The country needs to secure its gains made during the past two years which were supported by prudential macro-economic policies adopted to tide over the economic crisis and ensure that it accelerates economic growth, said former Central Bank Governor and renowned economist Dr. Indrajit Coomaraswamy.
“We need to sustain the growth momentum achieved during the past two years because income poverty has doubled and that the country cannot afford another debt restructuring,” he said while addressing the first public event to mark the 75th anniversary of the Central Bank last week.
The title of the public discussion was ‘A new paradigm in macroeconomic management’.
Dr. Coomaraswamy said the Government must strictly focus on building foreign reserves and do its utmost to avoid another debt restructuring which would be catastrophic for the country.
Comparing Sri Lanka to Singapore in the early 1960’s and now, the former Governor said Sri Lanka was much ahead of Singapore in its economic indicators but today Singapore’s per capita GDP is about USD 80,000 while it’s only about a little over USD 4,000 in Sri Lanka.
On the social indicators, Sri Lanka’s performance was impressive but on wealth creation it’s far less impressive, Dr. Coomaraswamy said.
Dissecting the economy to pre and post 1977 he said there were domestic policy missteps which beset the economy during both eras.
Each time we went to the IMF we were pretty good but bungled when Elections were held due to non adherence to fiscal discipline.
Referring to the Public Debt Management Act, Dr. Coomaraswamy said it is a new paradigm in public debt management, while improving accountability and debt transparency and ensuring the implementation of efficient and transparent borrowing practices.
However, he said the institutional arrangement needs the right people and also ensuring that credit credibility is maintained is critical. “We need to ensure that we don’t get into trouble again, other than through factors beyond our control”, he said.
“Sustaining higher economic growth is crucial and that should be the focus of the policymakers.
The performance of the export sector is disappointing. The tariff structure is very untidy. We need to reduce protectionist policies and be competitive,” Dr. Coomaraswamy said while stressing the country cannot repeat occasional bouts of economic instability.
Paying a glowing tribute to the Central Bank Governor and his team in undertaking to stabilise the economy during turbulent times he said all credit should go to Governor Dr. Nandalal Weerasinghe and the team for the valiant efforts to bring down inflation to around three percent from over 70 percent.
