Exports to grow up to 15 - 18% of GDP

Central Bank Governor Arjuna Mahendran targets exports to grow up to 15- 18% of the GDP from its current 14%.

The growth can be expected nine months into the floating of the rupee, he said.

"Our exports amounts only 14% of the GDP, however 15 years ago it amounted to 30%. Other countries in our region have expanded and developed in terms of exports. One of the reasons for this is that we have an overvalued currency.

By making the rupee float we expect exports to pick up around the midpoint of 2016," Mahendran said.

The Governor said the export sector has been performing poorly in the previous year. Sri Lanka being a country heavily dependent on the import of goods to facilitate the basic day to day needs does not have the necessary capacity to buy foreign currency. "We hope the picking up of exports will help us create cash reserves, rather than depending on borrowings. We need more foreign direct investments. This is why Indian and Chinese investors are so important.

Foreign Direct Investment is the way forward for the present economy. We need possible investors to come into Sri Lanka and export goods to the international market," he said.

Mahendran said that there will be a commencement of Chinese projects which had been investigated so as to see if it follows the methods of good governance.

However he stated that there is a procedure to be carried out and the process should be conducted transparently. The People's Bank of China has currently provided their consent to the issue the bonds.

"This is a very exciting outcome as we can look into Renminbi Finance which is cheaper for investors and for the country, when the government need to fund counterpart investments," Mahendran said.

He said they hoped that the seafood ban to the European Union would be lifted thus creating a positive environment for the export market to grow. The Governor added that the rupee is by no means under pressure and will continue to stabilize.