2017’s record exports nothing special - IC
By Nishel Fernando
Central Bank of Sri Lanka (CBSL), Governor, Dr. Indrajit Coomaraswamy has thrown a damp towel on the self-congratulatory reaction to Sri Lanka's 2017 export earnings, which were released last week and were at an all time high, by saying that it is far below the country's potential and should not be taken for granted.
"The newspapers today had screaming headlines stating that there were record earnings in exports in 2017. I don't think this is an achievement we should be proud of.
We are still a long way out as far as exports are concerned", said Central Bank of Sri Lanka (CBSL), Governor, Dr. Indrajit Coomaraswamy.
He made these comments yesterday at a seminar titled 'Economic + Sector Review and Outlook 2018', organized by Ceylon Chamber of Commerce.
However, Dr. Coomaraswamy noted that Sri Lanka was moving in the right direction as far as exports are concerned.
Dr. Coomaraswamy said that despite the noteworthy turnaround in exports, the trade deficit has expanded in 2017. The expansion of the trade deficit was due to increase in imports of rice, coconuts and fuel which were impacted by drought.
Ceylon FT last week reported that merchandise exports reached an all time of over US$11.4 billion in 2017 while overall exports earnings, including service exports, reached US$ 15.15 billion.
The Governor remarked that the Government was moving in the right direction by reducing and eliminating para-tariffs which was the major road block for Sri Lanka in breaking into Global Supply Chains (GSC).
"Over 50 per cent of the global trade now is accounted for by global supply chains. However, we have a negligible presence in GSCs. I think about only 7 per cent of our exports are part of the GSC while being a large closed economy, India has 22 per cent export share in GSC. We haven't made any progress into GSC due to these para-tariffs and we have missed out the most dynamic part of global trade", Dr. Coomaraswamy noted.
The Governor also highlighted that the CBSL boosted the quality of foreign reserves in 2017 as the CBSL became less reliant on short-term currency swaps. The Governor noted that at the end of 2017, the contribution to foreign reverses from short-term currency swaps reduced to $ 1.4 billion in 2017 from $2.5 billion recorded in 2016. The CBSL expects over $10 billion in foreign reserves this year.
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