Foreigners have more faith in SL’S future than locals: Governor

Meanwhile, Governor Coomaraswamy quipped that foreigners have more confidence in Sri Lanka and its economic prospects than the local private sector.

“Foreigners seem to have faith in the future of Sri Lanka, which doesn’t seem to be shared by our local private sector,” he told an audience full of bankers at the recently held Lankapay Technovation Awards 2017 in Colombo.

The Governor was basing his opinion on the fact that the US$ 1.5 billion sovereign bond issued in May was oversubscribed by seven times, while the local firms were seen holdings back their investment, adopting a ‘wait and see’ approach.

The Colombo Stock Exchange has been experiencing positives interest from foreigners as well, with net foreign inflows of approximately US$ 125 million for the first 5 months of 2017, up from a net foreign outflow of US$ 37.3 million during the same period in 2016.

Dr. Coomaraswamy said that the situation is not the fault of the local private sector, since government policies have been inconsistent in the past.

“The government has been constraining itself. There was no predictable or consistent policy. That is what I was trying to explain to you. In terms of the frameworks we’re putting in place, so hopefully, going forward all of you in the private sector will think carefully about recalibrating your risk appetite,” Dr. Coomaraswamy added.

He said that the Central Bank will be trying its best to maintain stable price levels through inflation targeting, while the fiscal policies will aim to reduce the budget deficit and the ‘stop and go’ cycles that led to a heavy debt burden.

Despite Dr. Coomaraswamy’s comments on the confidence of foreigners, foreign direct investments (FDIS) to Sri Lanka over the past 5 months were termed as ‘nothing significant’ by Fitch Lanka Managing Director Maninda Wickramasinghe earlier this month.

The Central Bank in a puzzling move has stopped publishing FDI information in its monthly external sector statistics bulletin.

FDI inflows to Sri Lanka in 2016 amounted to less half a billion dollar, most of which arrived in the latter part of the year.