“I do not believe that the US resolution will have any short-term economic implications, however, capital markets might be affected due to the negative sentiments. Particularly 5 to 10 years foreign borrowings will carry an additional risk premium,” Commonwealth Secretariat Economic Affairs Division’s former Director Dr Indrajit Coomaraswamy told The Nation.
When asked whether there would be a strain on trade relations with India, Dr Coomaraswamy answered in the negative stating that the issue was more of a political nature than an economic one.
Economist turned Opposition Parliamentarian, Dr Harsha De Silva in his view said that Sri Lanka is bound to face multiple issues through the adoption of the resolution and that the sovereign risk rating is likely to be adjusted in the interim.
“There will be more of an indirect impact followed by a direct impact on foreign investments and loans taken from overseas. However, since the Commission has given us a time frame, it could be temporary,” he pointed out. However, refuting the economic implications, Secretary to the Treasury, Dr P.B. Jayasundera addressing the media last week said that there was no way the Geneva issue would affect the Sri Lankan economy.
“The Geneva issue has not affected the Sri Lankan economy. Those who were voting are Sri Lanka’s strong economic development partners. I’m not considering the Geneva issue economically seriously,” opined Dr Jayasundera.
Touching on the present economy, Dr Jayasundera stressed that today Sri Lanka was moving from a consumption-oriented economy to a more savings-oriented economy.
“We now have slightly less than a US $ 5 billion reserve,” he pointed out. In fact, the 2012 budget spelt out the economic revival where in the airline sector alone Sri Lanka was moving beyond the 20 aircraft to ensure the all important connectivity to international airlines in keeping abreast with the global air traffic market.