|
Lanka’s
financial system resilient to global shocks
Dr.
Amunugama tells WB, IMF annual meetings in Washington
 Investment
Promotion and Enterprise Development Minister Dr. Sarath
Amunugama who is representing Finance Minister Mahinda
Rajapakse at the annual meetings of the World Bank and
the IMF in Washington DC has declared that the Sri Lanka’s
financial system has shown strong resilience to adverse
global developments.
“Sri Lanka’s financial system has shown strong
resilience to adverse global developments. With the
implementation of Basel II in 2008, the regulatory framework
of banks has been further strengthened,” Minister
Amunugama told the meeting on Monday.
He
said that the comprehensive development programs that
has been launched by the government to address the key
constraints for more equitable growth has already raised
the GDP growth rate to a satisfactory level of around
6.5 percent compared to the historical average of around
4.5 percent in the past.
“There has been a sharp reduction in unemployment.
Our growth momentum is expected to continue and register
around 7 percent in 2008, particularly benefiting from
improved performance in the agriculture sector. The
poverty indicators as well as many other indicators
relating to MDGs in Sri Lanka have shown remarkable
progress in recent years and we need to sustain these
achievements. My country has achieved most of the MDG
goals. We are pleased that the World Bank has already
committed US$ 900 million through the new country Assistance
Strategy,” Minister said.
In his speech as Governor of Sri Lanka of both WB and
IMF at the annual discussion, the Minister had said
that current economic crisis has many dimensions, including
the bursting of the housing bubble, high energy costs
and food prices, large macro-economic imbalances among
major players in the world economy, regulatory and supervisory
failures and the weaknesses of our early warning systems.
Although the latest financial market turmoil began in
advanced financial markets, the contagion of this crisis
will not be confined to the boundaries of developed
countries. Due to the increased economic interdependency
among nations through trade, investment and sophisticated
capital markets, it is clear likely that many countries
will have to go through a difficult period in the near
future.
“In that context, we believe that the IMF and the
World Bank has an important role to play to safeguard
global financial system stability and help maintain
a sustainable level of development. At the country level
all possible options should be explored to minimize
the adverse consequences,” he said.
In this regard Dr. Amunugama pointed out that a balanced
approach of monetary, fiscal and other policies to help
maintain productive investment is required. These policies
need to be assisted by sufficient flexibility on the
part of the Fund and the Bank to help those countries
that may need urgent liquidity support and development
assistance at this stage.
“We take positive note of the progressive steps
taken by the management of the IMF and the World Bank
particularly in regard to its reforms and new development
financing initiatives. We cannot stress enough the importance
of a contingent liquidity support facility for emerging
economies. Similarly, we are confident that the issues
relating to quota reforms of the World Bank group will
be resolved taking into consideration the claims of
developing and emerging market countries who are under
represented in the current quota structure,” Dr.
Amunugama said.
In his comments on how Sri Lanka has faced the global
crisis as well as the country’s recent macro economic
performance, the Minister said given the high degree
of openness of Sri Lankan economy the country by no
means an exception to the pattern of its peers in the
developing world.
“Sri
Lanka is a net importer of commodities particularly
oil. Our recent gains from commodity exports have been
more than absorbed by the sharply increased cost of
oil bill which showed a three fold increase within a
matter of two years. High food and energy costs have
been the main cause of high inflation in the country.
Thanks to the tight monetary policy measures taken and
good harvests, inflation which reached a peak a few
months ago is now on the decline. A drop in oil prices
to a reasonable level would be a great advantage,”
he added.
Despite these challenges, Dr. Amunugama stressed that
the financial system has remained resilient and went
on to explain some of the achievements.
The Minister in his speech also wished that through
the concerted efforts by all parties, particularly the
key players in the global, the world will be able to
recover form this crisis and continue the effort to
give a better life for its people.
Minister
holds bilateral talks
On the sidelines of these meetings, Dr Sarath Amunuguama
was scheduled to have bi-lateral discussions with the
Finance Ministers of India, China, Iran, Saudi Arabia,
Vietnam and the EU countries.
A special session of the SAARC Finance Ministers’
Meeting was also held chaired by Dr Amunugama since
Sri Lanka is now the Chairman of SAARC. At this meeting,
many issues regarding both global and regional development
were discussed.
This meeting also reviewed the aid architecture for
Sri Lanka which will be unveiled in the forthcoming
Budget.
Dr. Amunugama led the Lankan delegation to WB IMF meetings
which included Nivard Cabraal, Governor of the Central
Bank, Dr Ranee Jayamaha, Deputy Governor of the Central
Bank, R A Jayatissa, Deputy Secretary to the Treasury
and Dr P N Weerasinghe of the Central Bank.
|
