The pre 1977 and post 1977 periods marked economic progress in Sri Lanka and resulting fiscal progress impacted on the Central Bank, which ensured a high profile influence on the economy, were the featured remarks of Dr. Nimal Sanderatne at the 55th Anniversary lecture of the Central Bank this week.

The Central Bank was established August 28th 1950 and since then its influence on fiscal policy had grown and effectively translated to correlate to respective Governments’ financial policies to ensure its influence although significant, yet low key.

Governor Central Bank Sunil Mendis introduced Dr.Sandaratne, who chronicled his outstanding career, also included his present role in the private sector.

Dr. Nimal Sandaratne who served the Central Bank in positions of importance over a period of approximately 25 years, said that since 1977 the paradigm shift in fiscal policy was key in contributing to the steady rise of the private sector in preference to central control of the public sector. He said that the liberal shift in the tax structure promoted influx of foreign investment and up to about 1983 the economy grew at the rate of about 4.5% "The economic reforms introduced in November 1977 marked a water shed in the country’s economy", he said. "They reversed the policies pursued from 1970 to 1977".

Economic reforms included liberalisation of trade and exchange controls, and the overall dominance of the vicissitudes of market forces that influenced progress. These were facts that were adhered to ensure progress. He said that steady progress up to 1983 continued to auger well for progress but the ethnic conflict at that time had drastic repercussions on progress which plummeted to barely 1.5%.

The misjudgement of 1983 played its irreversible regression on the economy compounded by the JVP insurrection of 1987 which also had negative impacts on the overall monetary applications of that time, he said.

The World Bank, and the International Monetary Fund, with other donor countries supported policy reforms which penetrated progressive policy for development rather than consumption. Also of significance were investment guarantees and tax concessions. These reforms coupled with change of the constitution in 1978 promoted confidence within the international community inculcating financial discipline and a drastic reduction of subsidies, he said. Notably simplification of the tariff structure had its salutary impacts which further promoted confidence to garner support for progressive reform. Also of land mark importance was that restrictions in foreign investment were removed from the stock market. Concentrated promotion of such investment too had positive impacts on the economy and the good reputation of the country.

Dr. Sandaratne also made the point that although the government changed in 1994, laid down policies did not . This he said was quite significant because up to that point when ever there was change in government, policies too changed.

"Fifty five years is not a long period in Sri Lanka’s long history of over 2500 years. Yet These 55 years have witnessed profound and irreversible changes", he said.

His remarks in the long run were formidable yet thought provoking. He said quoting a Dutch economist who visited the country using a soccer metaphor said "You have excellent players but you are unable to score goals, as you do not work in teams."