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Spotlight: Econ Op-eds in Summary (Week ended 19th June '19)




1. Prospect of lower trade deficit strengthening external finances in 2019

By: Nimal Sanderatne


  • Sri Lanka’s external financial situation remains vulnerable, largely due to the amount of debt repayment due this year with reserves expected to drop to US$ 6.7 bn by year end. This is further worsened by economic and geopolitical concerns, which can further worsen this deficit. While a BOP surplus would help replenish these reserves, high trade deficits have made this a difficult task.


  • However, this year has seen an improvement in the trade deficit so far, dropping 55% for the 1st quarter when compared to the same period for 2018. This has been as a result of both a growth in exports and a fall in imports. If this trend continues, the country could see a smaller trade deficit by the end of the year and hence, a larger BOP surplus by the end of the year.


  • However, numerous factors could still impact the BOP. An expected drop in remittances and tourism is at the top of this list. Unpredictable factors such as a rise in oil prices due to US sanctions on Iran and trade tensions could cause adverse impacts as well. Hence continuation of tariff, monetary, and fiscal policies to stem imports will be necessary to increase the BOP surplus and help the country’s debt repayments.


For the full article – Refer The Sunday Times



2. Sri Lanka Tourism gets third chance. Will we blow it?

By: Rohantha N.A. Athukorala


  • Sri Lanka has had a few opportunities to revive and position the tourism sector. The first of such opportunities came in 2009 after the cessation of hostilities with the LTTE and the second in 2015 after the appointment of the new government. We were not able to capitalize on these opportunities despite having commendable plans and capable individuals to execute those plans. In the aftermath of the April 21 terror attacks, the country’s tourism sector is the most affected, with up to US$ 1.5bn at risk of being lost. However, this fallout is also an opportunity, since it allows the country to revitalize the industry and fix issues within it.


  • To this end, Sri Lanka can learn a few things from other countries such as the Maldives, where the industry landscape is similar. Maldives looks strategically at the bigger picture of its tourism agenda in a situation where the tourism sector is threatened by ISIS related threats. Tourism has thrived in the Maldives as they focus on other sectors that can boost the tourism sector as well as inviting young entrepreneurs into the sector creating new job opportunities. The country also has a very focused vision of making it a premier holiday destination with concrete plans which don’t change often.


  • The opportunity available to Sri Lanka right now must not be wasted. The country should go back to its basics and create an effective and targeted marketing effort to put Sri Lanka on the map again as a popular tourist destination. The hotels should also take this time to revamp their efforts to position themselves at the high-end. Ensuring that Sri Lanka takes initiative to address risks of over-tourism and ensuring that the country’s carrying capacity is not overwhelmed will be added requirements. Through the implementation of such policies, the country’s tourism industry as well as every other part of the economy that depends upon it can be strengthened.


For the full article - Refer Daily FT


(Compiled by: Chayu Damsinghe, Promodhya Abeysekara & Asel Hettiarachchi)

Disclaimer: This information has been compiled from sources believed to be reliable but Frontier Research Private Limited does not warrant its completeness or accuracy. The bullet points provided for each summarised opinion article is written by Frontier Research and has no connection to the respective author. Furthermore, the information contained in these reports/emails are confidential and should not be shared publicly. Disclosure, copying and distribution is strictly prohibited.

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