Business Times

Top team needed to lift Sri Lanka’s economy
By Natasha Gunaratne

Economists, among other issues, are urging President Mahinda Rajapaksa to induct a set of open-minded, modernist and innovative economic advisers who can lift the Sri Lankan economy from medium-level equilibrium to a high-level equilibrium economy during his second term in office.
One leading economist in Sri Lanka, Muttukrishna Sarvananthan who is also the Principal Research at the Point Pedro Institute of Development, told the Business Times that the government should focus on four policy priorities that are indispensable for achieving sustainable double-digit growth rate.

Dr. Sarvananthan said it is imperative to restore good governance which includes ensuring freedom of information, particularly on financial and economic information and media freedom. The President should clamp down on corruption, instill transparency and accountability in economic policy and management and improve the protection of human rights in the country.

He said the government should take concrete measures to wind down the over-sized public sector which has become a huge burden on more than 80% of the population that is outside the public sector. He also said appointments to public office, both government and semi-government, should be made on merit, competence and performance. Dr. Sarvananthan’s last point was to urge the government to undertake education reforms and increase private sector participation in primary, secondary and tertiary education including local and foreign private universities in the country.

Another leading economist and Professor at the University of Colombo Sirimal Abeyratne said the President must focus on developing economic prosperity, undertake programs for national integration and should exercise fiscal discipline. Dr. Abeyratne said the Mahinda Chintanaya, the President’s manifesto talks about nurturing local entrepreneurship through the increased role of the government. He also said that the manifesto is seeking to develop local entrepreneurship with increased government assistance outside of the economic policy environment which is something that has never been done before in any country.

Dr. Abeyratne said that according to the results of this week’s presidential election, President Rajapaksa managed to get a majority of the votes in the more rural and predominantly Sinhala areas of the country while the election results showed he was weak in the North and East, upcountry areas such as Nuwara Eliya and also in more urban areas. “This means he has not won the hearts of the Tamils in the North and East. Even in the more business oriented urban areas, it seems like there is a reluctance to accept his economic program,” Dr. Abeyratne said.

He added that over the past few years, other South Asian countries including India have improved tremendously in combating corruption according to Transparency International’s corruption perception index while Sri Lanka has gone down. Dr. Abeyratne said corruption levels are quite high in Sri Lanka while the rule of law is weak. The President will also have to address these issues during his second term.

Speaking on the President Rajapaksa’s vision to transform Sri Lanka into a Fivefold Global Hub (naval, aviation, commercial, energy and knowledge hub), Dr. Abeyratne said Sri Lanka’s geographical location, diversity and human resources will be advantageous. However, he added that a peaceful political environment must prevail which requires political will and the correct economic ideology.

Senior lecturer at the Department of Economics of the University of Colombo Lalith Gunaruwan said the Fivefold Global Hub project will be the engine driving the economy forward, pulling the agriculture, services and industry sectors along. Dr. Gunaruwan said maximum benefits must to be accrued to the local economy in the process.

Dr. Gunaruwan said the priority for the President should be to focus on planning and implementing his vision in the 2010 Mahinda Chintanaya. Government agencies such as the Ministry of Finance and Planning, the National Planning Department and the external resources department amongst other institutions will need to meet and draw up a plan for implementation.

He added that the government should also ensure that every dollar that is spent is spent efficiently with no leakages and no siphoning. He added that the government’s economic efforts should be beneficial to local entrepreneurs as part of the President’s national economic development plan as well.

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