The new government of President Gotabaya Rajapaksa has unveiled its National Policy Framework (NPF) themed ‘Vistas of Prosperity and Splendour’ to achieve US$ 6500 per capita income with an economic growth of 6.5 percent per annum under stable macro-economic fundamentals over the next five years, largely by focusing on supporting domestic industries.
The NPF constitutes of 10 key principles aimed at achieving fourfold outcome of a productive citizenry, contented family, disciplined and just society and prosperous nation.
The NPF has given the utmost priority to ensuring national security, emphasising that the government would adopt new methodologies to safeguard national security without compromising the democratic space available to the people.
With a high economic growth and below 4 percent unemployment rate, the government plans to maintain inflation at 5 percent or below while bringing down the fiscal deficit to 4 percent of GDP.
The policy document also aims to maintain interest rates at single digits while maintaining the exchange value of the rupee at a stable level.
It was proposed to establish a ‘National Policy, Planning and Implementation Commission’ functioning under the President to ensure transparency of the economic policy formulation and implementation.
Aiming to cut down wasteful State expenditure, the policy document proposes to set up a committee of officials under the chairmanship of the Cabinet Secretary to observe Cabinet papers on government expenditure and investment.
Further, it’s also proposed to suspend purchasing and renting of office premises and vehicles for the public sector for a three-year period.
To develop a conducive business environment for domestic industries, it is proposed to initiate discussions with the banking sector to develop systems to provide more time for firms to repay debts and to advice the Central Bank to remove firms which were on the CRIB list for a short period of time.
The financial assistance for firms facing bankruptcy is also spelt out in the document through the provision of finance at reduced interest rates.
Further, it was proposed to restrict the entry of foreign enterprises into industrial areas that are “easily handled” by domestic businesses.
In terms of the construction sector, the document spelled out action to establish a system where all required approvals can be obtained in one place or online while reducing time taken for approval of any building to be constructed, to a maximum of 3 weeks.
In addition, it was also proposed to reserve all State construction work for the domestic construction firms.
In terms of State-owned Enterprises (SOEs), several measures are proposed to ensure efficient, profit-making and rational public enterprises, which includes the amalgamation of “similar kind performing” State enterprises, setting up a National Enterprises Authority , recruiting professionals to large scale State-owned enterprises and revising the existing salaries and governing laws.
It’s also proposed to introduce laws restricting the privatisation of SOEs.
The government also plans to increase private sector employees’ existing minimum wage of Rs.10, 000 by Rs.2,500 while introducing an insurance scheme for public and private sector employees who become unemployed.
Further, it’s proposed to increase the employers’ contribution to the Employees’ Provident Fund (EPF) for employees of both public and private sectors to 15 percent from the existing 12 percent.
In terms of transport and infrastructure development, the government plans to conduct feasibility study to construct an elevated highway between Kandy and Nuwara-Eliya while developing and extending canal transportation as a new mode of transport.
In the energy sector, the policy document focuses on renewable energy with plans to enhance the contribution of hydro and renewable energy to 80 percent in the overall energy mix by 2030.
The government also plans to introduce several tourism development programmes with the intention of increasing annual tourist arrivals to 7 million.
Further, it’s proposed to commence an international publicity campaign to publicize the new economic plan of the government with the assistance of the private sector to attract foreign private investments into the country.
The full policy document can be accessed via the Finance Ministry website www.treasuiry.gov.lk.