To get them to produce output that they can sell in the domestic market and abroad. So one challenge is really how we link our SMEs into  International Supply Chains, either through larger companies, or directly. We really need to think in terms of linking up our SMEs to supply chains. The Government has already taken some decisive measures to overcome the short-comings of the export sector. With some  improvement in the performance in the export sector, so far, there are signs that the initiatives are favourable. Since March, we have now seen an improvement in export numbers. We’ve got numbers up to May – in March April and May the numbers have shown an up-turn in export revenue. Hopefully that will gather momentum. I think with the GSP-plus kicking in, and hopefully, a more stable macro-environment, export growth will continues. Page 16 of 17  As I said, Sri Lanka cannot attain 6-7% growth on a sustained basis without transformation of its export performance. Nor can we  overcome the constraints associated with our external debt burden without significantly enhanced non-debt creating foreign exchange receipts, generated, inter alia, by increased exports. So, export  transformation is crucial for both boosting growth and employment, as well as to stabilize our vulnerability stemming from our external debt. The performance of the EASL will be a key determinant of the future prosperity of all Sri Lankans. Thank you very much. Page 17 of 17
But when the crisis came, capital was insufficient, forcing a number of governments to contribute tax revenues to prevent a collapse of the financial system. At present, intensive work is underway in various international forums, above all in the Basel Committee, to develop new regulations covering the amount of capital a bank must hold in relation to its commitments. Capital adequacy requirements will be placed on liquidity risks, which previously lay outside such regulations, but this is only one of many areas in which capital requirements will be strengthened. New forms for equity are also being discussed, for example bond loans that, in the event of a crisis – but without requiring the bank to cancel payments – can automatically be converted into contingent capital. Another problem has been that the supervisory structure, which has generally been concentrated around the individual banks, missed the risks building up in the financial system as a whole. One example of this has been the tremendous growth of credit derivatives over the last decade, which, together with the emergence of complicated and hard-to-value structured products, have been given much of the blame for causing the crisis to develop in such a serious direction. An immediate example for us is the lending in euro in the Baltic countries, whose exchange rates are tied to the euro, but where the fiscal policy framework, at least in a couple of countries, has turned out to be weak. This problem is also being discussed intensively in many places around the world.