Think tank renews call for major economic reforms

Published : 10:13 am  May 28, 2015 | No comments so far |  | 


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By Chandeepa Wettasinghelaxaman2
Colombo-based think tank, the Pathfinder Foundation, yesterday renewed its call for sweeping economic reforms and cautioned that otherwise Sri Lanka would inevitably have to face successive crises in the near future.

“Are we on the right track as far as the economy is concerned? There is a very strong case that we can make, that we have not. It’s not enough to do incremental changes. We need major reforms,” Pathfinder Foundation Deputy Chairman Dr. Indrajit Coomaraswamy said.
He noted that while the government had aspired to resolve constitutional crises and other political dilemmas, they had ignored the economy, which is by far the most important factor of a country.

While noting the recent growth numbers—which are lower than official figures—the reduction of poverty and inflation, Dr. Coomaraswamy noted that such key economic indicators are deteriorating significantly.
He said that this is due to the lack of momentum in the key drivers of the economy, which in the recent past have been foreign borrowings and the new capacity added from the previously war-torn areas.

“The streams are diminishing significantly. So we need new sources of growth. The local savings levels are low, so we will have to rely on foreign savings which are not debt. The economy will have to be driven by foreign direct investments and private investments into the export sector,” he said.

While agreeing that lower levels of growth could be sustained theoretically, he said that it would lead to social upheavals.
“If we bring holistic reforms, the potential is there for an 8 to 10 percent growth. Some might ask, ‘Why not aim for lower growth?’ We cannot, because the modern Sri Lankans are too impatient and aspirational. So we need stability as well as prosperity,” Dr. Coomaraswamy noted.

He said that the cost of living is not high as people complain and the real problem is giving away relief in budgets with no links to improve productivity, which would lead to inflation and Balance of Payment issues.

“Is it fair that people who are sitting around and doing nothing get a wage increase of Rs.10,000?” Pathfinder Foundation Executive Director Luxman Siriwardene queried. “We must change this entitlement mentality. The government’s job is to create a framework to release the creativity and productivity.”

While he said that the drags on the economy, such as war, increasing nationalization and declining terms of trade have moderated, Siriwardene noted that politics and politicians still place a huge burden on the economy.
The comments were made during the launch of the Pathfinder Foundation’s white paper titled ‘Charting the Way Forward: Prosperity for All’, which will be presented to the government soon.