Sri Lanka fails to take economy off ground

Just after Sri Lanka secured Independence the country’s economy was favourable and export income was more than adequate where the economy was relatively open.

There was employment and exports of tea rubber and coconut brought in adequate foreign exchange, but with all these prosperity in the country, Sri Lanka failed to realize to lay the foundation to invest and diversification to take the economy forward. He said that this trend continued for some time but by 1955 it collapsed, until 1977.said Prof. A D V de S Indraratne, President, Sri Lanka Economic Association who was the guest speaker at the monthly forum for Public-private Policy Dialogue of the Federation of Chambers of Commerce and Industry of Sri Lanka (FCCISL)  heldrecently at Trans Asia Hotel. He spoke on "The Economy: Opportunities and Challenges and Outlook for 2008 and Beyond.

The Key Person’s Forum is organized by the Small and Medium Enterprise Developers (SMED) – a project of FCCISL and Friedrich Naumann Stiftung (FNSt.).

In 1977 the economy was liberalized, open and regulating and restrictions were taken off. Economic prosperity was in again, but this time too the country failed to make use of the opportunity to put the economy into a stable position. The growth rate then reached to 8.2 percent and the unemployment rate was halved, he added.

Though there was full growth for several years after the liberalization of the economy in 1977.  Then again, the economy was revived around 2002. 

In 2002 the growth from 1.5 percent to around 6 percent was despite the devastation by the tsunami and oil price hikes.  Even the security situation was brought under control and the economy was resilient.

The per capita income in 2006 was recorded as US$ 1350 and in 2007 it was recorded as US$ 1430 and further unemployment has been declining. But what has been worrying is the inflation which has been rising to 20 percent, despite the tight monetary policy of the Central Bank.

Prof Indraratne said that this was the third occasion that Sri Lanka failed to capitalize the opportunity to take the economy to a stable position. 

He said that  there is some kind of economic progress in the country, where things such as liberation of east, development activities being launched and the other development work as roads and infrastructure are on the cards.

He said that what was disturbing though is the galloping cost of living and the poverty of a large segment of people resurging.  He said that they boast about the high per-capita income, but it appeared to be high exaggerated, because half of the population is below the poverty line and some of their per capita income is less than US$ 250.

 This is the problem that all of them have not realized and they do not talk about equitable income distribution among the population.  He said that it was very unfortunate that whatever the development in the country they never seep down into the bottom line of the people – the poor people never enjoy the benefits of all these development in the country.

He pointed out that one third of the total population is absolutely poor and some of them do not have basic amenities. 

He said that bulk of the industrial capital is concentrated in the Western Province.



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