ECONOMYNEXT – Sri Lanka will go ahead with the free trade agreement with Singapore, on the basis of policy continuity, Deputy Finance Minister Harshana Suriyapperuma has said.
“This is a decision taken by previous governments,” Minister Suriyapperuma told the parliament’s Committee on Public Finance according to a published video.
“On that basis, and as part of the agreement has already been implemented, we decided to go ahead with it on a stand alone basis.”
The FTA envisages phased reduction of import duties and so-called para tariffs over 5 and 6 year periods.
Import duties have been lowered on two sets of goods (HS Codes) already.
The current items related to the first set of goods on which Port and Airport Levy is lowered.
Government members of the COPF had asked to study the matter, when it was previously taken up by the committee.
The decision was arrived at after a study, Deputy Industries Minister Chathuranga Abeysinghe said.
Sri Lanka had created access for a lot of goods under free trade deals but they were still not used by industry, he said.
COPF chairman Harsha de Silva said he supported the reduction of the PAL reduction was also in favour of creating a free trade area with Singapore.
The agreement was signed in 2018 but then President Maithreepala Sirisena had suspended the agreement during the so-called coup incident, de Silva said.
The economic credentials of the then so-called Yahapalana administration was blown to smithereens after the central bank triggered two stop-go cycles in the process of flexible inflation targeting and potential output targeting.
In the first inflation and stabilization crisis the rupee fell from 131 to 151 to the US dollar. In the second one the rupee fell from 152 to 182 to the US dollar.
On the day before the coup the rupee had fallen to 173 as money was printed through open market operations and dollar rupee swaps to cut rates.
Singapore does not have a policy rate to create forex shortages and therefore does not have to control trade or go to the International Monetary Fund after cutting rates.
Monetary Authority of Singapore is also has the Finance Minister as its Chairman. Successive finance ministers have believed in stability rather than ‘monetary accommodation’.
Exchange rate appreciation is used to keep inflation close to zero and avoid social unrest. (Colombo/Jan23/2025)
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