ADB Chief urges Sri Lankan Government to have a clear vision and strategy for development
The Asian Development Bank (ADB) has urged the Sri Lankan government to have a clear vision and strategy for development and share it with the people while focusing more attention on raising revenue.
Making a presentation under the ‘eminent speaker’s series’ at the Miloda – Academy of Financial Studies training institute of the Finance and Planning Ministry in Colombo, on ‘ADB’s Perspective on the Asian Region and its Relevance to Sri Lanka, ADB President Takehiko Nakao said “it is the responsibility of the government to set policies in line with the national strategy, prioritise its spending and investments and appropriately guide the private sector”.
Good governance, rule of law and efficient fiscal management important for development
State-owned enterprises should be reformed to raise government revenue, he said, adding that fiscal consolidation and efficient use of public resources will depend on these reforms.
He emphasised the need towards restructuring and streamlining the state-owned strategic enterprises to ensure much greater operational, managerial and financial efficiencies.
Mr. Nakao said that good governance, rule of law and efficient fiscal management are prerequisites for attaining upper middle income and high income earning country status as well as attracting investments.
Sri Lanka has achieved noteworthy economic development after ending the war, and it should focus on macroeconomic improvement on its way towards becoming an upper middle income country, he added.
However, he said that it is essential to implement infrastructure development projects in areas and sectors that are currently lagging behind to reduce inequalities and create access to opportunities.
A progressive tax system and spending on social protection will help mitigate income gaps in the society, he pointed out.
He stressed the need to implement a well -designed public works system using its own resources and supported by international partners such as ADB.
While adjusting its operations to match Sri Lanka’s development needs as a middle income country, the ADB places much greater emphasis on human resource development under its country partnership strategy for the 2012-2016 period.
The bank is continuing its assistance for Sri Lanka in infrastructure and private sector development.
ADB President Takehiko Nakao, visiting Sri Lanka this week, makes a presentation at the Miloda - Academy of Financial Studies in Colombo on Tuesday. (See story inside)
The ADB is investing in renewable energy and transmission efficiency as well as extending financial assistance for the ‘last mile’ road connectivity programme across 1,000 villages linking these villages, express ways and multi-model transport systems.
The bank is also financing the expansion of water supply systems in key urban areas including Colombo.
Mr. Nakao said that they will expand funding for the improvement of Science, English, and IT skills in secondary schools as well as for better technical and vocational education and training.
The ADB will soon embark on a major water project involving canals, reservoirs, and management systems to supply water from the South to the North for agricultural production and urban usage.
Despite three decades of civil conflict, Sri Lanka has managed to become one of the most successful countries in Asia in terms of social development indicators – especially health and education, he opined.
Mr. Nakao, who arrived in the country on Tuesday on a three-day visit, said in his view the island nation is on the path to becoming another Asian economic success story.
“What is especially striking is that economic activity in post-conflict Northern and Eastern Provinces expanded almost twice as fast as in the rest of the country. This is a remarkable sign of reconstruction and rehabilitation – a means to securing jobs and income, and to delivering reconciliation in the conflict-affected regions,” he told a media conference in Colombo on Wednesday.
However, despite the sound macroeconomic management, high level of public capital investment at 6 per cent of GDP, low inflation and high economic growth, one major challenge was the low revenue ratio, which stood at 13 per cent in 2013, the ADB chief noted.
He said for the Government to continue to play a key role in infrastructure development and human capital improvement, Sri Lanka will need to increase this ratio.
Mr. Nakao said the country needs a highly skilled labour force to fully tap its potentials.
Although investment in skills development, including technical and vocational training, is already underway, the ADB President encouraged “unrelenting” investment in upgrading human capital to create good jobs and income, and attract new investments from home and abroad.
The Government should improve the investment climate and facilitate private sector development and encourage foreign direct investment (FDI) to bring along new and improved technologies, as well as new markets and management skills, he added.
Meanwhile on Wednesday, Mr. Nakao met with President Mahinda Rajapaksa, as well as several ministers and senior officials, to discuss global, regional and bilateral issues, including challenges and opportunities for the Sri Lankan economy over the short to medium term.
At the meeting he commended the country’s strong economic growth, as well as its ongoing efforts to lift the country into upper middle income status.
Mr. Nakao also visited the Colombo Port, which last year completed the first stage of expansion part-financed with a US$300 million loan from ADB and the Giragama Tea Factory, which is owned by Pussellawa Plantations Ltd, one of the largest tea producing companies in Sri Lanka. ADB provided assistance to modernize its processing facilities.
He then visited the Habarana Maha Vidyalaya, a school that received ADB funds under the Education for Knowledge Society
Project.