What more can Govt. do: Strategies to solidify economic progress post-elections

Given Sri Lanka’s strategic location, the Government can actively engage in deepening regional trade ties, particularly with fast-growing economies

While the recent Presidential elections in Sri Lanka have set a positive tone for the country’s economic and political landscape, there is still significant work to be done to build on this momentum. The Government’s initial focus on anti-corruption, transparency, and institutional reforms has already had a strong impact on market confidence and investor sentiment. However, in the current global economic climate, additional measures are necessary to ensure that these early gains translate into long-term prosperity. Here are some key areas the Government could focus on to further strengthen its positive market impact:

1. Promoting innovation and entrepreneurship

The Government can encourage innovation by creating an ecosystem that fosters entrepreneurship and supports startups. This could involve providing tax incentives, low-interest loans, and grants for small businesses, especially in sectors like technology, renewable energy, and agriculture. Building incubators and innovation hubs in partnership with universities and private sector organisations would also be crucial in positioning Sri Lanka as a regional innovation hub.

To strengthen this initiative, the Government could establish stronger intellectual property laws to protect innovators and promote research and development across various industries.

2. Enhancing Public-Private Partnerships (PPPs)

The private sector’s involvement in infrastructure and development projects can accelerate growth while reducing the burden on public finances. Encouraging more public-private partnerships in sectors like infrastructure, healthcare, and education can help build critical assets efficiently. This approach would attract more investment, ensure high-quality project execution, and create jobs.

The Government should also aim to develop clear and transparent frameworks for PPPs to boost investor confidence and provide assurances around the long-term sustainability of these projects.

3. Expanding social welfare and economic inclusion

To ensure that the economic benefits reach all levels of society, the Government should focus on expanding social welfare programs. Strengthening education, healthcare, and social safety nets will reduce inequality and improve the standard of living for all citizens, which in turn fosters a more resilient economy.

Targeted programs to improve employment opportunities, particularly for women, youth, and rural populations, would also help broaden the base of economic contributors and reduce income disparity.

4. Environmental sustainability and green economy initiatives

Another crucial focus area is promoting a green economy by incorporating environmental sustainability into national policy. Developing a robust strategy for renewable energy investment, energy efficiency, and sustainable resource management would align Sri Lanka with global sustainability trends and attract foreign investors focused on environmental, social, and governance (ESG) criteria.

Incentives for businesses to adopt eco-friendly practices and reducing dependence on fossil fuels can lead to long-term environmental and economic resilience, particularly in sectors like agriculture, tourism, and manufacturing.

5. Digital transformation and e-governance

To improve efficiency in governance and public services, the Government should further embrace digital transformation. Expanding e-governance initiatives can enhance transparency, reduce bureaucratic delays, and cut costs, while making it easier for citizens and businesses to interact with Government institutions.

In addition, pushing for a comprehensive national digital policy that includes greater access to high-speed internet, promoting digital literacy, and investing in cybersecurity infrastructure would drive long-term competitiveness in an increasingly digital global economy.

6. Monetary policy and financial market reforms

To sustain investor confidence, the Central Bank and the Government must ensure that monetary policy aligns with broader fiscal reforms. This could involve maintaining stable interest rates, controlling inflation, and managing exchange rate volatility. Strengthening the domestic financial markets by introducing innovative financial instruments, such as green bonds or Sukuk (Islamic bonds), can help attract a broader base of investors.

Further reforms in the banking and financial sector can increase transparency and reduce risks, especially by enhancing the regulatory framework for non-banking financial institutions (NBFIs) and fintech innovations.

7. Strengthening regional trade relations

Given Sri Lanka’s strategic location, the Government can actively engage in deepening regional trade ties, particularly with fast-growing economies like India, China, and the ASEAN nations. This involves pursuing trade agreements, improving export infrastructure, and reducing trade barriers.

By boosting Sri Lanka’s export capabilities, particularly in areas like tea, textiles, technology, and tourism, the Government can help reduce the trade deficit and stimulate long-term growth.

8. Conclusion: The road ahead

The Sri Lankan Government has made significant strides following the Presidential elections, creating a renewed sense of optimism in the market. However, to sustain this positive trajectory, further actions are necessary. By focusing on innovation, sustainability, inclusivity, and financial reforms, the Government can build a robust and diversified economy that is well-positioned for future challenges and opportunities. These additional strategies, when executed effectively, will not only strengthen investor confidence but also ensure that the benefits of economic growth are felt by all citizens.

(The writer is a seasoned Asset Management professional with over 12 years of experience in investment management, portfolio management, and risk analysis. Now based in France, he remains actively involved in the financial sector, specialising in strategic planning and trade finance. He is an independent author, and the views expressed in this article are solely his own. They are not affiliated with or influenced by any political party or organisation.)