PM's Brexit committee's first meet tomorrow

A committee appointed to study the economic impact of Brexit on Sri Lanka and recommend corrective measures, will hold its first meeting this week.

The committee appointed by Prime Minister Ranil Wickremesinghe, comprises Convenor- Charitha Ratwatte, a former Treasury Secretary, Treasury Secretary R.H.S. Samaratunga, Sarath Rajapathirana, a former World Bank official now attached to the Presidential Secretariat, R. Paskeralingam, Advisor, Indrajit Coomaraswamy, Arjuna Mahendran, Saman Kelegama, Gishan Dissanayake, Srimal Abeyratne, Murtaza Jafferjee, Nishan de Mel and Anushka Wijesinha.

Brexit is far from a doomsday scenario for Sri Lanka, but is certainly cause for concern, said Chief Economist- Ceylon Chamber of Commerce, Anushka Wijesinha. “The main immediate channel of impact for us is through volatile international capital markets that have low appetite for risky assets such as investing in frontier markets,” he said. “Alongside an already weak global economy and continued financial market uncertainty, this adds a further dampener.”

"There can be impacts on the country’s ability to attract foreign capital, including the scheduled sovereign bond," he continued. "In the medium term, the main impact would be from the trade channel. Now we have to see what kind of trade deal Britain has with the EU,” Mr Wijesinha said. “But, if the forecasts around slow growth in Britain, as a result of Brexit, come true, then this will affect our trade exports. About 10% of our exports currently go there, of which 80% is apparel products.”

"A weaker pound will affect both tourist receipts and remittance flows," he warned. “Again, how long these effects last will depend on how long it takes for Britain to figure out the new arrangement with the EU.”

Mr Wijesinha said Sri Lanka should now focus on domestic issues such as improving the competitiveness of exports, the ease of doing business and innovation. “Also, to diversify our export product and market mix, so that, we are less reliant on the same markets and the same products,” he elaborated. “Expanding into new markets can be helped by forging new bilateral trade deals. But of course, this is a second best solution."