Now that Sri Lanka has achieved notable success in containing the danger posed by the pandemic to the health of the nation, the time has come for a concerted and decisive focus on reviving the economy. A Pathfinder Foundation Study Group produced a report which set out a new economic vision for post-Covid-19 Sri Lanka. An important recommendation in the report was the pursuit of trade agreements. The Doha Round of Multilateral Trade Negotiations is at an impasse. It has probably been dealt a fatal blow with the disengagement of the current US administration from the WTO. Many countries have responded by pursuing bilateral, regional and plurilateral trade agreements to boost growth and employment prospects. Sri Lanka has fallen behind and is confronted with the possibility of falling even further behind. The Sri Lankan authorities have done well to stabilise the external position of the country despite the extreme shock delivered by the pandemic to Sri Lanka’s key sources of foreign exchange: remittances; apparel exports; tourism receipts; earnings from shipping, FDI inflows; foreign institutional investment in government securities and the stock market; as well as the prospects of raising money from international capital markets. However, the temporary import bans and the decline in oil prices have served to mitigate the worst effects of these adverse trends. The effectiveness of these measures is reflected in the forex market, where the Rupee has been largely stable after its initial sharp depreciation to Rs. 199: USD. It has now stabilised around Rs. 186: USD.
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