggested that further emphasis be placed on bringing down the debt to GDP ratio.
Mr. Singh, on a visit to Sri Lanka, made these remarks on the evening of January 28 at the Centre for Banking Studies in Rajagiriya, at the fifth in the series of year-long public lectures commemorating the 60th anniversary of the Central Bank of Sri Lanka where he was the featured speaker.