Economynext | 14 February 2023
Sri Lanka to fast-track FTA with Thailand in bid to boost exports
By CHANKA JAYASINGHE
ECONOMYNEXT – Sri Lanka’s cabinet of ministers has approved a proposal to fast-track a free trade agreement with Thailand in the hopes of increasing exports to the Asian nation, Cabinet Spokesman Minister Bandula Gunawardana said.
“The biggest thing we have apart from the Economic crisis is the lack of forex in the country,” Gunawardana told reporters on Tuesday February 14.
“We lack dollars and we are unable to pay back for the goods we import. The only way to mitigate this is to increase dollar income and reduce outflows.”
The first round of discussions between the two nations happened in 2016 followed by a second round in 2018. The latest talks were on January 09-10, 2023. The agreement is expected to increase the current export value of 550 million US dollars per annum to 1.5 billion US dollars.
Countries like India, Vietnam and Singapore are heavily dependent on FTAs which have boosted their exports, Gunawadana said, adding that Sri Lanka should also consider FTAs in order to encourage exporters to compete in foreign markets.
“Because of FTAs other countries can export their products duty free,” said Gunawardana.
“If we do not get into these agreements, our exporters will have a hard time competing in those markets. We have to do it whether we like it or not.”
Sri Lanka is in the midst of its worst currency crisis in the history of the nation’s Central Bank which resulted in the depreciation of the rupee from 260 to 360 against the US dollar in 2022.
In November 2022, imports were down 18.1 percent to 1,445 million US dollars and exports fell 17.9 percent to 994 million Us dollars.
The trade deficit was 450 million dollars, down from 553 million US dollars last year, but slightly higher from October.
Inflows to the government was 208 million dollars in November up from 91 million US dollars.
Sri Lanka has seen exports falling, after the US Fed and other reserve currency central banks stopped printing money, reducing artificial demand for imports.