The Investor Sentiment - Equity and investments forum for Sri Lankans
The Investor Sentiment - Equity and investments forum for Sri Lankans
Would you like to react to this message? Create an account in a few clicks or log in to continue.
Please send an email to contact.lankaninvestor@gmail.com if you face any technical difficulties when posting
Search
Display results as :
Advanced Search
Latest topics
HAYC - HaycarbMon Oct 26, 2020 9:58 amsubash
Plantation Sector UpdatesTue Oct 20, 2020 3:11 pmslstock
LWL.N0000 (Lanka Walltiles PLC)Fri Oct 16, 2020 12:50 amsubash
CSE Daylight Robbery !Mon Sep 21, 2020 9:54 pmYin-Yang
Trading Journal Tue Sep 15, 2020 10:37 pmThe Invisible
AEL Access EngineeringTue Sep 15, 2020 7:24 pmsmallville
CFVF - First CapitalWed Sep 09, 2020 9:42 pmWonderer
අනං මනං! #/+?.<>Tue Aug 18, 2020 11:15 pmYin-Yang
Dividend AnnouncementsMon Aug 17, 2020 1:27 pmRana
Ceylon Tobacco CTCSun Aug 16, 2020 5:11 pmThe Invisible
Sunshine HoldingsFri Aug 14, 2020 9:39 pmThe Invisible
Disclaimer


Information posted in this forum are entirely of the respective members' personal views. The views posted on this open online forum of contributors do not constitute a recommendation buy or sell. The site nor the connected parties will be responsible for the posts posted on the forum and will take best possible action to remove any unlawful or inappropriate posts.
All rights to articles of value authored by members posted on the forum belong to the respective authors. Re-using without the consent of the authors is prohibited. Due credit with links to original source should be given when quoting content from the forum.
This is an educational portal and not one that gives recommendations. Please obtain investment advises from a Registered Investment Advisor through a stock broker

Go down
The Invisible
The Invisible
Posts : 2790
Join date : 2016-11-28
Age : 41

Sri Lanka economy to rebound, delaying reforms pose risks: World Bank Empty Sri Lanka economy to rebound, delaying reforms pose risks: World Bank

on Tue Apr 17, 2018 7:28 am
Message reputation : 100% (2 votes)
ECONOMYNEXT - The World Bank says Sri Lanka's economy will rebound in 2018 with annual growth averaging 4.5 percent in the medium term, driven by private consumption and investment but warned against delaying reforms.

"A further slowdown in reform implementation, in a challenging political environment, remains the key risk, the World Bank said in a report, 'South Asia Economic Focus Spring 2018: Jobless Growth?'

"The impending election cycle elevates this risk.

"The economy will rebound in 2018 and the outlook remains favourable, provided the government is committed to the reform agenda of improving competitiveness, governance and public financial management.

"Together with the IMF programme, these reforms will add to confidence and support fiscal consolidation efforts," it said.

Inflation is expected to stabilize at mid-single digit levels this year.

However, the upward trend in oil prices may exert some upward pressure. Sri Lanka's rupee collapsed in 2015 and 2016 after the central bank printed money, from 131 to 150 to the US dollar, but oil prices also fell at the time.

With oil prices rebounding the effect of the currency collapse will now pass on to the economy when prices are adjusted, analysts say.

The external sector will continue to benefit from tourism and GSP+ preferential access to the European Union, despite slowing remittances growth, the World Bank said.

"Foreign reserves are expected to improve, with emphasis on purchasing foreign exchange, maintaining a more market-determined exchange rate, and increased FDI," the report said.

The overall fiscal deficit is projected to fall in the medium term, supported by the on-going implementation of revenue measures, but there were risks.

Delays in implementing tax reforms and improving tax administration will further strain fiscal and debt management.

"Sri Lanka faces several challenges that increasingly put its future economic growth and stability at risk, which must be addressed through macro and structural reforms", the World Bank warned.

Broadening and simplifying the tax base and aligning spending with priorities will help the government stay on course towards fiscal consolidation, it said.

Sri Lanka should also shift towards a private investment-tradable sector-led growth model by improving trade, investment, innovation and the business environment.

Implementing the Right to Information Act will improve governance and citizen engagement. State-owned enterprises need to see improving performance and service delivery.

Mitigating the impact of reforms on the poor and vulnerable with well-targeted spending was critical for the success of reforms, the report said.

But slow growth in key countries that generate foreign exchange inflows to Sri Lanka in terms of exports, tourism, remittances and FDI, could put the economy at risk.

Steeper than expected global financial conditions would increase the cost of debt and make rolling over the maturing Eurobonds from 2019 more difficult.

"However, the enactment of the Liability Management Act will help mitigate this refinancing risk," the bank said.

Faster than expected rises in commodity prices would put pressure on the balance of payments and make domestic fuel and electricity price reforms more difficult.

Analysts however say the rising prices of one import will have no effect on the balance of payments, unless imported oil is subsidized with bank credit which in turn will be re-financed with central bank credit (printed money).

In 2015 and 2016 the Sri Lanka slammed into a balance of payments crisis, despite collapsing oil prices, due to money printing. When oil prices are raised, domestic oil users have to forego another purchase, keeping the external sector in balance.

Sri Lanka must also reduce vulnerability and risks in the economy by enhancing disaster preparedness, the World Bank said. (COLOMBO, 16 April, 2018)
Back to top
Permissions in this forum:
You cannot reply to topics in this forum