Sri Lanka needs to have a mechanism to attract domestic savings to carry out development activities and generate necessary funds within the country. Steps enhance the level of domestic and national savings will minimize dependency on foreign investments, Wealth Trust Corporation Executive Director Mangala Boyagoda told Daily News Business.
A strategic approach to promote savings and motivate savers to save in financial instruments especially in the capital market would facilitate increased level of savings within the country.
A high level of savings is an indication of economic growth, he said.
Despite efforts to inculcate saving habits among the public, the country records a low level of savings.
It recorded a decrease in domestic savings from 17 percent to 14 percent and a decrease in national savings level from 22 percent to 18 percent during the last three to four years, Boyagoda said.
The generation of savings is an indicator of capital formation that helps continuous development activities due to availability of funding. It also provides an impetus for GDP growth. It is important to focus upon increasing domestic and national savings to generate funds within the country, he said.
Sri Lanka has the lowest savings ratio in the region as against 45 percent in Singapore, 35 percent in Malaysia and 28 percent in India.
The country s main mode of savings is by money in savings deposits which is high as 45 to 48 percent. The decrease in inflation has provided positive returns for savers and this should be sustained. There should be a device to match the rising inflation that gives negative returns, he said.
Steps need to be taken to improve the level of financial literacy among the public for prudent investment decision-making. The economic activities are money driven and higher purchasing power would improve living standards and generate employment opportunities that lead to development of the country, he said.