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Financial Crisis in Sri Lanka

Assignment
by

Abinaya Ramachandran

on 4 November 2013

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Transcript of Financial Crisis in Sri Lanka

Recovery of the Sri Lankan Economy
Reasons of Financial Crisis in Sri Lanka
Exports Declined
There was decline in exports such as
Tea & Rubber.
Decline in growth of
Textile & Leather
In
2007

7.3%
but In
2008

3.1%
slow growth.
Exports of
Diamonds & Jewellery
also affected.
TYPES OF FINANCIAL CRISIS
FINANCIAL CRISIS IN SRI LANKA
The drop in exports and imports in 2009 has been recovered in 2010
CONTENTS
EXAMPLES OF FINANCIAL CRISIS
What is a Financial Crisis?
Types of Financial Crisis. Examples of Financial Crisis.
Reasons of Financial Crisis in Sri Lanka.
How Financial Crisis affected Sri lanka?
Measures that has been taken to control Financial Crisis in Sri Lanka.
Recovery of the Sri Lankan Economy.
Summary
Banking crisis
Speculative Bubble
International crisis
The Argentinean Banking crisis of 1980–82

The Chilean Banking Crisis during 1981–83

The Mexican Economic Crisis during 1995–97

The Asian Financial Crisis in 1997–98

The US Sub-prime Mortgage Crisis Starting from 2007
Measures that has been taken to control Financial Crisis In
Sri Lanka

How Financial Crisis affected Sri Lanka
The US crisis was the latest financial and economic crisis which impacted on trade and economic growth of Sri Lanka.
Reasons
Funds invested by Foreigners in TreasuryBonds & Bills flowed out from Srilanka.

The SL Nationals who have migrated abroad for employment couldn't send their valuable foreign currency.

The export of Tea, Rubber, Coconut, Spices, Jewellery, Garments have badly affected.
Unemployment
The service sector growth In
2007

7.1%
but In
2008

5.6%
Tourism Sector
Tourism arrival dropped by
11.2%
in
2008
partly due to the global cricsis.

The tourist arrivals from the Western Europe & North American countries dropped by
15%
in
2008
when compared to
2007.
Economic Growth
The lowest economic growth of
1.6 %
in the first quarter
2009
indicated the adverse effects of the global crisis on the Sri Lanka economy.

Economic growth in
2009
was
3.5

%
compared to
6%
in
2008
which showed the adverse impact of the financial crisis on the Sri Lankan economy.
Inflation
The average inflation in
2009
was
3.4%
the lowest since
1985.
The banking sector was resilient to external and domestic developments
Unemployment rate declined to 4.9 per cent in 2010 & Economic growth at 8 per cen in 2010
External reserve position improved
Exchange Control Measures
The restrictions on movements of foreign capital flows in Sri Lanka such as permitting the deposits in foreign currencies under specific schemes.

Bank Supervision Measures
The issuance of some directions to financial institutions.
The strict guidelines for maintenance of non-performing loans (NPL)
The CBSL also placed limits on the borrowings of Commercial Banks.

Other Measures
Under its monetary policy, the CBSL took several measures.
The CBSL and the government negotiated with the IMF for a standby arrangement to improve the external reserve position of the country.
Timely implementation of monetary policy adjustments helped in maintaining price stability and low inflation.
WHAT IS A FINANCIAL CRISIS
A situation in which the value of financial institutions or assets drops rapidly. A financial crisis is often associated with a panic or a run on the banks, in which investors sell off assets or withdraw money from savings accounts with the expectation that the value of those assets will drop if they remain at a financial institution.
Summary
Here we attempted to explain the basis of Financial Crisis , Types of Financial Crisis & some examples of Financial Crisis.

But as per our main topic
"Financial Crisis In Sri Lanka"
we mainly focused on the Reasons of Financial Crisis In Sri Lanka & briefly discussed the affected areas.

Later we discussed the Measures that has been taken by the Government & the Recovery of the Sri Lankan economy through some Graphs.

So from this presentation we can say that Sri Lanka too has got affected from US Crisis. As a conclusion we can't completely avoid the Financial Crisis, but through the continous implementation of appropriate polices we can avoid the adverse impacts.
Full transcript