Spotlight: Econ Op-eds in Summary (Week ended 18th September '19)

Snapshots

1. Declining agricultural exports since 2018 serious economic concern

By: Nimal Sanderatne

· Agricultural exports are more significant than indicated by their export values since the import content is much lower than for manufactured exports. Despite recent export growth, agricultural exports (with the exception of sea food exports) have been consistently declining despite the international demand. This can have negative impacts on BoP and economic growth.

· Tea exports, which have a high domestic value addition, have decreased due to a decline in the exportable surplus and lower prices. While natural rubber exports are low, rubber manufactures have earned significantly. Hence, rubber has the potential for a higher contribution to export earnings. Thus, increasing production of these crops are vital.

· Declining trend of coconut exports is likely to continue. However, unless production is increased to match rising domestic consumption, trade balance can be impacted through imports of edible oils. While increasing spices production is vital, Sri Lanka’s reputation for quality spices is threatened by mixing of low-quality imports which can have long run implications.

For the full article – Refer The Sunday Times

2. A new chapter in lending in Sri Lanka – pros and cons

By: Prasad Edirisinghe

· The General Manager of the CRIB had announced that the Bureau plans to release credit scores of banked citizens from August 2019 onwards. Although this is yet to be done, this could make the country’s lending circle much stronger, healthier and could upgrade Sri Lanka’s ranking on the World Bank’s Ease of Doing Business index.

· The new credit score would make the process of obtaining loans faster for those who have inadequate documentation or collaterals. The Bureau’s plan to incorporate utility bill payments to the score also facilitates borrowings for new borrowers. It could also help revive the deteriorating asset quality of the country.

· However, this score comes with a few issues. First of which is the involvement of third parties in borrowing transactions, due to the inability of parties to complete the requirements to obtain a loan and due to tedious tax and legal processes to transfer loans. Another is the exclusion of the informal borrowings from the score due to non-availability of data, resulting in the score not painting a totally accurate picture of one’s creditworthiness.

For the full article - Refer Daily FT

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