Sri Lanka government needs to make improvements to address the entire gamut of financial services that encompass banking, insurance, and non-financial instruments. Colombo Port City Economic Commission (CPCEC) and Board of Investment Chairman Dinesh Weerakkody claimed.
To ensure that the Colombo Port City has an effective banking regime in the port city, the authorities have completed benchmark studies.
He added that, there is enormous potential for investment in the agriculture, tourism, information technology, renewable energy, and education sectors.
He says the Government has committed to a wide array of important structural reforms. These include reforms to stabilise the current crisis, such as enhanced revenue mobilization.
It has taken measures to improve tax administration, cost-recovery based energy pricing, safeguard financial sector stability, and a stronger social safety net to protect the most vulnerable.
Also, reforms to enhance productivity and competitiveness, streamline Sri Lanka’s trade and investment environment, unlock the country’s growth potential, and address governance and corruption issues are a few others, he elaborated..
Referring to the banking sector non-performing loans of Rs 1.4 trillion and corrective action , he noted that the problem is, billions in impaired tourism, real estate and other assets are sitting on bank balance sheets.
He claimed that awaiting recovery with an improvement in the wider macro environment, which is very challenging.
This pushes banks to redeploy resources away from credit growth and a much needed contribution to the GDP. Banks are vital bedrock institutions in any economy.
They contribute significantly to the development of the economy through facilitation of business.
Banks also create money and facilitate the growth of savings in the economy. They are instruments of the Government’s monetary strategy, among many others.
The most important service provided by a bank is the provision of credit. Credit fuels economic activity, allowing businesses to invest with leverage and beyond their cash on hand, he explained. .
Banks should focus more to help revive the economy, not too much on exploiting profit opportunities to invest in financial instruments, which carry risks in conditions of lagging growth. Sri Lanka needs stronger, bigger banks.
The Government should push for consolidation keeping in view synergies and the benefits of mergers.