Major economic transformation in next one and half years: FinMin

The country’s Finance Minister Ravi Karunanayake recently said Sri Lanka was gearing up for a significant economic transformation in the next one and a half years. The minister said that plans were already afoot and changes were being made to increase economic competitiveness and growth. New strategies, both mid-term and long-term would be unveiled to support production and foreign direct investments (FDIs), he said.

He made the above comments delivering a guest lecture on the topic ‘Economic Policy of Sri Lanka and the Way Forward’ at the Defence Services Command and Staff College in Sapugaskanda, last week. “Sri Lanka is navigating a battered economic ship to calmer waters. Although there is much turbulence, we are confident of taking it to safer waters. The 2016 Budget provides an insight into the mechanics we intend to adopt in this endeavour.”

The minister further added that though the country ended a 30-year war, it is now facing an economic war. “The past rulers failed to successfully complete it and that onus is on us now. The past sins need to be corrected and it has to be done with the least amount of pressure on the people. When we got elected in January 2015, we had to take swift measures to rectify the mistakes and ease the burden on the people

That was done in a hundred-day programme. We made salary increases to public servants, brought down the prices of essential consumer goods. These measures did not impact the budget deficit in any way. Then we thought the budget deficit was Rs.7.1 trillion but now we have realized that this is almost Rs.8.9 trillion,” Karunanayake said.

Explaining the reasons behind this, the minister said the previous government had not recorded expenditure amounting to Rs.1.6 trillion, anywhere. “I have to state that expenditure on war has been properly documented but this is not the case when it comes to the monies spent on certain infrastructure development. Monies have been extravagantly spent on certain projects, which have been done to make some people popular.” The minister said, despite all this, the government was confident of steering the country’s economy towards safer waters and ushering all-round growth within the next five years. “First we have to increase the government’s revenue. Our task in this regards is more challenging as we have to do this at a time when there is a global economic meltdown. For the first time China has devalued its currency by 11 percent; India has devalued its currency by 15 percent. Still we import 68 percent of our goods. In this backdrop, what can little Sri Lanka do? But still we have not allowed this burden to be felt by the people.”

“Strengthening exports is one of the major areas when ensuring overall economic growth. However, when comparing with our traditional exports such as tea, rubber and coconuts other exports such as garments, ceramic goods and footwear have not come up to the expected levels. But we can be satisfied with the achievements made by some in the services sector.” “We believe that we can achieve 6.7 percent growth in the next couple of years.

If you are going to achieve that, we need a capable labour force. Today we have 2.2 million people working overseas. This is our talent, our resources; they earn an average salary of around US $ 300 per month. If we are to keep them here, we need to pay them a competent salary. This is why we increased the public servants’ salary by Rs.10,000 as soon as we came to power.” The minister in conclusion noted that everybody had a responsibility to contribute positively to these endeavours, which were aimed at socioeconomic growth.