Financial Times

Sri Lanka can achieve 10 % GDP, $3,000 per capita if...
By Quintus Perera
Achieving 10 percent growth rate and 3,000 dollar per capita income is possible if there is strong consensus by trade unions, political parties, employers, employees and NGOs among others of the country’s economic problems and policy issues, says Peter Harrold, World Bank Country Director for Sri Lanka.

Speaking as chief guest at the 14th Annual General Meeting of the Industrial Association of Sri Lanka (IASL) in Colombo last week, he said Sri Lanka could be identified as the country with the largest bureaucracy in the South East Asia and also amongst the largest bureaucracy in the developing world.

He said that the difficult task is compounded with huge public spending coupled with policy uncertainty entailed by political uncertainty. He said the World Bank and ADB sponsored a study on “Improving the rural and Urban Investment Climate of Sri Lanka” and the top five urban constraints according to the report are electricity, policy uncertainty, macro instability, cost of finance, and labour regulations. The top five rural constraints were transport, cost of finance, access to finance, demand and electricity. He said that there is a vicious circle of interest payments servicing the debts as there are loans and, “Consequently you have to borrow just to keep thing going and that is not sustainable fiscal policy”.

He said that with the national consensus tackling the economic woes, there should be investment, generation of employment and generation of higher income where all interest parties should understand the core policies. Dr Anura Ekanayake, new Chairman of IASL said that Sri Lanka’s economy registered an annual growth of 5.4 percent in the real GDP in 2004 which is a reflection of the economy’s resilience to the adverse shocks, surge in oil prices, drought, floods and finally the Tsunami disaster. He said that the impact of Tsunami would be felt in 2005 and beyond. He said that the healthy developments in the services and industry sectors contributed to economic growth in 2004 while the agriculture sector faced a setback due to adverse weather conditions.

He emphasized the need for a national economic policy with wide acceptance and also separate national policies for each of the key sectors of the economy.

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