Exporters will laud the move to depreciate the Sri Lankan rupee by 3 %, since this will improve their competitiveness in the international market considering the recent depreciation in currencies which took place in regional countries such as India, said Mangala Perera, Chief Operating Officer, C.W. Mackie PLC/ Scan Products in a statement.
“However, we should also be cautious of the short term impact of the rupee depreciation in terms of increased import prices creating inflationary pressure in the economy,” he added.
The high import reliance on basic commodities such as crude oil, wheat flour etc. will undoubtedly have a negative impact on the expanding trade deficit as well, he said adding that when considering the FMCG sector, there will be an increase in price levels as most of the raw materials and finished products are imported items. However, this effect will be temporary, as the market will adjust to the new exchange rate levels in the short to medium term.
He said it’s noteworthy to mention numerous incentives given to encourage the SME sector, such as, opening up special bank branches in all districts to primarily cater to the SME sector, new tax holiday periods, increasing the income threshold limit for payment of ESC, exemption of selected SMEs from NBT etc. These incentives demonstrate the government’s continued commitment towards encouraging and promoting local entrepreneurs and manufacturers, which is a very positive development.