State Minister of Money and Capital Market and State Enterprise Reforms Ajith Nivard Cabraal said he is confident that the expertise and the commitment of the President, Prime Minister, Cabinet of Ministers and other Government officials, will enable us to achieve what has been set out in the Budget. The State Minister in an interview with the Sunday Observer said they are keen to ensure that the Budget is implemented fully and that all that has been set out are achieved. We are confident that the Budget implementation will actually be quite robust so that we will derive the benefits envisaged.
State Minister Cabraal said overall we can be reasonably pleased that Sri Lanka has come out well in the Covid-19 as well as the economic management, which are important for a country like ours.
He said we are back on the recovery path and many people from the world over are remitting money to Sri Lanka. There is a 36 per cent increase in the remittances last month alone which shows a clear improvement in the rural and the industrial base. The State Minister is optimistic that the economic growth will not suffer as much as what other countries have had suffer.
Q: Since there is a global pandemic what is the outlook for the Budget?
A: We have some clear strategies and goals and wish to implement them as fast as possible. While implementing those strategies to achieve the goals, there may be a few adjustments that we need to make on a temporary basis to deal with the Covid-19 situation.
But our overall goals have not changed, and we will be pursuing them notwithstanding the Covid-19 pandemic. That is the way we will approach it.
Q: Does the Government offer new incentives to boost the export market?
A: We have already done the most important thing. We have maintained the rupee at a favourable level. We have brought down interest rates to manageable numbers. We have improved port facilities as well as port activities. We have brought in some innovation as well as automation at the Customs.
All those facilities that support the overall export industry have been undertaken. At the same time, we are ensuring the logistical arrangements to bring cargo in and to take cargo out. They have been improved in the Customs and the Ports. Therefore, we are confident that the export sector will do well thereby improving economic growth.
Q: The local manufacturers are reeling under the impact of the Covid-19 pandemic. Has the Government launched a ‘bailout’ package?
A: We have already given the local industrialists a debt moratorium which we have worked out through the banks. We have given them a tax reduction. Almost all the sectors in the country have been given a tax reduction, and we have given an interest rate reduction. These are the things that the people have been asking for. Of course, there has been some closure to certain periods.
That is actually a temporary phenomenon. Other than tourism which has faced some setbacks, all the other industries are bouncing back. If you study some of the companies listed in the Stock Exchange almost all of them have shown very good results in the third quarter, and the fourth quarter is also showing some improved results.
Hence, I think we are very well back on the recovery path and many people from all over the world are remitting money to Sri Lanka. The remittances have improved quite significantly.
About 36 percent improvement in the remittances in the last month alone shows that the rural base as well as the industrial base has been improving on a basis that has been fairly clear. So I am optimistic that the economic growth will not suffer as much as what other countries have had to face.
Q: The Central Bank appears to have deviated from the traditional role and begun to introduce aid packages to the affected businessmen. Could you elaborate on this?
A: The Central Bank also has to be flexible to ensure that the economic growth as well as the transition of funds in the entire system is improved. In a situation where there is some disturbance, interruption or difficulty, the Central Bank must come to the forefront to provide support.
This is nothing unusual because if you remember the time when I was the Central Bank Governor we carried out many innovations to ensure that business continues to operate and move. This is the right attitude to take and we are doing that. Interest rates have been kept low to stimulate the economy and I believe we are on the right track to provide those facilities to industrialists.
The Central Bank has been guaranteeing certain loans with the reimbursement of certain funds that have been transmitted by the banks. These are important to maintain growth at reasonable levels. I believe in the next few weeks and months, we will continue to see results and we will hopefully get over this situation with less pain than we originally thought we would have to suffer.
Q: Is the Budget going to be development oriented and if so what are its priorities?
A: Several priorities will be identified in the Budget. One is the water based project. We wish to ensure that the people in the country enjoy pipe borne water in the future. As we know about 42 or 43 per cent of the people have pipe borne water, and we want it to reach at least 95 per cent of the population.
If you remember, during the tenure of President Mahinda Rajapaksa, the country had only 70 per cent coverage in electricity but the Government was able to increase electricity coverage up to 99 per cent.
Similarly, water will be a priority for this Government. We will also be looking at 100,000 kilometres of road projects which again will have a lot of support from the Government.
The Government will also address the human- elephant conflict to ensure that the people in about 14 districts who are suffering from that conflict will be given support. Sometimes the elephants attack human beings and human beings attack the elephants.
Due to this conflict we see a lot of economic activity being stalled. Children are unable to go to schools and people have to stop work and leave for their homes by 5 pm. Such issues crop up because of the human-elephant conflict. So we need to address this matter as well.
