ECONOMYNEXT – Sri Lanka will provide ‘development bank funding’ for large businesses soon, Minister Ranil Wickremesinghe has said, assuring the government’s commitment to shedding bureaucratic red-tape to improve ease of doing business.
“Before end-November we will start development bank funding for large companies especially for those exporting goods and services,” Wickremesinghe told a business forum organized by major retailers of the country.
The government has rolled out Enterprise Sri Lanka which provides credit to small and medium enterprises.
“Next year local borrowings will be not be as high as our foreign borrowings so there should be space for private sector credit,” Prime Minister Wickremesinghe said.
Improving access to credit is part of the government’s plans to improve ease of doing business.
“There’s so much red-tape, and a number of competing bureaucracies, that it has become virtually difficult to do business. You have to spend a fair amount of time dealing with the bureaucracy”.
He said the government was looking at ways to make it easier to do business.
“This is something Deputy Minister Harsha De Silva is working on,” Wickremesinghe said.
“We have a development strategy in place and an export strategy, but we’re mainly looking at making it easier to do business. We are moving in that direction,” he said.
Wickremesinghe said the on-going economic crunch could last another year.
“All of a sudden in the last six months economic climates have changed in a way we have not. Most parts of the world will go through this phase for a year or so, and this is true even for Sri Lanka,” he said.
Currency depreciation, limitations of money circulation, rising interest rates and non-performing loans going up are being felt across the economy.
“People are finding it a bit more difficult because of the global currency crises,” Wickremesinghe said.
“We are not the only ones with balance of payments problems but with limited exports we need to ensure the changes happen fast.”
Some soft-pegged emerging market currencies have fallen as the US Fed raised rates. Some currencies float and their falls are not related to any balance of ‘payments troubles’.
Most emerging market currencies have fallen as a result of US Fed rising interest rates and its trade tensions with China.
But Gulf countries, which raise interest rates in step has remained solid so far. Other countries, like Australia and Singapore, float independently and do not fall due to balance of payments trouble. Such currencies also go up.
But, Wickremesinghe assured that the government was working towards a more flexible regime that defended the free market, was business-friendly and export oriented.
“We have immediate problems, but we can face them together and use the crisis as an opportunity to grow to a higher level and become a more dynamic economy than we are today,” Wickremesinghe said.
Analysts have called for reforms of the central bank’s operating rules or its abolition in favour of a currency board, to allow free trade to take place. (COLOMBO, 18 October 2018)