Economic Affairs State Minister Dr. Harsha De Silva asked the country's upper middle class to act with some social consciousness to help the government offset the impact of the depreciation of the Sri Lankan currency.
"Social consciousness of our high income people are also important now; perhaps postpone by just a couple of months that new luxury car or that trip to Alaska. These will all help to cut the demand at the margin, " de Silva said, in a Facebook statement.
The State Minister also said that the Sri Lankan currency had overshot its fair value at the moment, but would gain strength soon.
He added, "The (brave) decision of our government to introduce the fuel price formula is certainly a huge boost to limit demand and the temporary measure like 100 percent margin on LC for import of cars for personal use will help stem import demand."
“The Sri Lankan rupee is again under pressure. The reasons for the current episode are primarily exogenous; driven mainly by outflows of US dollars from emerging markets due to a robust US economy, gradual tightening (of interest rates) by the Federal Reserve and investors taking refuge in the US with escalating trade tensions with China. While the impact of this shock is being felt across the world, current account deficit emerging countries, like Sri Lanka, are getting battered more than those with healthy trade balances."
"I am not planning on explaining the more fundamental reason for the continuous pressure on the LKR today, but those who follow my writing are fully aware of how strongly I have been arguing for even stronger policy measure to increase the exports to GDP share of Sri Lanka including FTAs and unilateral liberalization of trade to increase investments and more conducive immigration policy to bring in technical expertise to move from producing low value simple products to high value complex products. That is the only sustainable solution to the continuous pressure on the LKR and to create high wage jobs, " he also said.
Sources : asianmirror
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