Sri Lanka’s investment environment needs diversification to provide better opportunities for the public and corporates, said Central Bank of Sri Lanka Governor Dr. Nandalal Weerasinghe while addressing the ‘Invest Sri Lanka’ forum held in Colombo today (27).
Highlighting the limited investment options available to the general public in the country, he stressed the need to expand the capital market and allow State-Owned Enterprises (SOEs) to raise funds through public ownership.
“Many Sri Lankans invest their savings in fixed deposits or banking instruments due to the lack of sufficient diverse investment opportunities,” the Governor said. “Due to the lack of investment opportunities in diverse instruments, people fall prey to frauds, pyramid schemes and unauthorized financial operations and people lose their money.”
“If you look at Sri Lankan investors or the general public, what are the investment opportunities for the Sri Lankan public, still many, their savings, they invest in fixed deposits or the banking sector. The reason is that they do not have that many investment opportunities.”
“This is another important aspect, the opportunity has been given to the people to invest their savings in various investment opportunities. Senior citizens are trying to deposit their savings and live off the interest income. It is not sustainable.”
“Under such a monetary policy cycle, market interest rates cannot rise excessively, if we maintain inflation at a level of 5%, it can never be double digits.”
“Under such a monetary policy cycle, market interest rates cannot rise excessively, if we maintain inflation at a level of 5%, it can never be double digits.”, he added.
He further said: “In this situation, if there is no large amount of savings in a bank, no one will be able to live on the interest income from their savings. This is where providing such financial instruments is important.”
According to the CBSL Governor, one solution is to strengthen the government securities market and foster corporate ventures. “Capital markets and regulated financial instruments offer opportunities for better returns. It is very important to ensure financial stability and predictability while allowing for capital formation,” he said.
Regarding state-owned enterprises, Dr. Weerasinghe stressed the importance of public investment.
“The state does not have the capacity to inject more taxpayer money for the expansion of state-owned enterprises, and even banks have limited capacity to finance such growth. The best approach is to allow state-owned enterprises to raise capital through the stock market, while maintaining a level of state ownership,” he said.
“The government has expressed its willingness to shift towards state ownership while retaining strategic control. Offering that stake to the public is the right move in my opinion. There you will get opportunities and there will be opportunities for public and private corporations to raise capital with predictability and stability, but capital is where that capital building is important,” the CBSL chief said.
