A Brief Colonial History Of Ceylon(SriLanka)
Sri Lanka: One Island Two Nations
A Brief Colonial History Of Ceylon(SriLanka)
Sri Lanka: One Island Two Nations
(Full Story)
Search This Blog
Back to 500BC.
==========================
Thiranjala Weerasinghe sj.- One Island Two Nations
?????????????????????????????????????????????????Thursday, November 28, 2013
Budget 2014: No Rupee Devaluation Shocks
By Hema Senanayake - November 28, 2013
The economy is a system; you can’t do whatever you want in one area
without having impact in another area. The stability of rupee depends on
the balance between the inflow of dollars (or foreign currencies) into
the country and the outflow of dollars. And private sector credit growth
is important to achieve higher GDP growth; ensuring private sector
credit growth is not possible if the balance between inflow and outflow
of dollars breaks negatively which means inflow of dollars reduced in
compared to outflow. The proposed dramatic reduction of foreign
borrowings in the budget of 2013 should have definitely broken the said
balance negatively. This was a great mistake and as a result finally the
government desperately pushed the National Savings Bank to borrow in
dollars.
The said mistake has been avoided in 2014 budget. In this budget it has
been proposed to increase foreign borrowings by 34.15% to Rs.331.5
billion; this will roughly amounted to USD 2.5 billion. Quickly you will
guess that in the year 2014 there won’t be currency devaluation shocks.
That is right. Another positive point is the proposal to reduce
domestic borrowings by 22%. The combined effect of both proposals is
that it provides a better chance to expand private credit issuances. If
credit issuances (or credit growth) are not significant then there are
chances to appreciate the value of rupee which is an indication that
CBSL has to bring down the interest rates. This means in 2014 we will be
able to see more stable currency, low interest rates and private sector
credit expansion which combination helps to have a higher GDP.