Expected economic reforms in ‘window of opportunity’ and regime change, missing
While Sri Lanka’s macro-economic policies in Sri Lanka have been a perennial problem since independence, the window of opportunity for economic change with last year’s regime change has not been taken advantage of with credible and needed reforms. This was stated by Dr. Razeen Sally, Chairman of the Institute of Policy Studies, while addressing the 2-day Islamic Finance Forum – South Asia held last week in Colombo. He said that this window of opportunity would not be available forever and the reforms and aspirations of those responsible for this regime change in Sri Lanka have been let down.
The peace dividend has had its positive impact on growth at 6.5 per cent during the Rajapakse administration and now it is at 5.5 per cent.
He summed up indicating that Rajapaksa’s 10 year presidential rule had accelerated the ‘authoritarian democracy or leaning towards one party rule’ which pursued Sinhala Buddhist nationalist agenda at the expense of the minority, lately targeting Muslims. The economy is on a debt-fuelled growth spree almost relying on foreign commercial borrowings to finance big projects which is public-led at the expense of the private sector. He said the good news is that the political atmosphere is more liberal but independent institutions including the media still find pressure, though there are no signs of white vans appearing in the middle of the night.
Ethnic tensions have been reduced. The underlying problems have to be resolved and, though this would not happen overnight, at least there seem to be beginnings of the moves in the right directions, he said. Dr. Sally said “Macro-economic policy in Sri Lanka has always been a problem – pretty much since independence. It got worst under the Rajapakse regime and this was worst last year with two very bad budgets.” He indicated that there has been no credible plan for reforms by this national unity government, with very complicated political reasons. The main thrust of his address was confined to Indian and Sri Lankan economies. With regard to India, he said India accounts for 80 per cent GDP of South Asia and according to World Bank, South Asia is a US$2.5 trillion economy.