ECONOMYNEXT – Sri Lanka cannot afford an economy dominated by government and cannot continue to run its twin deficits and live beyond its means, President Ranil Wickremesinghe said, calling for more deregulation and private enterprise.
“Sri Lanka can’t stay in this state, with a trade deficit. We can’t live beyond our means. We can stabilise the economy. We can ensure that our bankruptcy status will vanish. What do we do to ensure it doesn’t return in 10 years’ time?” said Wickremesinghe speaking at an event on Tuesday August 15.
“If you have a trade deficit, you have to keep borrowing foreign currency. If you have a budget deficit, you have to keep printing money. Are you going into this vicious cycle again?” he said.
Wickremesinghe said he had warned against this previously but it was not taken seriously.
“So we have to get out. We have to move out of this cycle. We have to think anew,” he said.
“Our economic system didn’t enable us to achieve our full potential. Even during the war. One good example of our full potential is that we were able to build an apparel industry during the war,” he added.
Sri Lanka cannot have an economy dominated by the government, both in economic terms and also in terms of regulations, he said.
“Deregulation and private enterprise has to take over.
That is what we’re aiming for,” he added.
President Wickremesinghe’s administration has been receiving criticism from opposition parties, particularly left-leaning sections of the opposition, for his reform agenda built around what is now Sri Lanka’s 17th International Monetary Fund (IMF) programme.
Wickremesinghe’s emphasis on the state not engaging in business and focusing instead on providing services such as health and education has been met with opposition criticism, particularly in the wake of plans to divest government-held shares of several state owned enterprises (SOEs).
Meanwhile, Sri Lanka’s main opposition party the Samagi Jana Balawegaya is opposed to the privatisation of strategically important SOEs but also advocates an end to state monopoly in sectors like power and energy through competition.
The topic of SOE reforms post-IMF has been politically sensitive with various groups including sections of the opposition accusing the government of “selling national assets”. This has been a rallying cry of the leftist National People’s Power, led by the Marxist-Leninist Janatha Vimukthi Peramuna (JVP), which has historically opposed privatisation of most SOEs. The government of President Wickremesinghe, however, has defended their reform agenda as being necessary for the economy to recover and for Sri Lanka’s long term development. (Colombo/Aug17/2023)