Central Bank Governor Dr. Nandalal Weerasinghe told a forum organized by the Ceylon Institute of Builders that the country’s construction sector boomed due to government-funded projects, but the same model will not apply in the future.
“After the end of the war mega-infrastructure development projects took place, largely are government-funded projects, either borrowed-money or taxpayers money,” he said, adding that when the Sri Lankan government was finding it difficult to finance a comfort letter was given to the private commercial banks, where funding can be obtained from the banks for the government project and the money will be paid later.
“That was a trap,” revealed the Central Bank Governor.
He said that the country’s construction sector developed to its present state was mainly due to government-funded projects, and going forward the sector cannot rely on government-sponsored projects.
“If we are going forward with the same model, we will see another round of restructuring, and debt sustainability issues. That can never happen again. If that happens, we will be repeating the same cycle of crises,” warned the Governor.
(newsfirst)