IMF’s Mathai outlines series of proposals to help sustain Sri Lanka’s healthy growth

International Monetary Fund (IMF) Resident Representative in Sri Lanka Dr. Koshy Mathai in an illustrative 60-minute long presentation outlined a range of proposals Sri Lanka needed to adhere to if it was to sustain its healthy growth, which the post war nation was enjoying at present.

Speaking at the Institute of Chartered Accountants of Sri Lanka (ICASL) on ‘Economic Outlook and Policy Issues’ recently, Dr. Mathai impressed upon the need for Sri Lanka to focus more on promoting Sri Lankan exports overseas.

While emphasising that Sri Lankan exports to the world had seen a dip over a period of time from 0.8% to 0.6%, Dr. Mathai noted that restoring the dip in exports and increasingly promoting Sri Lankan exports should be a key goal to ensure sustained growth in the country.

“Sri Lanka should also focus more on exporting to neighbouring countries such as India,” he proposed. At present Sri Lanka’s export to India stands at just 5% in comparison to its exports to US, which stands at 20% and to the EU, which is 36%.

“Korea sends 35% of its exports to Asian countries and Sri Lanka should adopt a similar trend and capitalise on Asia’s growth,” he said.

Among other measure Sri Lanka should take to maintain the present healthy growth was to maintain fiscal discipline, while taking steps to improve the country’s business environment which will be key to spurring Foreign Direct Investment (FDI) and growth.

“Financial market development is also of critical importance and Sri Lanka should concentrate on reducing its budget deficit and focus on continuing to build its reserves, while using monetary tools to deal with the excess rupee liquidity that could result from the reserve build-up,” the IMF Resident Representative said.

He highlighted that although the country’s literacy rate was high, there was a dearth where Sri Lankans lacked specialisation in their respective professions and it was imperative that more initiatives and investments were made for higher education facilities and more vocational training facilities in the country. He also welcomed the opening up of more private universities in Sri Lanka.

“Although the literacy rate is high, there are constant complaints of a shortage of managerial talent so it’s important for Sri Lanka to increase its investments for higher education which will help bridge this gap,” Dr. Mathai said.

He concluded by emphasising that “Sri Lanka’s economy has been stabilised but to sustain this stabilisation, a policy agenda is necessary which will ensure continued fiscal discipline, financial market development, business environment improvements, large investments in physical and human capital, meaningful private sector participation, regional integration and national consensus.”