Soros to boost Sri Lankan economy, Stiglitz to provide ‘sound’ advice’
Prime Minister Ranil Wickremesinghe getting tips from Economist Joseph Stiglitz on reviving Sri Lanka’s economy.
Billionaire investor and philanthropist George Soros on Thursday exuded confidence in Sri Lanka and told the Sri Lanka Economic Forum in Colombo he wanted to assist and invest in the once, war-torn country.President Maithripala Sirisena, who participated as the chief guest at the economic forum held under the theme of “Steering Sri Lanka towards Sustainable and Inclusive Development, left the Oak Room at Cinnamon Grand, soon after the inauguration ceremony without delivering his speech on the agenda.
Taking part in the high-level forum in Colombo fully packed with ministers, academics, senior officials, and business leaders, Mr. Soros said the members of his foundation and investment decision makers in his business are here to explore investment opportunities and assist the government’s programme.He noted that he was impressed by what the Sri Lankan government has achieved within a short period of one year and it has become a bright spot with the capacity to attract investment avoiding the economic fate experiencing in several other countries. The island nation has moved towards a more open society and this is the cause his (Open Society) Foundation supports, he stressed.
Mr. Soros expressed the belief that Sri Lanka could be able to tackle the harsh reality of economic issues and attract investment especially for tourism. “Money will be pouring in here, because generally the banks are pulling money out,” he opined adding that “banks are reducing lending and for better or worse Sri Lanka belongs to countries that need funding”. He disclosed that his team was looking at investment opportunities in the country and also social projects.Referring to the global economic situation, he pointed out that external global environment will be hostile in the future and that funds would flow out of developing countries.
“Money is no longer coming to developing countries and harsh choices will have to be made instead of waiting for things to get better,” he said.
“The world is now in a deflationary situation and developing countries that benefited from the commodity boom will not be able to do so any longer,” he warned. Reminding about the 2008 economic crisis, Mr. Soros noted that the Chinese currency depreciation is de-stabilising the world and, China’s attempts to transfer its deflationary pressure to the rest of the world would trigger another world economic crisis.
Prime Minister Ranil Wickremesinghe expressed optimism of Sri Lanka’s prospects, revealing to the audience that “the political process is over and the rest of his term would be concentrating on fixing the economy”. Sri Lanka’s Cabinet of ministers with several decades of experience with collective wisdom would ensure a better future for people because the mandate was for a better life, the premier emphasised. The country will have to overcome internal economic vulnerabilities and fiscal uncertainties, he said adding that global economic situation should not be put forward as an excuse for failing to achieve growth in the island nation.
He noted that Sri Lanka was trying to find solutions as to how the country could become the most competitive economy, socially inclusive and a global city for the region. The Premier revealed that the aim of the government to make Sri Lanka the most competitive nation in the Indian Ocean and to develop the island as a mega city for the region that will go between Singapore and Dubai. He emphasised the need of establishing economic links between Sri Lanka and Tamil Nadu and with other Indian states such as Gujarat.Mr. Wickremasinghe disclosed that “Sri Lanka was the first country in South Asia which introduced an open economy, first in Asia to go for free education and one of the first nations in the region to enjoy universal franchise.
The Premier noted that the country should move forward from the current status of a low income earning country.Nobel Laureate Economist Joseph Stiglitz told the spellbound audience, Sri Lanka’s challenges are more specific and boils down to public sector performance.
The country’s troubles, in that sense, are neither a matter of fiscal policy nor monetary policy. It is a matter of lack of innovative and efficient public sector management.Nevertheless, the gap between deregulated markets and trickle down growth is a significant challenge, and deserves extended debate, he pointed out.
He urged Sri Lanka to tackle its foreign debt crisis which was impeding growth. The assistance of World Bank and other multilateral agencies should be sought to find ways of easing the debt problem. Prof. Stiglitz, during a panel discussion suggested a tax on land and property to boost sagging tax revenues. However this proposal was opposed by another panel of discussants in which he (Prof. Stiglitz) did not take part.
Although economic outcomes in Sri Lanka were mainly due to successive governments failing to improve fiscal and public sector performance, it is worth paying attention to incidental factors and those who offer singular policy advice, he pointed out.Noticeably, in an age of theoretical pluralism, singular prescriptions are now increasingly out of place, he added.
Ricardo Hausman, Director of the Center for International Development and Professor of the Practice of Economic Development at Harvard University, said that Sri Lanka should diversify its exports introducing innovative products as the island nation depends on garments, tea and rubber s for over several decades. The sustainability of economic growth calls for Sri Lanka to convert its comparative advantages towards initiating industries that can grow and expand while supporting higher wages.
The exact choices must be made in urbanisation that will ensure the right balance of productivity, competitiveness and sustainability, which will also impact national development, and the sustenance of livelihoods, he pointed out. He noted that Sri Lanka will face a formidable choice in determining the establishment of a solid foundation towards sustaining long-term growth through sound monetary and fiscal policy.