Also, we have to encourage Foreign Direct Investments (FDIs) to the country. We are arranging new pockets of sources to which the FDIs should flow in. One is the Port City.
The second is port related activities and the third, the farmer industry where we have already allocated 400 acres of lands. We are also promoting the improvement of educational and health facilities.
Hence, there are vast numbers of new ventures that will be promoted to ensure that the people will make these investments. It will be an investment driven budget. At the same time, the Government has about 289 projects which are presently ongoing, each over billions of rupees.
It is another area where we would concentrate to ensure that those projects are completed as fast as possible to ensure that the growth momentum is maintained. These are all avenues open to the Government and the country which we will promote. We also wish to ensure that the macro fundamentals remain stable.
That is, the rupee to be stable and interest rates to be stable at lower rates. We have to ensure that the reserves build up. We want to see that unemployment is kept in check. All these will be helpful to take the country forward in the next five years.
Q: Instead of going for a total lockdown, the Government has resumed business activities while controlling the Covid-19. Could you explain the new system?
A: I think that is what is important. When you lock down a country or a vast geographical area, you find that the economic factors suffer immensely. Many countries are beginning to understand this and are moving to a situation where it is a partial lockdown for a limited period of time of limited areas which have concentrations of Covid-19.
Sri Lanka is following that. I think it is an excellent way to deal with this situation because we have to have a reasonable balance between the management of Covid-19 from the perspective of health conditions while ensuring that the people have the space and the ability to continue with their economic activities and their livelihood. It is maintaining a delicate balance as instructed by the Government.
We have to ensure that health regulations and health conditions are adhered to while at the same time allowing people to do their businesses, attend to their employment and continue with their economic activities. That is important for the country to move forward and also have the resources to fight this disease.
Q: Is there any truth in the Opposition allegation that the Government has not properly handled the second wave of Covid-19?
A: It is natural for the Opposition to make such allegations. Actually, if the Opposition was in Government, there would not have been a second wave of Covid-19 because the first wave would have probably finished us all off.
They are now talking about a second wave. Had they been in office we would have been in a real mess because we know how badly they have been handling other issues, let alone Covid-19 which is of a huge magnitude. However, we have maintained a delicate balance between the two.
We have dealt with the Covid-19 situation and at the same time ensured that the economy also moves. So that a balance has been struck carefully and the Government is moving forward. We have got a few more patients than we had in the past.
But the number of people who are recovering and discharged from hospitals are also increasing rapidly. Unfortunately, we have had some deaths which we had to face. However, those numbers are much less in terms of the percentage that some affluent countries have had to suffer. I think the health authorities have done an excellent job. The support staff of the Security Forces and the Police have also done their duty in the tracing of Covid-19 suspected patients and treating them. The quarantine system too has worked very well. Most of the patients were those who came from abroad.
Therefore, we can see the community spread that the Opposition is talking about is not as widespread as what they had been making out. I think overall we can be reasonably pleased that Sri Lanka has come out well in this Covid-19 management as well as economic management both of which are important for the country.
Q: Are there any special measures in place to protect the garment industry and ensure its smooth functioning as a major foreign exchange earner?
A: All industries have been given the space to continue with their activities. Not only the industries, but the agriculture and services sector too have been provided with the space to develop their own methods to be able to continue with their businesses.
So working from home, working with the proper protective gear, making sure that meetings are held in an atmosphere where the transmission is limited are all carefully handled by the Government and guidelines have been issued to ensure that the spread of the Coronavirus is controlled as much as possible. We have to appreciate the fact that the results have been comparatively good and it is an indication of the way that the Government has handled this situation.
Q: A Budget is a development initiative. Will the current global economic stagnation have its constraints on the Budget implementation?
A: There would always be challenges. But the implementation of the Budget is mainly a function of the commitment that we have to ensure that the Budget is implemented. Someone has to follow up.
That is the important part of the philosophy of implementing any Budget or for that matter any action. I think we are working well in the management techniques. We have been in the forefront of many challenging tasks in the past. I am confident that with the expertise and the commitment of the President, the Prime Minister, the Cabinet of Ministers and other Government officials, we will be able to achieve what has been set out in the Budget. We are keen to ensure that the Budget is implemented well and that all that has been set out are achieved.
One of the functions of my Ministry is project monitoring. As I said before, we have about 289 projects in progress. We will be following those projects carefully to ensure that they are implemented on time. We have already started working on these projects. We are confident that the Budget implementation will be robust and the people will derive the benefits that are envisaged.