Sri Lanka’s economy is unlikely to be adversely affected by the earthquake and tsunami in Japan except in debt-related issues and possibly a dip in foreign loans and aid, the Central Bank and economists said.
Central Bank Governor Ajith Nivard Cabraal said there was little exposure in key sectors with Japan and any impact, if at all there was one, would be in the country’s debt position.
“Some 1/3rd of Sri Lanka’s loans are in Japanese yen (currency). The yen has been appreciating over the years against the US dollar and that means we are paying more rupees on our loans whenever that happens. Now there is a feeling (in global markets) that there could be a blip (depreciation) of the yen at least temporarily and if that happens, it would be some benefit to our debt servicing,” he said.
According to the Central Bank’s last 2009 annual report, Japan was the highest lender with US$ 295 million for major projects in Sri Lanka with China a close second with US$ 291 million worth of loans.
Institute of Policy Studies (IPS) Executive Director Saman Kelegama said, however that Japan was Sri Lanka's
biggest lender and with that country having to re-direct its financial resources for post-tsunami reconstruction work, it might reduce its quantum of loans to countries like Sri Lanka.
Veteran Japanese second-hand car dealer Berty Widanagamage said the car market was also unaffected and a shipment that was due to leave a Tokyo port on Tuesday, March 15 for Colombo was so far on schedule. “I spoke to them (agents in Tokyo) yesterday and there was no indication of any change in this schedule. Vehicle auctions are also continuing as usual on the Internet and also buyers being physically present there,” he said.