Sri Lanka advised to attract FDI, in order to maintain high growth rate: World Bank

Apr 17, 2015 (LBO) – Sri Lanka is advised to attract more foreign investments to keep up with its high growth rate due to the Island’s limitation on public and private national savings compared to national investment, a newly released World Bank report said.

“With limited public and private national savings compared to national investment, Sri Lanka needs to attract FDI in order to maintain its high growth rate,” World Bank’s South Asia Economic Focus report said.
“However, Sri Lanka attracts less FDI than expected despite its geographic, education and infrastructure advantages,”

Sri Lanka’s new 100 day administration has taken a back seat in setting a foreign direct investment goal for this year (2015) after authorities under the past regime have repeatedly failed to meet their targets in the recent past.

Investments advisors say, Sri Lanka’s policy inconsistency is unhealthy for foreign investments while the new mini budget does not send the right signals to the FDI community either.

Critics says the new ruler’s interim budget 2015, also called the “Saradiel budget” approved by the parliament in early February, is only targeted at a basket of goodies promised during the presidential election campaign.

Sri Lanka’s foreign direct investment (FDI) was 1,900 million US dollars in 2014 data showed.
The island fell short of the targeted 2.0 billion US dollars FDI’s for 2013 and 2.5 billion US dollars for 2014.

The report also warns that the country’s concessional borrowing sources are drying up and are being replaced by borrowings on commercial terms, which could affect affordability.

“With the country on course to join upper middle income countries, concessional borrowing sources are drying up and are being replaced by borrowings on commercial terms, which could affect affordability.” World Bank said.