Economic development won’t be compromised whilst fighting terror – President

By Indika Sakalasooriya
The country’s economic goals will not be negotiated on the face of terrorism or any other impediment, and the key infrastructure projects that have been planned and already started will take place on schedule, President Mahinda Rajapaksa averred during the customary presentation of the Central Bank Annual Report to the Finance Minister by the CB Governor, at the CB premises, yesterday.

President Rajapaksa, who is also the Finance Minister, said that the government is doing its best to ensure the continuation of the GSP + concessionary scheme on exports to the European Union. However he emphasiSed that the motive of getting the GSP + will never compromise the independence and the sovereignty of the country. He further said that if we do not get the tax concessions from the EU in the future due to the actions of various parties who want the country to lose GSP +, the country’s private sector should be equipped to handle the circumstances by improving efficiency and productivity.
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Commenting on some of the statistics presented in the 2007 annual report, Rajapaksa remarked that although the country has maintained a fairly good growth around 6 percent during the last three years, there are parties who still claim that the economy is collapsing.

“In 2007 the poverty levels of the country has come down to 15 percent from 23 percent in 2002. There are three power plants and a few ports in key locations in the country are coming up. In addition the infrastructure of the country is being developed at a rapid pace. Knowing all that I don’t know how one can say the economy is going down” he questioned.

According to the 2007 CB Annual Report, the Sri Lankan economy has recorded a growth of well above 6 per cent for the third consecutive year, for the first time since independence, demonstrating that Sri Lanka has now moved on to a higher growth path of above 6 per cent per annum from an average of around 4-5 per cent.

It also states that the country’s economy grew by 6.8 per cent in 2007, the annual average rate of unemployment reached its lowest ever recorded level of 6.0 per cent, while the per capita income rose further to US dollars 1,617 in 2007.

The economic growth in 2007 was mainly driven by the performance in industry and services sectors which grew by 7.6 per cent and 7.1 per cent, respectively, while the agriculture sector grew moderately by 3.3 per cent.

“This can be regarded a remarkable achievement in the presence of terrorism and global high oil and food prices” CB Governor Nivard Cabraal said.

He also pointed out that although the headline inflation of the country has reached above 20 percent, the core inflation remains around 8 percent.

“Presently the whole world is experiencing high inflation scenarios mainly due to the towering oil and food prices. Amidst all these external shocks plus war, we are considerably good to maintain core inflation around 8 percent”

Talking of the future challenges, Cabraal said that maintenance of the growth momentum and keeping of inflation to moderate levels are the key challenges the country will face in 2008. He also hinted that the tightening monetary policy the CB has been following in 2007 will also continue in 2008, though there may be a gradual reduction in interest rates.