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Economy to reach 5% growth by end 2021

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Jayamaha noted that Sri Lanka remains committed to ensuring its clean debt repayment record and noted that the debt management agencies had put off going to the capital markets to raise funds due to the high prevailing costs in the current environment.

Jayamaha was speaking yesterday at an Alpen Capital organized webinar on the Outlook of the Sri Lankan Banking and NBFI sector.

Jayamaha warned against preemptive negative forecasts on rising non-performing loans as there has not been enough meaningful data to analyze the extent of the problem. Jayamaha noted that with the rebound in growth there is expected to be improvements in the level of credit collection.

Jayamaha cited strong corporate profitability and the booming stock market as signs of the economy’s health. She felt that the monetary policy was appropriate given the pandemic and helped keep the economy functioning.

The Monetary Board following its reconstitution under Prof W D Lakshman as governor decreased rates by over 200 basis points in 2020. This decrease was further accompanied by another 100 basis point reduction in 2021.

Jayamaha critiqued international agencies by noting that there were even a ratings downgrade following the end of the civil conflict which proved to be wrong given the high rates of economic growth and development.

DFCC CEO Lakshman De Silva commended the strong action taken by Prof. W D Lakshman and the current monetary board for helping create resurgence in early 2020. He noted that COVID-19 had impeded the recovery but that there were adequate relief measures for the smooth functioning of the business sector.

RAKBANK UAE CEO Peter England was dismissive of the rating agencies. He noted that Sri Lanka’s regulatory environment was very strong and that he was very confident of the character of Sri Lankan entities. England noted that the ratings had impacted IFRS risk frameworks for international lending to Sri Lanka. RAKBANK had to cut back on all its international lending operations to maintain healthy domestic liquidity given a higher rate of customer redemptions. RAKBANK is currently focusing on more established lending entities in the country.

It was noted that the NBFI sector consolidation plan had caused some entities to stop lending to certain segments of the economy given lower risk tolerances of the larger consolidated entity.

Source DailyNews
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