Who will get the economy going? No one, unless truth is told


Dr. Sirimal Abeyratne

by Sanath Nanayakkare

With the parliamentary elections approaching, Sri Lanka is on the verge of entering another phase of its familiar 'pledge cycle', therefore, it's high time the main political parties told the masses the absolute truth on the status of the country's economy, and the masses demanded to know the truth and nothing but the truth before the country would end up in an economic crisis, think tanks of the Pathfinder Foundation told the media in Colombo last week.

Pathfinder Deputy Chairman Dr. Indrajith Commaraswamy, Executive Director - Luxman Siriwardena and Dr. Sirimal Abeyratne-Professor of Economics, University of Colombo and Senior Fellow of Pathfinder held this press briefing concurrent to the launch of the Foundation's valuable booklet titled 'Charting the Way Forward : Prosperity for All'.

The booklet discusses 12 highly relevant topics in a very succinct style. They include: Maintaining Sound Macroeconomic Fundamentals, Improving the Business Climate, Land/Labour/Capital Markets, Exports and FDIs, SMEs, Ways to Increase Agricultural Productivity, Training and Skills Development, Empowering Plantation Community, Reform Strategy for Public Enterprises, Efficient Public Service Delivery, Social Protection and Capitalizing on Emerging Mega Funds.

Commenting on the independent, analytical work presented in the booklet, Pathfinder Executive Director Luxman Siriwardena said," It's timely to inform the manifesto preparation process of the political parties, and stimulate public discussion on the important determinants that enable successful transition of the Sri Lankan economy to a sustained high-growth path. We're submitting the reform proposals in the spirit of constructive engagement to promote the improvement of the lives of all Sri Lankans".

Hitting the nail on the head, Siriwardane said," The hole in the budget deficit was dented by the Budget Speech - November 2014 as well as the Interim Budget - February 2015.

We need to get out of this vicious cycle and deal with the harsher economic realities without misleading the people".

Dr. Sirimal Abeyratne,-Professor of Economics, University of Colombo and Senior Fellow of Pathfinder said," Sri Lanka needs to follow good practices which are being pursued by an increasing number of countries around the world. Welfare measures promised through the political manifestos must be cost -calculated and shown where the funds would come from to deliver them. This will enable the voters to assess the financial viability of the promises they vote for. 10% economic growth is necessary in the next 10-20 years to meet the growing aspirations of the people, and this is doable and feasible if the right policy framework is followed with consistency".

Pathfinder Deputy Chairman Dr. Indrajith Commaraswamy noted," We are not saying that the country is in an economic crisis, but we may end up in a crisis if we don't take action. There's a lot of discussion on political and constitutional reforms, legal reforms etc., but the management of the economy is the most important thing".

"The debt dynamics have changed substantially and the scope for the State to borrow is no longer there. The budget deficit is likely to deteriorate as a result of the non-fundable 'budget handouts' that we saw in the recent past. Lee Kwan Yu said that elections in Sri Lanka are an auction of non-existent resources. The boost given to consumer demand is no longer sustainable. The Balance of Payment is under pressure. It's only a matter of time that we will have tax increases, expenditure cuts, interest rate increases and depreciation of currency or some mix of this prescription. This is why we need to implement major economic policy reforms at this juncture," he pointed out.

"The impact of the economy on the day-to -day lives of the people is of paramount importance. The Pathfinder Foundation feels the need to get the whole country focusing on economic issues and all other issues. The longer you wait the more intense the pain will be, so we need to achieve macroeconomic stabilization as soon as the elections are over. For this, the political leaders, the academics, the public and private sectors and the whole society have a responsible role to play. Facing the economic reality in a realistic way could see us through the looming crisis', Dr. Commaraswamy said.

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