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Hambantota Port deal would bring in large scale industries:CB Governor

The Hambantota Port deal would bring in large scale industries in the future, while the whole area would be transformed, Central Bank Governor Dr Indrajit Coomaraswamy said.

He made these remarks addressing a gathering yesterday at the Induction and Graduation ceremony 2017, of the Institution of Engineers Sri Lanka at the BMICH.

He said that the Port deal was an opportunity that should grabbed.

"Some people debate that the deal was not framed appropriately. But it is not only concerning the deal, it would also develop the area in the years to come," he said.

He said the country was likely to have two trade agreements with China and India which could be a change maker as no other country in the South Asia has equal access to these countries.

Dr Coomaraswamy further said that over the last 30 - 40 years, the economic growth had slowed down and the underlying cause for this has consistently been the government budget, adding that the governments​ had not been able to manage public finances.

"Until we get the budget deficit in order, the economic stability is not going to be possible.

"There had been higher budget deficits in the past 30 - 40 years. On the contrary, all successful countries in the South East Asian region were able to have a disciplined budget," he said.

He said the government had put in place frameworks to stabilize the economy.

"The government is in the process of implementing a revenue based fiscal consolidation programme with the aim of bringing the budget deficit down to 3.5 percent GDP. Our target for this year is 4.6 percent and at present the government is on the right track," he said.

Dr Coomaraswamy said that in the past, government​s had been spending their foreign reserves and to get away from that system we need a more flexible exchange rate policy.

He noted that the country would have a stronger macro economic policy, adding that a new export based economic growth strategy would be created in which the private sector would be involved for export and investment.

He said as the government does not have the money for development processes, the private sector has to be the main engine to drive the process.

"If we don't meet the economic aspirations of the people, we would have to face political and social instability. While taking initiatives to boost the domestic investment, equal priority has to be given to bring in Free Trade Agreements as well," he said.

Dr Coomaraswamy said that one of the most disappointing aspects of the post conflict era over the past 6 -7 years, was the performance of both domestic and foreign investments in the country.

He further said that the government had taken the necessary measures to achieve a stable economy by strengthening the investment climate, investment promotion, trade facilitation and trade policy.