“BRI countries need to move to a new economic model to boost the economy after the Covid crisis”
- Former Deputy Speaker, Renown businessman Mr. Thilanga Sumathipala says addressing an International conference
Former Deputy Speaker, State Minister and renown businessman Thilanga Sumathipala had the opportunity to present some of the most valuable and practical ideas to the world while addressing the annual conference of the Financial Street Forum in China. This was a remarkable opportunity for a Sri Lankan considering Sri Lanka and china having a strong & broad economic and financial connections. Apart from Mr. Sumathipala only a few world famous speakers were given the opportunity to address this conference. The theme of the conference was “Economic Recovery and Green Development of the Belt and Road Initiative” and was held as a three-day conference from October 20th to 22nd in Beijing.
Mr. Thilanga Sumathipala delivered the keynote address on “The Belt and Road Initiative: Economic Recovery and Green Development” and was attended by Heads of International Financial Institutions and eminent economists.
Mr. Sumathipala pointed out the need to revive economies currently crippled by the Covid epidemic through the BRI (belt and road initiative) which is China’s economic and land-sea connectivity strategies to connect Asia, Africa and Europe.
According to the International Monetary Fund, the global economy contracted by 3.3% in 2020, Sumathipala said. And This was the steepest down turn since the great depression of the 1930`s.
In a survey conducted by centralbanking.com a policy institute whose advisory board includes central banks heads from G7 Countries and Nobel Laureates indicated that central bankers held the following views on the BRI.
Accordingly,
- Lockdowns and social distancing affected two-thirds of BRI projects adversely.
- No central bank reported a reduction in funding from china.
- 87% expect BRI projects to contribute to past-Covid recovery.
- 75% of these say the BRI can support a green recovery and sustainable development.
- The majority of respondents expect BRI to boost GDP in the next 05 years.
- 88% of survey respondents expect the BRI to contribute to home –jurisdiction development.
- The BRI can help on infrastructure, job creation & catalysing other foreign direct investment.
- Nearly 80% believe BRI projects are economically viable.
- BRI debt terms appear similar or more favorable to other financing terms & Conditions.
- There are low expectations of BRI alleviating poverty directly.
Mr. Sumathipala also pointed out that there is a high expectation of long-term benefits to be derived from BRI projects at times when governments have increased short-term debt and in some cases liquidity shortages. The rubber rice agreement was outlined as an example of a model will function.
BRI countries can be catalyzed and new economic models can be activated, allowing governments to purchase goods or services in their own countries from the private sector for export in local currency and exchange them for goods and services from other countries through interstate sovereign guaranteed letters.
Mr. Sumathipala said lending with appropriate interest rates with a maturity of more than 10 years would temporarily ease the need for diversion of foreign currency settlements and budget resources currently being used to alleviate the issues arising from the Covid epidemic.
In order for the government of countries to act as clearing houses for the export and import of goods a robust transaction reporting system needs to be incorporated to records the transaction underlying the trade flows and to ensure such flows are not adversely impacted by red tape. The use of block chain technologies to record and transact and clear the potential trade flows and supporting infrastructure like data centers to securely retain information pertaining to these flows would be required and thus the use of block chain would need to be incorporated in to the macro economic policies of the respective countries, he added.
Finally, Thilanga Sumathipala pointed out that the effectiveness and sustainability of BRI revolves around the participation of both the public and private sectors in their countries.
Mr. Thilanga Sumathipala has also been invited to address a conference on other leading academic and cultural activities.
