“Wait and see” from foreign investors
There was no panic in the money markets with the US dollar pegged at Rs 155.50 - Rs.155.55 on Friday.
Business chambers pleaded for calm. The Ceylon Chamber of Commerce (CCC) said that, “A recurrence of such a conflict will impact adversely on the development of this country in many ways i. e. spiritually, socially and economically.”
SLASSCOM, the IT/ BPM industry’s main body urged members to establish a zero- tolerance policy for any incident involving racial or religious discrimination and disrespect.
“We have excelled in positioning Sri Lanka as a compelling destination for innovation and ingenuity. This credibility was earned by individuals from every community, race and religion collaborating as creative, highly-productive teams,” it said.
What worried many professionals in government and the private sector was the delayed reaction of the Government to restore law and order in the trouble spots in Kandy. “Capital flows into the stock market and rupee denominated Treasury bills and bonds will get affected if the situation isn’t brought under control and the rule of law firmly established,” another high-ranking government official noted.
The crisis comes on top of a drop in revenue collection at Excise and Customs Departments due to some administration issues and business disruption in some areas. Another reason for the decline was the drop in revenue from liquor and tobacco taxes as sales have come down following an increase in excise duty.
The economy had been settling down to a more comfortable path in 2018 until the results of the February local government poll, in which former President Mahinda Rajapaksa’s party made surprising gains, shocked ruling party politicians.
The reversal has led to decisions bordering on a return to subsidies and handouts to win public support, and at the same time, putting the brakes on tight economic reforms.
The latest crisis sparked by ethno- religious tensions is a further setback to plans to drive increased foreign investment this year, more tourist arrivals and cut government spending.