Need to attract domestic savings stressed
To minimize dependency on foreign investments:
Sri Lanka needs to have a mechanism to attract domestic savings to
carry out development activities and generate necessary funds within the
country. Steps enhance the level of domestic and national savings will
minimize dependency on foreign investments, Wealth Trust Corporation
Executive Director Mangala Boyagoda told Daily News Business.
A strategic approach to promote savings and motivate savers to save
in financial instruments especially in the capital market would
facilitate increased level of savings within the country.
“A high level of savings is an indication of economic growth,” he
Despite efforts to inculcate saving habits among the public, the
country records a low level of savings.
“It recorded a decrease in domestic savings from 17 percent to 14
percent and a decrease in national savings level from 22 percent to 18
percent during the last three to four years,” Boyagoda said.
“The generation of savings is an indicator of capital formation that
helps continuous development activities due to availability of funding.
It also provides an impetus for GDP growth. It is important to focus
upon increasing domestic and national savings to generate funds within
the country,” he said.
Sri Lanka has the lowest savings ratio in the region as against 45
percent in Singapore, 35 percent in Malaysia and 28 percent in India.
“The country’s main mode of savings is by money in savings deposits
which is high as 45 to 48 percent. The decrease in inflation has
provided positive returns for savers and this should be sustained. There
should be a device to match the rising inflation that gives negative
returns,” he said.
“Steps need to be taken to improve the level of financial literacy
among the public for prudent investment decision-making. The economic
activities are money driven and higher purchasing power would improve
living standards and generate employment opportunities that lead to
development of the country,” he said.