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Central
Bank reforms for modernisation
Speedy
end to war essential - CB "The ongoing peace efforts, with strong and wider domestic and international support, have created optimism with regard to finding a lasting solution. The international community will not only help Sri Lanka in its efforts to find lasting peace but has also pledged to assist its subsequent rehabilitation, reconstruction and reconciliation efforts," the bank said in its annual report for 2001 released last week. W.A. Wijewardene, the bank's senior deputy governor, said growth rates could take off as much as 3 to 4 percent over the current growth rate if peace is restored in the country. "There are a lot of inquiries from institutions and private foreign investors about investment prospects and if there is an increase in investment, the growth rate would rise sharply," he said at a news conference called to present the report to the media. Dr. A.G. Karunasena, the bank's economic research director, said Sri Lanka's economy is expected to grow by 3.7 percent this year, up from a negative growth of 1.4 percent in 2001, because of a much-improved local and international economic environment. "Economic growth last year contracted to 1.4 percent for the first time since 1948 but this year we see positive growth of 3.7 percent because the weather is improving and the world economy is recovering, particularly in the US," he said. Economic growth in 2000 was 6 percent. Karunasena said the economy's performance last year fell far below expectations due to severe external shocks like recession in the west, the September 11 terrorist attacks in the US, the Tamil rebel attacks on the Colombo airport in July and a prolonged drought that spilled over from 2001 and led to crippling power cuts. The bank report, in a section on the outlook for 2002, noted that achieving the fiscal targets in this year's budget and implementing already-announced policy adjustments and economic reforms would be critical to ensure the realisation of the expected economy recovery and the projected improvements in macro-economic stability. It said the agriculture sector is expected to recover with a growth rate of 2.2 percent with increasing production in all major crops except coconut which is expected to record a further decline due to the long lagged effect of poor rainfall in 2000/2001. Tea production is projected to improve by 3.7 percent as weather conditions improve while rubber output is expected to grow by two percent, benefiting from the anticipated increase in international rubber prices. Paddy output this year is projected to improve by seven percent, up partially from the drop in 2001. Inflation is expected to rise by nine percent by the end of the year in line with moderate increases in domestic food supplies and import prices. The report said that fiscal adjustment alone is not adequate to reduce the overall budget deficit and borrowings. Such efforts have to be complemented with a strong public enterprise reform programme including the introduction of automatic price adjustment mechanisms and cost minimisation measures. "In order to increase public support for such reform it is essential to convince the public that all Sri Lankans, not only the users of subsidised goods/services, have to pay, now or later, for losses, in public enterprises, caused by maintaining their product prices below the corresponding cost of production," the report said. Solar
power firms eye Jaffna "It is biggest and commercially most viable rural solar company among the seven rural solar companies that we have," Philippe de Renzy-Martin, CEO Shell Solar BV told reporters during a visit to Colombo last week. Shell solar which is part of Shell Renewables Lanka Ltd, is expecting a 50 percent rise in sales every year, with sales this year targeted at a high 20,000 from 5,400 in 2001. The company has sold 10,000 units in the past few years out of a total 25,000 units installed by all solar firms across the country. Pradip Jayewardene, business development director at Shell Renewables said members of an association representing the solar trade were planning to visit Jaffna to assess the potential for selling solar units. "The industry is looking at the north and the east as a potentially good market," he said adding that GTZ, a German-supported donor agency, was facilitating the Jaffna visit. De Renzy-Martin, asked how the Sri Lankan solar operation has been more successful that any other Shell solar company, said there were many reasons for this. "Affordability is better. Rural people here have more money than rural farmers in South Africa for instance. The access and infrastructure in Sri Lanka's rural areas are much better than other Shell sites," he said. About half of Sri Lanka's population - approximately nine million people or two million households - don't have access to electricity from the national grid and solar power is among the most efficient and cheapest to power homes. De Renzy-Martin
said that Shell Solar BV, the fourth largest solar company in the
world, was also investing a lot of money in wind power units across
the world but as far as Sri Lanka was concerned, Shell's concentration
would mainly be in solar power - apart from its other interests
like LPG. |
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