A senior economist told Sri Lanka’s President that winning the socio-economic war would not be as difficult as winning the war on terror unleashed by the LTTE, but corruption needs to be eliminated as it reduces Sri Lanka’s productive potential and aggravates poverty.

Emeritus Professor of Economics, University of Colombo, A. D. V. de S. Indraratna, President of the Sri Lanka Economics Association and Chairman of the Monetary Policy Consultative Committee of the Central Bank, was inducted last week as the 29 President of the Organisation of Professional Associations (OPA).

President Mahinda Rajapaksa was the Chief Guest at the induction ceremony.

"Winning the socio-economic war will not be as difficult as winning the war against terrorism and a conducive environment for this must be created which means there has to be good governance, corporate social responsibility, law and order, civic consciousness and public spiritedness," Prof. Indraratna said.

"For this, the Government has to eliminate corruption, waste and ostentation on the one hand, and lawlessness, crime and violence on the other hand, wherever they occur. Corruption which is a scourge on the body politic and society is not a recent phenomenon. It has been on the increase since the seventies," he told Rajapaksa while delivering his induction speech.

Prof. Indraratna said Sri Lanka’s professionals were concerned at the level of corruption prevalent in the country and reminded Rajapaksa of his pledge to fight corruption.

"We of the OPA are very concerned about the nature and level of corruption, because corruption reduces the productive potential of the economy and aggravates the country’s poverty. Professionals are glad that Your Excellency has vouched to stamp out this curse of corruption," he said.

Prof. Indraratna also urged the Media Minister, Anura Priyadarshana Yapa, who attended the induction ceremony, to speed up efforts to introduce legislation on the right to information.

"The media minister also can help in this campaign against corruption by follow-up work on the Draft Right to Information Act. We are confident, that Your Excellency will be able to win the socio- economic war too, as you have won the war against terrorism," Prof. Indraratna said.

An economist addressing the Annual Sessions of the Sri Lanka Economics Association in 2008 said that according to a survey conducted by the association; about 2 percent of GDP was lost due to corruption and bribery in the sphere of infrastructure development.

"Economists should demand that the 13th and 17th Amendments be activated," Lloyd F. Yapa a consultant on strategic development said.

Making the executive answerable to the judiciary, recruitments to the public sector based on merit, streamlining rules and procedures and enforcing accountability are some of the attributes to good governance.

Sri Lanka does not have an accountability system and well trained media and there is no transparency, little delegation and devolution and there is no place for criticism and consultations; corruption is rampant.

Poor governance has prevented Sri Lanka from realizing its full potential and what gains have been made are not shared equitably.

The majority of people have not realized the strong link between poor governance and inequitable growth.

Yapa said that economists should dedicate themselves into making the people aware of the nexus between governance and prosperity.

While Sri Lanka’s economy has shown improvements since the end of the war which unleashed its potential to grow further, the Central Bank and government think tank, the Institute of Policy Studies, indicate in various publications that the government needs to do much more to curtail or eliminate wasteful expenditure in order to deliver sustainable and equitable economic development to all Sri Lankans.

"The government has a target of reducing the fiscal deficit to 5 percent of GDP by 2011, and this is the same undertaking that was given to the IMF. The target for this year is 7 percent and 6.5 percent for 2010. Many wonder how these can be achieved given the current pressure on the deficit," an economist said on condition of anonymity.

"One way is to increase the tax base, as I understand it, even the IMF believes tax revenue can be increased without introducing new taxes. But this alone will not help. The government needs to rationalize expenditure.

"A bloated cabinet, excessive foreign jaunts and misguided investments such as Mihin Lanka cause pressure on the spending size. How much more can the government achieve if these are eliminated," he said.