Friday 10th October 2014
By Chaminda Perera
- Set to exceed US$ 4,000 next year
- Single digit inflation for last 16 months
The country will surpass the US$ 4,000 per capita income mark next year, Central Bank Governor Ajith Nivard Cabraal said.
"By 2016, we will come closer to a per capita income of US$ 5,000," he said.
He said the Gross Domestic Product growth of the country is 7.8 percent. " Inflation has been in the single digit for the past 16 months which Sri Lanka is not used to," he said. The CB Governor noted that the country will enjoy a low inflation rate and maintain same in the future too.
He added that the government is targeting Foreign Direct Investments amounting to US$ 2 billion. "If we had a target of US$ 200 million, that was deemed fantastic eight years ago. The numbers are different from what we aspired for eight years back," he said. Cabraal said Sri Lanka has moved from a vicious cycle economy to a virtuous cycle which is an important element in the macro economic management. He said the country's economy has shown the highest growth continuously for the past few years since the liberalisation of the economy.
"Sri Lanka was moved from a vicious cycle that we were trapped in for nearly five decades to a virtuous cycle which is an important element in the macro management," he said.
The Central Bank Governor said the administrators and other stakeholders in the economy are striving to preserve this virtuous cycle. "We have a great need and commitment to maintaining this virtuous cycle," he said. He said it was President Mahinda Rajapaksa who wants to set higher targets in terms of the per capita income of the country.
"He wants to promote the per capita income of US$ 1,200 in 2006 to 4,000 by 2016.The President wants us to be completely different from where we were in 2006 by 2016 (from 1,200 to 4,000). It was a challenge for the country's economic planners," he said.
Addressing the Capital Market Conference 2014 organized by the Security Exchange Commission of Sri Lanka, the Governor said that the Central Bank was able to create a new mindset in the people that they could look forward to better economic times.
President Mahinda Rajapaksa inaugurated this conference in Colombo yesterday.
"When we started the new wave of development in the country in 2006, there were many who believed that these ambitious plans that was being unfolded would not be realized", he said He said that these dreams have come true and Sri Lanka has make tremendous achievements in almost all sectors of the economy. "Our macro fundamentals keep pace and propels the new wave of development," he said. "We stressed the need for a new set of macro fundamentals eight years ago . It was challenging at the beginning . I believe that we have been able to achieve progress. The Governor said that the public debt is coming down. The public debt which was 91 per cent in 2006 will come down to 75 per cent at end of this year. "Sri Lanka stands out as a key performer in all capital markets in the region. It has had the best performance since the end of the conflict. The post conflict stock market performance is also strong," he said. The Governor added that plans have already been formulated to make the country's economy more robust to achieve a per capita income of US$ 7500 by 2020. "We would have GDP of 150 billion dollars by 2020 where we will have a per capita income of 7,500 US$. The economic growth average is expected to reach an average of 8 per cent in 2020. Inflation is to be maintained a little below the present level and poverty 3 per cent in 2018, he said. Earlier, the Governor also fielded questions on Twitter. How do you justify the commercial loans obtained by govt. at higher interest rates for development projects?
Govt. is now borrowing at much lower rates than in the past, due to the improving conditions. What will be the inflation and GDP in the next five years. What are the industries you think we need to tap more?
By 2020, GDP would reach US$ 150 bn., and inflation would be about 4% and Five hubs would play a vital role. Lankan accumulated debt represents 589% of the government revenue - IMF and Moody's report, what is your view? What is important is debt sustainability and the Sri Lankan debt is sustainable.
Any expected impact towards consumption in medium term due to working age population expected to decrease?
This impact would be well compensated by the higher incomes.
The IMF came out with a report last week that said SL's public debt is too high. How concerned are you with this?
Our public debt is reducing as a percentage of GDP. That means we are on the right track.
"Every Sri Lankan owes debt (Public Debt) more than their per capita income" how do you see that?
That was true in 2002 and 2003. Our debt to GDP levels have been brought down from 105% in 2002 to 75% by 2014.
Recently at a meeting you said by 2020 SL will have a per capita income of $7500 - what would rural Sri Lankans get by 2020?
The incomes of rural Sri Lankans would also increase significantly from what it is today. Policy measures are in place.
Improving infrastructure and capacity building itself will not generate technology innovations. What else are you doing?
Without capacity building technology innovations won't take place. Hence, it is vital that we continue this process.
From: Daily News. http://www.dailynews.lk/?q=local/capita-plus-plus#sthash.cPsnEb32.dpuf
