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What is Regaining Sri Lanka?
By
Dinesh Weerakkody, R Abeyesekara and R Silva
The truth is that Sri Lanka is still in the thick of an economic
crisis-a crisis born of deep indebtedness. We need to have a single
minded priority-to overcome the debt crisis, if not our future generations
will continue to be in debt. The government's core strategy involves
accelerating economic growth by removing the barriers to productivity
and putting in place review mechanisms to ensure that new barriers
do not arise. Improved productivity is also essential to increase
incomes and also attract increased investment. There are three key
elements in the government's programme for Sri Lanka to regain control
of our economic future. These include 1) accelerating the process
of privatization of commercial activities 2) reforming the legal
foundation of the economy 3) increasing substantially the efficiency
in the critical government functions.
Economic
Strategy
Regaining Sri Lanka presents the government's strategy
to meet the economic challenges facing the country and to put the
economy on a path where we can reap the benefits of a vibrant economy.
The economic crisis facing Sri Lanka has a number of dimensions
- all of which must be addressed to accelerate economic growth and
increase prosperity. To do this, four key challenges must be overcome:
1) Creating 2 million new jobs 2) overcoming the public debt crisis
3) granting resources for reconstruction 4) higher productivity
and increased investment.
To meet the
four challenges facing the country, our goal is to achieve a sustainable
10% annual growth rate. Improving productivity is the key to accelerate
economic growth and transform the economy to meet the economic challenges
that face the country. A comprehensive and sustained attack must
be aimed at the barriers that reduce productivity and as a result
limit investment and economic growth. We are placing a major share
of the responsibility on the private sector for accelerating economic
growth, increasing jobs and incomes and providing the resources
that will be needed for the reconstruction requirements that peace
brings. It is the private sector that makes the decisions that determine
productivity and it is on this basis that future growth will depend.
Initiated
The Action Plan to implement the programme embodied in
The Future-Regaining Sri Lanka is the result of several months of
intensive review carried out under the Ministry of Policy Development
and Implementation. It presents the proposals for actions in a number
of areas, many of which were initiated during the year 2002. The
Action Plan is an evolving document that will change with time.
The Implementation
Programme is being prepared, with a strong focus on managing and
monitoring the implementation of this large and complex Action Programme.
A number of Steering Committees (have the primary responsibility
of implementing Action Programme) have been established, and will
report to a Programme Management Committee (monitoring and management
of day to day implementation of the program), which will report
to the Economic Policy Committee, chaired by the Prime Minister,
on the progress achieved in implementing the Action Programme. The
Programme Management Committee would also identify where there are
constraints and identify and coordinate the technical assistance
requirements to effectively implement the programme.
Elements
When looking at an overview of key elements in the Action
Plan, Macro Trade Policy Framework, Employment and Labour, Education,
Manpower and Science, Finance and Investment, Infrastructure Development,
Improving Productivity and Public Sector Reform can be identified.
Steering Committees have also been established for agriculture,
gender equity and water resources. Task Forces have been set up
for some of the many Steering Committees. Macro Trade Policy Framework,
this area of the Action Plan focuses on the design and implementation
of macroeconomic policies, including in particular, public expenditures,
taxation, prices and the exchange rate and trade policies. Priority
actions under this include fulfilling the government's commitment
to maintain the budget deficit at 8.5 percent of GDP. This is being
addressed through closer monitoring of expenditures and ongoing
tracking and analysis of expected revenues. Another priority action
is to design and implement a stable and efficient low tax regime
that will meet the government's revenue requirements and be conducive
with high rates of economic growth.
Employment
Employment and Labour, this area in the action plan focuses
on the steps necessary to ensure maximum productivity from Sri Lanka's
labour force and also to create employment. Priority actions include,
providing better support for workers overseas as well as identifying
more and better employment through skills enhancement, the establishment
of a computerized network service that will provide more up-to date
information for people seeking employment. Education, manpower and
Science are initiatives to improve educational opportunities for
the young as well as for workers changing jobs and upgrading their
skills.
Finance and
Investment ensure that all participants see an economic benefit
in the system and have access to a choice of instruments with diverse
risk-return opportunities. An efficient and effectively functioning
financial system will lead to increased competitiveness with economic
growth, macroeconomic stability and poverty reduction.
Infrastructure
Development - this section of the Action Plan addresses the following
sectors -Telecom and IT Sector; Power and Energy; Civil Aviation,
Shipping and Port Development; Transport, Public Utilities and Housing;
Natural Resources Development. Telecom and IT Sector are to develop
the telecom sector on a competitive basis to facilitate the growth
of ICT services. Power and Energy are to move towards achieving
a competitive power tariff structure by working towards the restructuring
of the CEB and CPC. Civil Aviation is to develop both the international
and domestic airports where BIA Katunayake needs to be developed
as a hub given its location between Singapore and Dubai. Shipping
and Port Development is involved with obtaining a stronger foothold
into servicing the region and the next generation of deep draft
ships.
Transport is
involved with building a modern road network along with the upgrading
of the existing roads. Housing and Construction are involved with
the supply of affordable housing, particularly the expansion of
housing. Natural Resources Development is involved with renewable
resources, non-renewable resources and other miscellaneous environmental
issues, while being mindful of improving and/or maintaining environmental
integrity.
Productivity
Improving Productivity - this area of the action plan includes the
reform proposals for the industrial, agricultural and services sectors,
including the plantations sector and tourism. The other areas of
the action plan are aimed at improving the access of business to
productive labor and finance and an adequate supply of infrastructure
services. More specific objectives include: Agriculture-greatly
strengthen the foundation for commercial activity, better development
of markets for inputs and outputs; Tea and the plantation sector-put
operations on a stronger commercial footing through longer leases
and reduced restrictions on alternative activities; Tourism-seeking
to transform the industry to increase the services offered and attract
a broader clientele.
Public
Sector
The Public Sector Reform-priority actions under this include,
the government's approach to shifting commercial resources to the
private sector, through privatization of viable enterprises and
resolution of loss making enterprises will be accelerated and also
the establishment of the Revenue Authority and Macro Trade.
Successfully implementing The Future-Regaining Sri Lanka will require
sustained effort in a number of different areas.
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