GDP growth vs: National development

The current ‘top of the pops’, with the Governor of the Bank that is central to most socio- economic controversies of the current regime, is none other than the GDP growth rate.

It is most unfortunate that the highly professional Assistants of the Bank, for whom the private sector had much respect, not only endorse this song repeatedly, but extends the argument to degrees of absurdity that makes citizens wonder whether there is a keenly contested race soon to fill posts of deputies, where the endorsement of the boss and his boss are essential to be crowned.

The Assistant, as reported in the newspapers, who argued that, since the North and East contributes only 8% of GDP and therefore can be ignored for the present until the conflict is resolved and who also did not find any arguments against concentrating further resource allocations to the Western Province, in order that productivity, quality and international competitiveness, key to GDP growth can be leveraged, must have wrapped his development economics fundamentals in a Chinthana Satakaya in his new role. Despite the beating he got from his economist colleagues, he had the audacity recently to argue that tourism contributes an insignificant extent to GDP and the current country situation with low tourism flows was not a major issue.

He conveniently forgot the investments already on the ground, people numbers dependent both directly and indirectly, contribution to provinces outside the Western province and above all the potential for value addition in the future (when the growth in income from housemaids, tea and apparel ceases to be significant) in his assertive pronouncement.

Instead of merely waving the flag of GDP growth rates blindly on a quarterly basis, should not the boss and the Assistant show the public, the composition of the net contributors to growth, segregating war related spends, breaking and making related reconstruction spends, other components that are not sustainable and does not add long term value to the nation and its people.

It is time that the private sector told the Governor that the their vision for the nation, its people and the private sector is not merely restricted to short term quarter to quarter GDP growth. It is time to ask for accountability from the Governor for a national vision that is acceptable to the private sector.

The attention of the Governor must also be drawn by the private sector to the assessment of the long term impact of the following key issues, which issues have a significantly priority in the longer term growth and development of the private sector:

• Likely budget deficit for 2007
• How the budget deficit will be financed and the likely inflationary impact in the longer term.
• The level of investments in, borrowings by and contingent liabilities of state enterprises financed by the State Banks and the Riot Fund.
• Long term impact of proposed foreign currency borrowings.
• Long term impact of the foreign relations policy adopted by the government that has brought its international relations to the lowest ebb with traditional development partners and key trading partners.
• Long term impact of the break down in law, order and human security.
• The darkest black marks that adorn the international notice boards on human rights violations in Sri Lanka and impact thereon preferential trading options currently enjoyed by the private sector.
• The long term impact of the judicial processes and outcome of shocking developments in the legal systems.
• Long term impact of the negative ratings of Sri Lanka in key international bench marks.
• Long term impact of perceived high levels of corruption.
• Long term impact of lack of human resources with capability, attitudes and values to yield competitive advantages.
• The level of commitment to the provisions of Fiscal Responsibilities Act.
• The proposed framework for implementation of the provisions of the Consumer Protection Act.
• The level of independence of the Monetary Board.
• The level of independence of decision making in respect of investments of the Employees Provident Fund and Employees Trust Fund.
• The level of readiness to face possible issues and sanctions in terms of the “Carbon Foot Print” of Sri Lanka.

The private sector looks forward with interest to the next quarterly presentation by the Central Bank where old tunes will be played down and new issues raised, brought up.