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Top economist proposes multi-pronged approach to rebuild economy

24 March 2021 09:33 am - 3     - {{hitsCtrl.values.hits}}

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  • Calls for removal of restrictive economic policies 
  • Urges to increase govt. revenue via taxation 
  • Highlights need for treating all countries as economic partners
  • Stresses need to improve productivity in key sectors of economy 

By Shabiya Ali Ahlam
A multi-pronged approach is required to rebuild the hard-hit economy, which was already on downward path even before the pandemic struck, according to senior economist and former central banker Dr. W. A. Wijewardena.


Pointing out that there are no quick fixes, nor a single step fix to resolve the vast array of economic issues faced by Sri Lanka today, he asserted that policy makers must start with removing the restrictive policies currently in place, which serve little purpose in achieving a meaningful recovery.


He highlighted the need to have a clearly announced timeframe for exiting the restricted economic policies, such as the import ban, introduced at the onset of COVID-19 pandemic as temporary measures, so that the public is aware when the restrictions are removed from the system.

“These types of restrictive economic policies would work when an economy is in a crisis by delivering a shock to the economy. But if it is prolonged and retained beyond the required timeframe, the shock becomes unbearable, and it will start hurting all economic activities, preventing the economy from returning to the long-term economic growth path,” he told a bankers’ forum in Colombo this week.


Dr. Wijewardena pointed out that as the country needs to return to the long-term economic growth path, there is no place for restrictive policies in the macroeconomy. 


He also highlighted the need to increase the government’s revenue base and pointed out that the government’s move to print new money to finance its expenditure programme leads to inflation.


Dr. Wijewardena asserted the need to have the revenue base reach at least to pre-COVID-19 levels and the approach towards that should be by expanding the base via taxation and other non-tax revenue measures. He stressed that the government should immediately change from bank financing to tax financing.


He also emphasized the need to have a 360-degree link with the rest of the world to create economic relations with global peers without discrimination. Doing so would allow Sri Lanka to become an inclusive, and not an exclusive member of the global economy, he noted.


“No country today can remain in isolation from others by confining itself to a single country or a group of countries. In this case we can take an example from India. India today has economic relations with all the countries in the world, including its rivals like China or Pakistan.” 


Sri Lanka should not consider any particular country or group of countries as enemies. But treat everyone as economic partners,” he added.


Dr. Wijewardena also highlighted the need to increase productivity in key sectors of the economy, such as agriculture and industries, by introducing new technology as productivity in these sectors remain woefully low.

 

 

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  • Bernard Wednesday, 24 March 2021 09:54 PM

    Sri Lanka has already been elevated to the closed and import restrictive economy era of the early 70's or worse!

    sacre blieu Thursday, 25 March 2021 07:53 AM

    Advice from a person with such wisdom should be taken into serious consideration, and his political preference should be impediment to come in the way. There are cavities forming in the substance of the economy,created by erosion of the principles and practice and at one point,and soon, would beguine to crumble and chaos will set in. The lobby of many industries , is apparent to only encourage monopolies to the detriment of the hapless citizen, and the prolonging of some restrictions would bring them to the point of desperation and erode further in the direction of the crime. A gradual pace of liberating the import of essential goods and components should be conducive towards normalization. The stronger supervision of many NGO's is very urgent, as some of them are cover ups for fraud and even funding anti socials acts, and justified accountability should be established.

    Nalin Thursday, 25 March 2021 12:03 PM

    1. As a large amount of funds is allocated for expenses every year, knowledgeable officers should check all estimates and expenses. 2. The Auditor General should carry out auditing of all government organizations at least once in three years. This will reduce the government expenditure considerably


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