Government seeks to deepen capital market to finance economic growth

The Government will step up efforts to channel domestic savings into productive investment through Sri Lanka’s capital market as the country moves from macroeconomic stabilisation towards a broader economic transformation, Deputy Minister of Finance and Planning Dr. Anil Jayantha Fernando said.

Addressing a Colombo forum held under the theme “From Resilience to Sustainable Growth – One Vision for a Resilient Market”, jointly organised by the Securities and Exchange Commission of Sri Lanka (SEC) and the Colombo Stock Exchange (CSE), Fernando said the capital market had a critical role to play in pooling savings scattered across the economy and directing them towards larger investment projects.

However, he acknowledged that concerns over market manipulation, unequal access to information and inadequate investor knowledge had undermined public confidence in the market. He said information asymmetry allowed a limited group of investors to benefit from advantages unavailable to others, contributing to negative perceptions of capital market investment.

The Government would therefore seek to create a level playing field, improve the investment environment and ensure that market participants operated within the applicable rules and regulations, he said. Fernando stressed that avoiding conflicts between private interests and the public interest, alongside upholding the rule of law, was essential to building confidence in economic institutions. He said the Government had already undertaken measures to support capital market development, although some initiatives might not yet have been sufficiently visible. He indicated that the Government’s policy direction would become more evident through the Budget.

The Deputy Minister said the next phase of economic policy needed to focus on mobilising investment from both domestic and foreign sources rather than relying solely on the gains achieved through economic stabilisation.

He also highlighted the importance of maintaining macroeconomic stability while working towards lower inflation and interest rates over the longer term. Acknowledging uncertainty surrounding global energy prices, geopolitical tensions, international trade and climate-related risks, Fernando said Sri Lanka needed to build resilience and strengthen its capacity to attract investment.

Policy reforms, improved investment facilitation and a more transparent market environment would be important in supporting this transition, he added.

Source: Daily News