Mangala Samaraweera, Finance and Media Minister has said that the government is looking forward to and focusing on rebuilding and re-positioning the island with three major economic policy priorities.
The priorities being: Ensuring the continued access to global capital markets at an affordable rate to enable Sri Lanka to re-finance external debt this year; uplifting economic growth through Enterprise Sri Lanka and Gampereliya; and continuing our reform programme to build competitiveness of the economy.
Speaking at the inaugural meeting of the Breakfast Buzz series organized by the American Chamber of Commerce (AmCham) at the Colombo Hilton, the Minister said a lot of work has been done to ensure the first priority. “A key element of this would be the continuation of the IMF programme which will signal to markets our continued commitment to disciplined, rules based economic management. The IMF staff mission is in Colombo this week continuing negotiations with officials of the Treasury and the Central Bank. Our objective is to ensure responsible fiscal policies whilst enabling space to invest in targeted growth supportive measures.”
Expressing views on the second priority he said, “Enterprise Sri Lanka is a programme to support private investment in small business, start-ups, and drive entrepreneurship. Sri Lanka has for too long relied on hand outs and artificial consumption booms to drive growth.”
“These are unsustainable measures that have repeatedly resulted in balance of payments crises. Enterprise Sri Lanka will drive growth through private investment and expand economic capacity for future growth. We have already seen over Rs. 70 billion in new credit disbursements going into SME exports, agriculture, and the service economy.”
“In parallel, Gampereliya is a rapid rural infrastructure investment programme. The need of this was highlighted due to the droughts that adversely affected cash flows into the rural economy. By October 2018 Gampereliya was fast tracking investment into rural roads, small markets, and irrigation – and importantly putting cash back into the hands of the rural economy. This is no doubt one factor that supported the recovery of consumption in the fourth quarter of last year. In fact given the success of Gampereliya, one of the first actions of the illegal government was to halt the Gampereliya programme by a cabinet decision. We have now resumed the programme with renewed vigour.”
Having stabilized the economy, the Minister said he is confident that the twin programs will support economic growth and consumption – which will in turn drive consumption growth and help all business activity as well.
The third priority is to continue reforms to enhance productivity and competitiveness. As a result of the government’s effective initiatives, s Sri Lanka moved up 11 places in the Doing Business index last year.
Minister Samaraweera added, “There is a lot more to be done but it is clear that we are on the right path. We will continue to build competitiveness by liberalizing the economy where we see excessive controls and costs.” He also said major future plans on investments on training and skills development will be announced through the Budget 2019 next week. “We will work closely with the private sector in building relevant skills.”
He assured the government’s policy initiatives are built on the spirit of the title of the session – ‘crafting and implementing evidence based policies’. “Gampereliya for instance, includes investments in irrigation to improve climate resistance and reduce vulnerability of the rural economy. It includes investments in rural roads and markets to improve connectivity and integration into value chains that can uplift sustained income generation,” the Minister said.
“We are also implementing a rules based economic framework that will create confidence in the sustainability of the policy outlook. The Inland Revenue Act for instance is an important piece of legislation that reduces individual discretion and builds in predictability. The same applies to a market based fuel pricing mechanism. We will explore similar practices in other areas that help instil certainty and predictability. And we will continue to consult with industry in policy implementation and provide the necessary time frames for industry to adjust to such measures.”