Port City to lay basis for ‘financial district unique in South Asia’

by Sanath Nanayakkare

The controversial Port City project will resume some landfills shortly which could lead to the making of a special business and financial district which would be unique in South Asia, in the wake of discussions between the government and the Treasury, Prime Minister Ranil Wickramasinghe disclosed yesterday.

The Prime Minister made this comment while delivering the keynote address at the 30th anniversary celebrations of the Colombo Stock Exchange.

"In addition to developing small business sectors of the economy, we are planning to transform Colombo into a megapolis. If hopefully the Port City project gets underway, where I think there will be some landfills shortly, it could have the making of our special business and financial district which will be unique in South Asia, the Prime Minister said.

Making the government’s policy direction clear in preparing for predicted global financial volatilities to howsoever achieve a growth momentum of 6.5% in 2016 and 8-9% in the following years, the Premier said, "Once the policy direction is given and economic reforms are implemented, the rest of the matter would be largely dependent on the unfolding global political and economic scenario."

Speaking further the Prime Minister said,"Tonight the House of Commons will decide whether to bomb Syria or not. Two days ago, German Cabinet decided to dedicate its armed resources to the expanding war against ISIS in the Middle East. Western countries and Russia also will be acting in a similar manner. This is an unfolding political scenario which will have an impact on emerging markets."


"Meanwhile the IMF has decided to include the Yuan in its Special Drawing Rights (SDR) currency basket. These are two important developments which will have an impact on emerging economies, including Sri Lanka. Meanwhile, the global growth forecast has been lowered by 0.2% between July and December. In such a context, we have to expect declining commodity prices which will have an adverse impact on our economy. Moreover, declining capital flows into emerging markets are also on the cards as the US Federal Reserve will increase its rates next year. Consequently, there will be pressure on our currency along with increased financial market volatility which will translate into slower growth in emerging markets with increased risks. On the other hand, there is the likelihood of an improvement in the established markets. We have to assess these implications and determine how best to deal with them."

"Now talking about the CSE; it has had its booms and lulls since it was founded in 1985. With a new round of reforms in 1990 it enjoyed a boom. Then it had another boom after the ceasefire agreement in 2002. In the backdrop of the 2008 financial crisis, it received another incentive. Then with the conclusion of the war in 2009, the CSE posted further growth."

"The less attractive US FED interest rates are likely to go up next year. It will essentially be a political decision as President Obama would like to show to the electorate that the US economy has bounced back and the interest rates have regained normalcy. On the other hand, the burst of the Chinese equity bubble will inhibit the free availability of Chinese credit. But, nevertheless, this development in turn could bring us direct investment from China as China would be looking to expand its economy upon which we could capitalize on, to expand our economy."


"Whatever influences and whatever spillovers come from external elements, we have to maintain a 6.5% growth rate for 2016, leaving a margin for unforeseen circumstances. And then jump to a growth rate of 8-9% in the following years in order to become a high-income country by 2030. This is easier said than done, but we have to mobilize our capacities to achieve this goal."

"The Finance Minister presented a mini budget during the interim period which increased the aggregate demand. It generated a surplus in the hands of the ordinary people and thereby more spending by them. This is already obvious with increased demand for consumer goods. After all, there is still lot of static and untapped consumable income in the economy, especially in the balance sheets of some companies. We have to explore ways and means to direct those funds towards investment."

"I was reading Moody’s report and it refers to our high deficit. Yes, we will have high deficit at the start. But when investment comes in and revenue grows and more people enter the tax net, more revenue will be generated. Thus, as we achieve our growth targets, we will bring deficit down to 3.5% by 2020."

Social Market

"State enterprises will be called upon to perform better from next year to contribute to the state economy, thus helping the country to achieve this deficit target. Meanwhile, social market aspects, including free education, free health services will be maintained while long commutes to work will be dealt with through high rise residences built for executives, thus making their job outcomes more productive for the economy."

"To carry out these economic plans, the Economic Management Committee of the Cabinet, Policy Development Office, the Institute of Policy Studies, an International trade Agency etc. will be coordinating their functions."

"Sri Lanka Economic Forum will be held early next year. It will also bring in Harvard University Centre for International Development. Rikado Houseman will visit Sri Lanka this month with George Soros."

"As I mentioned in parliament yesterday, we have asked the IMF to help us to rewrite the tax code and have informed them on the need for a stand-by agreement."

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