Luck no longer favours Sri Lanka – Prof. Sally
Raising the urgency for fiscal consolidation, a leading economist on Thursday blamed the country’s “culture of complacency” as the main curse that befell Sri Lanka. Singapore based Lee Kwan Yew University Prof. Razeen Sally addressing the business community at the Ceylon Chamber of Commerce on the topic “What Can We Expect in 2016? Global Economy and Sri Lanka” said that the culture of complacency is the curse on Sri Lanka.
He pointed out that argument for fiscal consolidation or the repair of public finances was an urgent necessity adding that this had not registered with the present or previous administrations. Prof. Sally observed that in the wake of the rising interest rates next year the global economic climate was expected to get worse. He also noted that the government’s reform credibility was in question as major and comprehensive tax reforms were required to make revenue and the assumption that Sri Lanka could ride this out with “a little bit of luck” is dangerous.
In this context Prof. Sally said obtaining another International Monetary Fund (IMF) loan was “unavoidable” next year to get a reform programme underway. The economist pointed out that the state’s increased dependence on the aid packages to bail out the country was dangerous to the country as in effect it would “prevent a sinner from repenting.”
Prof. Sally also blamed the chamber members for their inability to take on competition adding that it was not up to the companies to decide what was good for the country. He asserted in the case of opening up Sri Lanka to the tea blending market that “what is good for Dilmah is not good for Sri Lanka.”
In addition, he stated that more liberalization on investment was required to ensure that shipping companies like Maersk come here without coming through John Keells Holdings. Trade negotiations were important in line with the new US on the Trans Pacific Partnership Agreement (TPP) that Prof. Sally believed would bring in export market access.
Dwelling on the positives of Sri Lanka entering into such a trade pact with the US he continued that “staying out of it will make it harder to get into the global value chains,” adding that this venture would cement the country’s relations with the US.
With Sri Lanka entering an urbanization drive with the establishment of a Megapolis he cautioned against a number of issues particularly political interference in the planning.
In addition he pointed out that increased concentration should not be on Colombo as it would “suck oxygen from secondary cities like Trincomalee and Galle.” Moreover, buying ‘smart’ city packages was not such a great idea, he stated adding that people need to be aware of those who advocate these measures that may not work here in developing countries.
Decentralisation of municipal councils with real power for Mayors was needed to carry out the proper planning in their respective areas, he explained. Another cautionary note that Prof. Sally pointed to was in finding a balance with planning and the limitation on the number of zones.