Sri Lanka tea exporter calls for economic stability rather than inflation-depreciation cycle

March 09, 2007 (LBO) – In a departure from the usual cry, a top tea exporter in Sri Lanka has called for lower fiscal deficits and economic stability rather than depending on currency depreciation to regain competitiveness lost through fiscally-induced domestic inflation. James Finlay last traded at 143 rupees. Earnings per share on ordinary revenues were 5.86 rupees per share.

“In the trade of between economic growth – supported by fiscal deficit and liberal monetary expansion – and the control of inflation, the country has evidently opted in favour of the former,” James Finlay and Company in Colombo told shareholders in an economic review.

“It is important, however to note that low inflation creates a vastly superior environment for stable growth and generally orderly conditions on all markets.”

James Finlays had exported 8.8 million kilos of tea to 31 countries and earned 2.7 billion rupees in 2006.

Finlays said Sri Lanka’s economy is expected to have grown by over 7 percent in 2006, driven by strong domestic demand, post-tsunami reconstruction and expansionary fiscal policy.

“The impressive GDP [Gross Domestic Product] performance was partly attributable to a marked increase in government expenditure,” Finlays said.

“Consequently, de