Sri Lanka govt committed to economic reforms: Harsha
ECONOMYNEXT – Sri Lanka’s government remains committed to implementing economic reforms but had prioritised political reforms without which a durable peace and stable economic growth would not be possible, Harsha De Silva, deputy minister of national policy and economic affairs, said.
Although growth had slowed down to around 4.5% while double that rate was needed for the island to ensure prosperity for its people, De Silva said he was not pessimistic about the future.
“To have sustainable 8% growth we need a peaceful, stable democracy,” he said at the Institute of Policy Studies which launched its ‘State of the economy 2017’ report Tuesday and another report on tax policy in Sri Lanka.
Although the government was criticised for not prioritising economic reforms, it needed to ensure reforms in politics, governance and foreign policy to ward off pressure over alleged human rights abuses.
Rebuilding external relations was critical to re-engage with the rest of the international community without which Sri Lanka would have faced economic sanctions by now, De Silva said.
Political reforms were essential to give people back their freedoms, he said.
The state-led, infrastructure-led, debt-fuelled growth model of the former regime was proven to be not sustainable.
The new government is committed to implementing the deep structural reforms needed to transform the economy and put it on a sustainable high growth path to becoming a highly competitive knowledge-based economic hub of the Indian Ocean, De Silva said.
“We want make that structural break – to create a knowledge economy.”
Forthcoming reforms will ensure more money is spent on improving the quality of education, De Silva said.
An analysis by his ministry of capital spending in education and higher education had revealed most of the money had gone to put up buildings.
“ We found that for so many years an average of 60-70% of capital expenditure went to build buildings – school buildings, hostels, labs – but there was nothing really inside those buildings – no microscopes in labs, no beakers.”
The government lacked the funds to increase spending because of looming heavy debt repayments and a still-low tax collection, and its policy therefore is to continue with non-state higher education, De Silva said.
“We need to prioritise spending where we want it, not just in bricks and mortar. We are moving money from bricks to microscopes. We will make major policy changes in capital spending in education.”
(COLOMBO, October 11, 2017)