Economic slowdown, a temporary phase - Treasury Secretary | Sunday Observer

Economic slowdown, a temporary phase - Treasury Secretary

31 May, 2020
S.R. Attygalle

 Covid-19 induced economic slowdown will be a short-lived scenario as the third and fourth quarter will record a growth between 2.5 to 3 percent providing some impetus to the economy to take off next year, said Secretary to the Treasury, S.R. Attygalle, responding to remarks made by United National Party Leader Ranil Wickremesinghe who urged the Government last week to expose the real state of the economy and how it plans to service the burgeoning external debt.

“We are optimistic that the third and final quarters will show positive growth backed by a revival in agriculture and industrial activities, the key pillars of the economy,” Attygalle said.

The weather is turning out to be favourable for all agricultural activities, exports of crops such as tea are said to be regaining markets with better prices and industrial activities will resume soon  contributing to an early recovery of the economy,” the Treasury Secretary said, adding that there is no issue with the servicing of debt as all outstanding debt to-date have been settled and those coming up would be settled on time.

The UNP Leader called upon the Government to tell the public as to how it plans to service debts without impacting the lifestyle of the people and exerting further pressure on the economy.

In his statement, the former Prime Minister said, “From now until 2023, Sri Lanka has debt servicing of up to US $10 billion. This year alone Sri Lanka has to pay US $3 billion in debts, and on a single day in October the country has to pay US $1 billion.

He said the debt to GDP which was around 87 percent last year would go up to 93 percent this year and 100 percent next year.

“We have not only paid the debts but also paid salaries of public sector employees, pensions, made Samurdhi payments and interest without any delay,” Attygalle said.

He said there had been a dip in growth since March this year but things are improving gradually and certainly there won’t be a negative growth this year as speculated by some.

“Agriculture recorded satisfactory growth in the first quarter though there was a dip in the second quarter,” the Treasury Secretary said, adding that the Government has not permitted large sums of money to be printed  as alleged by some.

He said only a small percentage of money has been printed and that is insignificant compared to money printed by other countries.

“What has been borrowed this year is to pay debts which will not result in an increase in the debt stock. Anyone can hold a view about the debt to GDP which was high even during the former regime. Japan had a debt to GDP of 175 percent,” Attygalle said.

He said the BOI has resumed about 90 percent of its operations and we see orders coming to factories.

However, noting that it is not going to be rosy for the economy with exports, remittances, and earnings from tourism expected to take a dive further this year, he said the Government has commenced discussions with multilateral donors for a moratorium on repayment of loans.

On the path to economic revival, he said the manufacturing and export sectors must think out of the box to come up with products that will go with the time and needs of the buyers such as healthcare goods. The tourism industry could consider ‘quarantine tourism’ and focus on wellness tourism.He said orders for rubber gloves are up to maximum capacity for the rest of the year and added that if plan ‘A’ does not work we must go for plan ‘B’ which is in demand.