Political will, bureaucratic support needed to pursue Sri Lanka reforms
ECONOMYNEXT – Sri Lanka needs strong political will and the support of the bureaucracy to push through the reforms that have been announced to free up the economy and speed up growth, a World Bank official said.
Despite natural disasters, Sri Lanka is reaping the benefits of improved revenue collection and managed expenditures and, has thus recorded a primary fiscal surplus for the first time in decades, the bank said in its latest report.
In 2017, for the first time in decades, Sri Lanka’s fiscal revenue exceeded expenditures excluding interest payments, leading to a primary fiscal surplus.
Despite this and other improvements in macroeconomic performance, the island nation remains vulnerable, the World Bank said.
“The current domestic political environment has slowed reforms and complicated the stable medium-term outlook,” it said.
“Natural disasters continue to take their toll on the GDP, while the pace of urgent fiscal reforms has lagged in a challenging political environment,” said the World Bank Sri Lanka’s new Development Update.
“Sri Lanka’s march towards Upper-Middle-Income status and more and better jobs hinges on the economy’s competitiveness and its ability to pursue a private investment-tradable sector-led growth model,” said Ralph Van Doorn, the World Bank’s Senior Economist for Sri Lanka and the Maldives.
Highlighting the challenges posed by domestic political considerations and institutional constraints on implementing policies, Van Doorn said:“A strong political will and support of the bureaucracy could help advance the reform agenda.”
Sri Lanka’s outlook remains stable but is conditional on reforms, he told a forum where the ‘Sri Lanka Development Update’ the World Bank’s bi-annual macroeconomic publication, was launched.
To transition into Upper-Middle-Income status, Sri Lanka will have to embrace a new growth model and improve its economy’s competitiveness, he said.
(COLOMBO, June 28, 2018)