The Sri Lankan government has strengthened the macro economic fundamentals to face any eventualities positively and has taken several measures to deal with the loss of European Union’s tariff concession, Generalized System of Preferences (GSP) plus facility from next month.

 

Addressing media, the Government spokesman Media and Information Minister Keheliya Rambukwella said the government under no circumstances will betray the country, no bow down to the internal or external pressures but will make every action to protect the integrity and sovereignty of the country.

 

“Presently we have a foreign exchange reserve of USD 6.2 Billion sufficient to meet the import needs for more than six months and we are optimistic of increasing it to around USD 7.5 billion at the end of the third quarter,” the Minister informed.

 

Explaining further the Minister said the reserves are sufficient to bring down the dollar exchange rate to about Rs. 105 but the government is maintaining it at current level to help the exporters and it is one of the measures taken by the government to counteract the losses from GSP+ and help the exporters, encourage their production activities and make them competitive in the international market.

 

According to Minister Rambukwella, Sri Lanka’s exports to EU countries constituted about 50 percent of total apparel exports in 2009 and of those only about 60 percent benefited from the GSP+ scheme.

 

The Central Bank of Sri Lanka estimates on a net basis the total value of the losses as a result of the withdrawal of the concession to be about USD 102 million a year.

 

The European Commission (EC) on February 15th this year decided to suspend the GSP+ trade facility to Sri Lanka following an investigation by the European Commission that said the country fell short in implementing three UN human rights conventions relevant for benefits under the scheme.

 

The Commission gave six months time to rectify the concerns and set specific demands to satisfy their requirements.

 

The government last month said the conditions set by the EC to extend the GSP+ tariff facility are so “unacceptably intrusive” and intervene in the affairs of the country and it felt the need to inform the Sri Lankan public of the implications of accepting those conditions for a limited‐time benefit.

 

The government says in preparation for the withdrawal of the GSP concession effective from August 15, the government, the Central Bank as well as many Sri Lankan exporters to the EU have already taken many measures to deal with this risk.

 

Some of the measures taken by the government to handle the losses include improving the business environment in the country by ending the conflict and stabilizing and improving almost all macro‐economic fundamentals.

 

Low inflation, lower rates of interest, high foreign reserves, stable rupee exchange rates, political stability in the country and removal of Sri Lanka from the list of high war risk countries are some of the measures, the spokesman pointed out.

 

(CP)