By Hiran H.Senewiratne
Sri Lanka can be a high income nation like those in East Asia, if state fiscal problems could be resolved and all communities get together, Prime Minister Ranil Wickremesinghe said.
“Sri Lanka has a unique chance to go on a unique journey after the end of a three decade long war and could meet all the challenges facing it, under the current system of unified governance, Prime Minister Wickremesinghe told the Sri Lanka Economic Forum 2016 launch at the Cinnamon Grand yesterday.
President Maithripala Sirisena and Prime Minister Ranil Wickremesinghe inaugurated the Forum under the theme “Steering Sri Lanka towards Sustainable & Inclusive Development”.
The event was backed by George Soros’s, Open Society Foundation and the Centre for International Development of Harvard University, along with Nobel laureate economist Joseph Stiglitz. The event was also supported by an array of internationally acclaimed development experts and thought leaders.
Wickremesinghe said Sri Lanka had been a trading nation in the middle of the Indian Ocean for thousands of years and it was the first nation in Asia to modernize, ahead of Japan.”Sri Lanka also had free education. But the country now faces challenges, which have to be overcome if jobs and high incomes are to be achieved, Wickremesinghe added.
The Prime Minister said the government’s main objective is to provide decent living conditions for every citizen and the government is the main stakeholder in this effort. The government is now working to put the economy on the right path to achieve economic goals, he said.
Prime Minister also said that the government is now giving the legal right to 1.5 million freehold titles, which could be used for housing, agriculture or any other business purpose.
He said the people gave a mandate to President Maithripala Sirisena in January 2015. “The president himself has given up his executive powers. His promise to abolish the executive presidency will also become a reality along with a new constitution, he explained .
Wickremesinghe said Sri Lanka was now on a path to create an inclusive growth wherein all people, those who gave a mandate and those who did not, would have a better life.
Professor of the Practice of Economic Development at Harvard’s Centre for International Development Ricardo Hausman said, “The Sri Lankan economy is structured around four key areas of risk and opportunity, important to support sustained and inclusive long-term growth, based on a study done by the Harvard University’s Center for International Development.
He said that those are: macroeconomic and fiscal stability, structural transformation and competitiveness, urbanization and development and regional development and Social Inclusion.
He said where macroeconomic and fiscal stability is concerned Sri Lanka will face a formidable choice in determining the establishment of a solid foundation towards sustaining long-term growth through sound monetary and fiscal policy.
Hausman also said that where structural transformation and competitiveness is concerned the sustainability of economic growth calls for Sri Lanka to convert its comparative advantages towards initiating industries that can grow and expand while supporting higher wages.
“Urbanization and development require that exact choices must be made in urbanization that will ensure the right balance of productivity, competitiveness and sustainability, which will also impact national development, and the sustenance of livelihoods, he said.
As Sri Lanka comes face to face with the challenges of structural transformation and urbanization, some sectors of the economy are likely to face greater pressure than others, which may excessively affect some regions and social groups over others, he said.
“Sri Lanka will have to ‘swim upstream’ as the external global environment becomes more hostile and funds flow out of developing countries and China’s economy becomes unstable, investor George Soros said.He said the world was now in a deflationary situation and developing countries that benefitted from a commodity boom are no longer doing so.
“With interest rates in the US going to positive territory the trends may get stronger he said.”There was instability in China and its currency was falling he added. “The falling Chinese currency will export deflation. Money was no longer coming to developing countries and harsh choices will have to be made instead of waiting for things to get better.”