Sri Lanka launched an 130 billion rupee ($818.12 million) programme on Friday to generate entrepreneurship and rural development and boost faltering growth, officials said. The programme allocates 50 billion rupees in concessionary loans in the next two years to create at least 100,000 new entrepreneurs and another 80 billion rupees to boost the rural economy though a raft of development projects.
"We need investments, exports and money circulation for a stronger economy," said Prime Minister Ranil Wickremesinghe. "At this moment we are encouraging local investors to invest and extending our support for the talented people to start new businesses and that's why we have launched this new system to boost the economic growth."
The Indian Ocean island nation's economy grew 3.2 percent year-on-year in the first quarter of 2018, cooling from 3.5 percent in the fourth quarter of 2017. Analysts cited political disquiet and a weaker currency for the slowdown.
Finance Minister Mangala Samaraweera on Tuesday said the economy is likely to grow about 4.5 percent this year, below the central bank estimate of five percent, in a sign that political uncertainty is curbing a more robust recovery after last year's 3.3 percent expansion, the lowest in 16 years.
Growth was knocked last year by a combination of tight economic policies and drought and flood damage to agriculture. The International Monetary Fund (IMF) has forecast economic growth to rebound to four percent this year.
Analysts said 4.5 percent growth would be possible due to recovery in agriculture after a series of weather-related disruptions, loose monetary policy, and strong global demand. Political uncertainties have also affected the economic outlook as the country's ruling coalition eyes a presidential election next year.
The parties led by Wickremesinghe and President Maithripala Sirisena formed a national government after the last parliamentary election in August 2015. But Sirisena's centre-left party has opposed many liberal economic policy measures proposed by Wickremesinghe's centre-right UNP.