Govt unity averts major economic impact | Sunday Observer

Govt unity averts major economic impact

Sri Lanka’s economic analysts last week hailed the final prevalence of sanity after a 10-day tumultuous period, riddled with political uncertainty, triggering a minor adverse impact on the economy.

“The panic created that was totally unwarranted. In retrospect, although there was an adverse chain reaction, I would say thankfully there was no major economic impact since the uncertainty lasted only for a short period,” Economist, Ravi Abeysuriya told the Sunday Observer.

He pointed out that the confirmation from all three party leaders from the Unity government on Wednesday that the government’s ‘status quo’ would remain, played out as a huge sigh of relief, with a seal of assurance that the stability is intact.

“From the business community’s point of view, the confirmation of continuity of the coalition government in Parliament bodes well for the economy given that there is an assurance of political stability going forward,” Abeysuriya asserted.

Reiterating that the need of the hour is political and economic stability, he said that the business community had been extremely concerned that any change in policy consistency would have had a damaging impact at this hour.

“There are a lot of good things that have happened and are going on which include the legislation to replace many archaic Acts such as the SEC Act in Parliament. So it is very important for the country to continue its upgrade to global standards and implement newer thinking,” he pointed out.

According to analysts, while the economic fall-out from the political situation in the immediate aftermath of the election caused the Rupee to take a steep fall against the US Dollar and some other major currencies, the edging up of interest rates in the Treasury Bond markets and the creation of economic uncertainty for potential long term investors were major causes for concern.

Meanwhile, a top investment analyst opined that the economy has stabilised since the installation of the new Central Bank Governor and the new Minister and Deputy Finance Minister.

He said that it would have been a tragedy for the economy if the country ruins the economic prospects that will trickle down over the next two years with short-term political frenzy.

“There has been lot of hard work to bring out professionalism in the Finance Ministry and the Central Bank. The rewards are already apparent in the declining interest rates during the past one year or so,” the analyst who did not wish to be quoted said.