A breakdown of Sri Lanka's economic issues

COLOMBO (News 1st): Prof. Lalith Samarakoon (Secretary of the National Economic Council) and Dr. Indrajith Coomaraswamy (CBSL Governor) attended this weeks cabinet briefing to explain Sri Lanka's economic position. According to Professor Samarakoon, the current condition of Sri Lanka's economy was "not due to short-term influences". What is the current economic crisis the country is facing? - questioned a journalist at the briefing. Prof. Lalith Samarakoon went on to explain that an economic crisis is created during a time frame. "Therefore we must ask the question, during the medium term what turn did the economy take?" He added Sri Lanka's debt has increased by 49% (compared to the end of 2014) "We did not go anywhere with the problem regarding the budget deficits of 5.4 in 2016 and 5.5 in 2017. If we stood at a certain position, that is where we stand even today. The budget deficit in the medium term is a structural issue." said Prof. Samarakoon. He revealed that the Balance of payments in 2014 was 2.5% and in 2018 it is 2.9% He went on to explain that in 2017, Sri Lanka recorded the lowest economic growth in the last 16 years, even when the growth was at 5% in 2004. "This year we expect an economic growth of nearly 4%. This is why we say that our country is currently facing several economic issues. These issues were not created recently." he added. Sri Lanka's economy was impacted adversely by several incidents that took place from 2015 onwards. While the total losses incurred due to the 'Bond Scam' is still not specified, economists say that the scam resulted in market interest rates to increase by 3%. The bond scam also caused heavy losses to several public funds including the EPF and damaged investor confidence. The national carrier 'SriLankan Airlines' also incurred losses of nearly Rs. 28 Billion, during the year 2016 and 2017. Obtaining loans at higher interest rates to fund several projects including the central highway project has also caused heavy damage to the country's economy. During July 2017, Moody's analytics downgraded Sri Lanka's credit rating. Moody's further downgraded Sri Lankan Government's foreign currency issue and senior unsecured ratings from B1 (Negative) to B2 (Stable) this week. However, the Secretary of National Economic Council says that the downgrading does not properly reflect the country’s macroeconomic fundamentals, and clarified that Sri Lanka is not facing any challenges over debt repayment.