Sri Lanka’s central bank will study the growing indebtedness in Tamil-majority north and east, its Governor Indrajit Coomaraswamy said.
“We are concerned about the rise in household debt,” the governor said, referring to a prevalent post-war challenge facing families that are rebuilding their lives. Following the study and its analysis, the apex institution will take necessary steps, Dr. Coomaraswamy told Colombo-based foreign correspondents.
After Sri Lanka’s civil war ended in May 2009, scores of displaced families who returned to their hometowns are struggling to piece their lives together. While the community suffered enormous losses for three decades, those resettling are grappling with few jobs, means to livelihood and often resort to heavy borrowing.
A recent report of the central bank pointed to high levels of poverty in the Northern and Eastern provinces.
Also, Sri Lanka is experiencing a drought that has badly hit the agriculture sector, a key economic driver in the north.
If the drought continued throughout the year, the country may have to import food and fuel worth an additional $800 million, senior Central Bank officials said. With likely rain and a falling inflation rate, the economy would pick up by the end of the year, they said.
Free trade pact
Dr. Coomaraswamy said that if the island nation could deepen the Free Trade Agreement with India — the neighbours are currently negotiating an Economic and Technological Cooperation Agreement — and ink similar deals with China and Singapore, it would have preferential access to a market of 3 billion people. That would include China, India, Pakistan, Singapore and Europe.