“Sri Lanka is on the verge of becoming an upper-income country. To ensure sustainable development, a viable growth model that maintains macro-fiscal stability and increases resilience to natural disasters should be formed,” said Senior World Bank Country Economist for Sri Lanka and the Maldives, Ralph Van Doorn, at the Sri Lanka development update seminar organized by the World Bank in collaboration with University of Colombo’s Department of Economics, with emphasis on “Managing risks and creating opportunities for sustained growth”.
World Bank prepares the Sri Lanka development update twice a year.
In view of this update, Sri Lanka is revisiting its growth model, undertaking structural reforms to mitigate risks and create new opportunities for households, firms, the public sector and macroeconomy.
Van Doorn said, “Anticipate, mitigate and communicate should be the salient points in the new growth model. Sri Lanka while mitigating inevitable risks, should grasp opportunities. Macroeconomic performances continue to be broadly satisfactory despite significant challenges including natural disasters. Prepare in advance for natural disasters.”
He further said, “While pursuing structural reforms to promote competitiveness and to attract more FDI, the country cannot afford to forget its poor or vulnerable. With innovatively deployed policy instruments that support structural adjustment, those adversely impacted must be protected.”
“Risks should be analyzed and an integrated approach to risk management has to be adopted while ensuring fiscal consolidation. Though fiscal performance has improved, significant risks remain. Tax payments are abused by certain people,” said Van Doorn.
He elaborated on liberating trade and paying debts early without waiting for the last minute.
“Global growth prospects have increased with benign financial conditions and Sri Lanka must make use of this opportunity. The country must have more focus on exports. It should approach bigger markets to achieve economies-of-scale in production. GSP Plus will improve access to the EU market and it is a big opportunity for Sri Lanka to boost its exports.”
FDIs more than doubled in the first half of 2017 due to inflows like the Port City. One-stop-shop for FDI, reforms to the investment climate and trade, reforms for SOE to perform better are needed.
Official reserves increased with forex purchases and external borrowings. Yet external debt related risks remain high.
Sri Lanka has an ageing male society thus labour force must be enhanced with increased participation by females. Female participation in labour here is one of the lowest in the world,” said Van Doorn.
A panel discussion took place with Indrajit Aponsu, Ralph Van Doorn and Dr M Ganeshmoorthy.