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Tuesday, 9 April 2019 00:44 - - {{hitsCtrl.values.hits}}
By Charumini de Silva
Finance Ministry Economic Advisor Deshal de Mel last week said Sri Lanka faces a great challenge in recuperating the economy noting that the country’s growth rate of 3.3% was well below potential and less than the regional average.
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Finance Ministry Economic Advisor Deshal de Mel
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“The real challenge now is to improve the economic growth. In 2018 the growth was around 3% to 3.3% which is well below the potential. The Central Bank estimates Sri Lanka’s GDP should be around 5% to 5.5% and we are well below that and below the regional averages right now,” he said at a discussion organised by Institute of Policy Studies (IPS) last week.
He stressed economic growth was crucial in terms of raising livelihood as well as debt sustainability. “It is a short and medium term priority to get our growth rate back up to a range of 5%, where we all want it to be,” he said. From a Government perspective, to stimulate growth in the short to medium term, de Mel pointed out that it was essential to have fiscal and monetary space, which the economy lacks at present.
However, he said that within those constraints, the Government has made few interventions by trying to address some of the key areas which they believe could have a material impact on the economic growth in Sri Lanka.
According to him, Enterprise Sri Lanka and Gamperaliya programs were some of the key initiatives that the Government had rolled out from last year to uplift the growth in various aspects.
He said that through the Enterprise Sri Lanka program, the Government intended to provide concessionary financing for small-scale businesses in a more sustainable manner. “We wanted to stimulate growth not through driving consumption, which successive Governments have done that resulted in a negative impact on current account, leading to a Balance of Payment (BOP) crisis,” he added.
Over Rs.70 billion has been channelled into the economy under the Enterprise Sri Lanka concessionary loan schemes, he pointed out, adding that this credit is disbursed at 40% of the typical market rate into various sectors of the economy, including agriculture and manufacturing.
He also said the rural infrastructure investment scheme ‘Gamperaliya’ was initiated with dual intentions to channel cash back into the rural economy as well as to uplift infrastructure in the rural villages.“We wanted to inject cash back into the rural economies that were adversely affected by two droughts and revive the declining agricultural sector in those areas,” de Mel asserted.
