The drift toward shared prosperity has begun: Eran

Says more progressive economic activity will be converging


Eran Wickramaratne, State Minister of Finance - Pic Kamal Bogoda

by Sanath Nanayakkare

Over the past two and a half years, Sri Lanka switched from economic instability to stability on the strength of correct economic policies and reforms, and now the country has entered a growth phase where all Sri Lankans – not just a select few – would be able to enjoy a fair share of the prosperity, Eran Wickramaratne, State Minister of Finance told The Island Financial Review last Friday.

"The Central Bank of Sri Lanka (CBSL) whose independence has been reinstated is pursuing an inflation-target based monetary policy and pursues market-driven interest rates, keeping credit growth in check The CBSL is continuously monitoring consumer-price pressures. And the government doesn't engage in artificial ballooning of the economy through debt-laden public expenditure in line with its fiscal consolidation programme. We are doing all the right things to truly grow the economic-pie for every one to share," he said.

"Foreign Direct Investments to the country nearly doubled last year. Exports continued to record growth momentum for eight of 11 months of 2017 compared to 2016. The earnings from exports increased to $ 10.4 billion, a growth of 10.82% in January-November 2017 compared to the corresponding period of 2016. The growth in exports was mainly driven by industrial exports – 42% followed by agricultural -18% and fisheries – 42% respectively. Industrial exports contributed almost two-thirds of the total export earnings of the country. We will further attempt to benefit from Europe's economic recovery", Wickramaratne pointed out.

"We signed an FTA with Singapore recently which goes beyond the sphere of goods and services into developing crucial sectors of the economy such as investments, technology, infrastructure, intellectual property rights, telecommunication and so on. On another front, a feasibility study is to be undertaken to explore the possibility for an FTA with Indonesia," he said.

The state minister pointed out that for the first time since 1950s, Sri Lanka is to post a surplus in the primary account of the Budget, and for the first time since 1987, the country is to post a surplus in the current account of the Budget.

He remains optimistic that towards the end of 2018, there will be more progressive economic activity converging, and when that happens, the government will be able to reduce the gap between economic realities and people's aspirations for a better standard of living.

Let me give you an example, he said," Say there's a three-wheeler driver who makes a living by transporting people over a hard stretch of terrain in his village. Then, over time, this bad road gets developed and his son gets a good road to continue in his father's job, a lot more more comfortably than his father. That's not the kind of development we envisage. We develop that road in tandem with other economic activity central to the village. And that will empower this young man to get a well-paid job in the skilled-workforce.. With this in mind, we have laid more importance on human capital development than on infrastructure development. That's why the prime minister introduced the 13-year compulsory education scheme for children to qualify in whatever field they excel in. We can't afford to have school dropouts anymore. We want all of our young people in the high-yield economy. That's why we have increased expenditure on education to 2.37% of GDP from 1.9% of GDP. We will be gradually increasing it to 3% in the next 2 to 3 years".

The Island Financial Review asked the minister whether sovereign bond traders who are well versed in regional sovereign bond issues, varying interest rates, credit ratings, investor appetite at any given time and the periodical borrowing-requirements of the Sri Lankan government, could have acted as 'scam artists' to make a fast buck by ethically dubious means.

In response, the minister said," In my opinion, there could always been bad practices in the bond trading process. The Bond Commission Report confirms it. I think that investigations should be dated back to1990s rather than 2008 provided transaction records can be traced up to that point in time. Making money on one's financial knowledge is acceptable, but if one makes a fast buck by means of bad practices, that is illegal".

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