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World Bank stresses need for sustained reform implementation

3 April 2024 02:09 am - 7     - {{hitsCtrl.values.hits}}

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Senior officials of the World Bank addressing the media at the Sri Lanka Development Update report launch - Pic by Kithrisi de Mel

 

  • Stresses need for continued implementation of a strong and credible structural reform programme
  • Says must ensure that reforms that have restored macro-fiscal financial stability are sustained
  • Notes need for continued implementation of structural reforms that would encourage higher private investment and non-debt creating flows

 

As Sri Lanka is looking to leave behind the effects of the crisis and move towards development, sustained reform implementation is essential for Sri Lanka to have a stronger and more resilient economy, the World Bank said yesterday.

In its recent development update for the island nation, the agency stressed that continued implementation of a strong and credible structural reform programme will help address the root causes of the crisis and avoid stagnation at low levels of economic growth. 

“This requires a two-pronged approach. The first is to ensure that reforms that have restored macro-fiscal financial stability are sustained. The second is the continued implementation of structural reforms that would encourage higher private investment and non-debt creating flows into the country,” the World Bank said in its ‘Bridge to Recovery’ report launched yesterday.

In maintaining macro-fiscal-financial stability, the World Bank noted that one of the top priorities is the enactment and implementation of debt and fiscal management legislation. This is to strengthen fiscal responsibility, budgeting, and public investment management, which will ultimately support better borrowing decisions, so that debt remains sustainable over the medium-to-long term. 

Efforts are also needed for keeping a consistent and independent monetary policy – following the elimination of monetary financing through the enactment of the new Central Bank Law – which is essential for continued macroeconomic stability. 

While Sri Lanka should monitor financial sector risks as elevated NPLs and significant exposure to the sovereign continue to hinder financial sector stability and impede credit intermediation, it must also maintain a market-determined and flexible exchange rate to facilitate external adjustments and rebuild international reserves. 

A key effort is also to focus on addressing fiscal risks associated with SOEs, including thorough energy sector reforms and the continued enforcement of cost-reflective utility pricing to limit SOE losses.

Meanwhile, in encouraging private investment and non-debt creating flows, Sri Lanka must implement broader SOE reforms to address the financial, competitive, and governance-related risks posed by SOEs. 

Implementation of key reforms that support a more favourable investment environment, including establishing the necessary legal and institutional infrastructure, are key to enhance competitiveness and enable private sector-led growth, the World Bank said.

It also noted that the implementation of a new trade policy regime that would gradually and consistently reduce anti-export bias would help the economy.


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  Comments - 7

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  • joshua Wednesday, 03 April 2024 08:32 AM

    IMF should first insist on mechanism to free the country of corruption. There are convicted thieves and who made the country bankrupt in that parlimanet..... and our one seat President is beating around the bush and poor people are paying for the sins of these morons.

    Neo Wednesday, 03 April 2024 02:41 PM

    You have been fed lies my son. IMF knows better than the stupid politicians you listen to.

    Ridiculous Situation Wednesday, 03 April 2024 08:59 AM

    Stop and downsize all government expenditures. Politicians are not leading by example but want the public to pay more taxes to maintain their luxury lifestyle. Ridiculous situation and this must stop.

    johan Wednesday, 03 April 2024 12:08 PM

    Reforms are good to temporarily overcome the situation but without financial discipline and stringent control over recurrent expenditure cannot reap the results anticipated.Not forgetting the corruptions and fraud as well.The interim Govt.cannot achieve the desired due to political instability which forces the Govt. only increase the taxes by burdening the masses more and more whereas already 60% of the population consuming one or two meals a day and unable to make ends meet.So there is nothing to praise when entire population is cursing the politicians for the situation.

    Daya Jay Wednesday, 03 April 2024 12:47 PM

    Put an end to corruption, greed, dishonesty, and profiteering! Embrace transparency and honesty, and watch Sri Lanka soar to rapid development

    KD Wednesday, 03 April 2024 01:21 PM

    World Bank can forget about progress with JVP/NPP. The people of this country do not want progress. They want to be stuck in mediocrity.

    joshua Wednesday, 03 April 2024 09:44 PM

    Mr KD. You can sit and elect the same morons as you wish. But get ready to see stars soon, People are fed up with these rogues and best is to give somebody else and hope for the best.


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