Sri Lanka on cusp of growth, say officials at Singapore Investment Summit

Highlights - Agreement with IMF possible mid April: Governor Central Bank - GDP growth seen at 6.5 pct, budget deficit at 5.9 pct vs 6.0: Governor - USD10 mln investment going into East, says Brandix - Initial discussion on FTA with Japan: Finance Minister Singapore, Mar 15, 2016 (LBO) - The Sri Lanka Investment Summit, organized by FinanceAsia, opened at the Four Seasons Hotel in Singapore on Tuesday, well attended by international investors and local delegates. Finance Minister Ravi Karunanayake told the audience during the morning session that the island offered better growth prospects than other regions. Trade agreements with India and China, and a possible free trade agreement with Japan, were key selling points he said. “The US offers one to two percent growth.

Africa offers three percent, while Asia offers five to seven percent. We are on the cusp of significant growth,” Karunanayake said. “We just had initial discussions on a free trade agreement with Japan,” he added. With funds such as Franklin Templeton represented at the summit, some of the attendees told Lanka Business Online tourism and infrastructure looked attractive for investment. Felicia Untoro, an official of Airbus Helicopters, said the company was looking at a financing partner in Sri Lanka. "Sitting at the right point in the cycle, the sequencing of reforms, and the communication of reforms and the execution of reforms is something investors would pay attention to," Hasan Jafri, founder of a Singapore-based advisory firm, said. “It’s a professional discussion. Anybody who sits in for the first time would be be drawn in,” Anil Changaroth, the secretary to Singapore-Sri Lanka Business Association said. In his presentation on monetary policy, Governor of the Central Bank Arjuna Mahendran told the audience economic growth was projected at 6.5 percent this year, while inflation could be contained at 3 to 5 percent.

Support from the IMF could help Sri Lanka's efforts to reduce its BOP deficit, he added. “We hope that by the middle of April we will have an agreement with them (IMF), which will trigger more multilateral lending.” The balance of deficit was projected at 138 million dollars for this year, from 1.5 billion dollars deficit last year, while the budget deficit could reduce to 5.9 percent from 6.0 percent, he said. Commenting on interest rates which have increased in recent months, he said steps had been taken to tackle ‘exuberant” credit growth running at over 25 percent.
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“Rates are still quite low by historic standards, and we are hopeful that the strengthening supply side would prevent us from tightening much further,” Mahendran said. Hasitha Premaratne, CFO, Brandix Lanka, said the company had just laid the foundation for a 10 million dollar investment in the east of the island which will produce 3,500 jobs. Sponsors of the inaugural investment summit are Standard Chartered, Perpetual Treasuries and Asia Securities.

Further sessions continue in the afternoon. (Chamath Ariyadasa reporting for LBO from the conference)