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Covid crisis may clip 1.5 percentage points off 2020 growth rate
Sri Lanka’s economy is heading for a major setback as a result of the COVID-19 crisis with preliminary estimates showing it would clip 1.1 to 1.5 percent points off from this year’s economic growth, according to official figures.
Central Bank Governor W.D. Lakshman told reporters recently that the Gross Domestic Product (GDP) would be between 3.5 per cent and 4.0 per cent this year.
As the government calculated its losses, an allocation of Rs. 100 billion has been made to pay salaries to 1.4 million public sector employees and pensions on April 3.
The Sunday Times learns that the estimated loss in tax revenue would be around Rs. 156.5 billion from the projected revenue of Rs. 1,565 billion in 2020. Non-tax revenue will come down by Rs. 180 billion. “This will further go down to unimaginable proportions if the coronavirus crisis prevails in the country for two more months,” one government source said.
In the money markets, the US dollar was trading at Rs.191.50 and Rs. 191.70 on Friday on less demand. Some inflows of remittances from migrant workers were seen in the market.
Foreign income has got battered with a drop in migrant worker remittances, the garment sector shutting down and a drop in tea earnings too. Foreign outflows from the Treasury bond and bills market compounded the crisis.
Foreigners have been rushing to sell Treasury bills and bonds, with the outflow this week being Rs. 8.23 billion while last week it was Rs 11.42 billion. In the last week of February and the first week of March, the foreign outflow amounted to Rs. 19.6 billion, Central Bank data showed.
Other data showed that the estimated revenue loss from worker remittances, tourism, apparel sector and tea exports will be around Rs. 967.42 billion or US$ 7.28 billion up to May 2020.
This would include worker remittances falling by around $2 billion, tourism revenue by about $1.5 billion, apparel exports by around $510 million and tea export revenue by around $520 million, among other losses.