Speech by Sri Lanka Minister of Finance

Microfinance Focus, October 14, 2010 (Colombo) : Chandula Abeywickrema, Chairman of BWTP Network and Deputy GM (Marketing & Retail Banking) of Hatton National Bank, introduced the guest speaker, whose stage appearance at the forum was brought forward due to unforeseen circumstances. Mr Chandula announced, “We are indeed privileged to recognize the presence of Dr Sarath Amunugama, despite his mother’s passing away in the early morning of this day. He has also just arrived back from New York from a conference. Dr Sarath Amunugama is the Deputy Minister of Finance of Sri Lanka and a senior advisor to the President.”

Dr Amunugama, Minister of Finance, Sri Lanka

Dr Sarath Amunugama summed up the Sri Lankan economy along with his insights. He said, “Ladies and gentlemen, it is a great honour for me to participate in what is obviously an important meeting for Sri Lanka. After the sessions by the World Bank in New York, I am most convinced that what you are discussing today is important in spurring future microfinance developments. As you know, the economy is coming out of a downturn, however the crisis is not over. It is very clear that we are not achieving those targets that we have set 2-3 years ago. The main consequence of failure to achieve satisfactory growth in global economy is that it creates turbulence. The way that the Western countries are coming out of recession is through increasing dependence on technology.

There is a new phenomenon – we see different types of growth, as well as sluggish recovery. Today, the American unemployment is unique, and why the sluggish growth? In contrast, the emerging markets of developing countries, particularly BRIC countries, are leading the growth. Vietnam and Sri Lanka are included as well. Currently, we have average 6% growth and I think this year we can achieve an 8% GDP growth and sustain it. We now have to look at the role of growth in the rural areas. With the sluggish growth in the West and the rapid growth in the BRIC countries, there is a flow of capital away from the developed countries, flowing to Asia and this is creating alot of problems. Usually we should be happy with the money, but it brings about problems. The flow of capital from developing countries results in the strengthening of currency etc., resulting in what the journalists call “currency war”, which we will see in the near future.

What are you going to do with large unemployment and frustration? I think other countries must re-value their currency, and not de-value, so that their currency will become stronger. This is why the new Chinese government said that their strategy is not just growth but growth with harmony. Fast growth, yet reaching to fill the gap. The Sri Lankan government is also looking to balance growth, all-rounded growth.

We have found out from Dr Yunus and Grameen Bank that it is the women who do the trading, women who go to the market and women who need capital and a formal structure to carry out their own businesses. The poor is very bankable, and according to studies, the repayment of loans is much higher in microfinance institutions than commercial banks. There are very few under-performing loans among the poor. Today, we are making over 3 billion USD, with all the money flowing from developed countries. We are hoping to make 5 billion in the future. If we use our policies properly, we can promote rural growth in this country. We have to create value in rural areas and ensure they contribute to growth. After the Northern economy was integrated in Sri Lanka, we have seen a 2% jump in our GDP growth. Many products that we have imported in the past are now produced locally here. Economic growth momentum is shifting to BRIC and first-tier countries; and Sri Lanka is in the first tier countries and very good to invest in. Finally, I would like to say a word of greeting for each of you. We have emerged from the terrorist war, and today, I would say Sri Lanka is one of the safest countries in the world. Our tourism is booming with 60% growth this year. As good friends of Sri Lanka, please come once again.”

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