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country with little in the way of foreign investment.
Its economic outlook was bleak, as the civil war — which would not end for another three years — continued to act as a drain on the public purse. Meanwhile, overseas investors elected to spend their money in more politically stable countries.
Stabilising the economy
It was under these challenging economic circumstances that Cabraal took up his new job. Handpicked for the role by President Mahinda Rajapaksa, he was tasked with stabilising the economy and establishing a favourable long-term economic outlook for the country. He did so in style, proving many economic doomsayers wrong.
By the end of 2013, Sri Lanka’s economy was worth around $67 billion, with a per capita income of $3,280. Its medium-term outlook suggests that the country has the potential to grow at around 8% yearly from 2014 onwards.
And increasing trade with China is playing a significant part of the country’s economic revival.
Such a financial journey would mean that within the next five years, Sri Lanka’s economy could surpass $100 billion, and its per capita income would exceed $5,000.
Cabraal explains how he managed this transformation of the country’s economy.
“By taking a consistent and firm approach, which often resulted in unpopular decisions having to be made, we were able to gradually convert Sri Lanka into a country with low inflation and a low inflation outlook,” he says.
These were not easy wins, however. “It took us a considerable length of time and a lot of tough moves to bring inflation down to stable levels, and even longer to contain the inflation expectations,” he adds.
“Today, all our macro fundamentals are moving in the desired direction and some have already reached reasonably benign levels. Of course, there is more to be done, and we have to continue in this vein to ensure that the major successes we have achieved so far are further enhanced in times to come.”
Anticipating possible challenges
But like an experienced general who never underestimates the power of his enemy, Cabraal is already anticipating the possible challenges that the country may encounter in its crusade for economic growth and prosperity.
At the same time, he remains confident that over the next few years the country will move toward a new trajectory, while also sustaining the growth and stability of the economy.
The Governor is reluctant to take full credit for Sri Lanka’s fiscal turnaround and credits the bank’s considerable successes to his team. He also believes that taking a laissez-faire approach to the role has enabled him to get results.
“It has been a trait that I have been able to perfect over many years,” he says, “and through which I am able to dispassionately evaluate the background to an issue while passionately driving towards a set goal.”
Keen to downplay the crucial role that he has played in Sri Lanka’s economic turnaround, the Governor maintains that he has directed the economy in accordance with the overall fiscal principles initiated by the President.
Cabraal does concede, however, that his background in finance, administration and economic affairs may have helped him secure this prestigious post. Before taking up his current post, the Governor served as Secretary at the Ministry of Plan Implementation to President Rajapaksa.
Revival of economic prospects
The revival of Sri Lanka’s economic prospects has been spearheaded by the ‘Mahinda Chinthana’ (Mahinda Vision), an ambitious national program that aims to create consistent economic growth and a continuous increase in employment opportunities.
Cabraal explains that maritime, aviation, knowledge, energy and commercial industries are the new drivers of the island nation’s economy.
“These sectors will provide a large number of new employment opportunities for the youth of our country. In addition, a renaissance in tourism after the end of the conflict is also generating a substantial number of new opportunities,” says Cabraal.
He is well-placed to make such predictions. Sri Lanka’s future prosperity has been a major concern of his for some time, and he has written on strategies to regenerate the country’s economic fortunes in publications including the book ‘Towards a Sri Lankan Renaissance’ in 2002.
Cabraal spent the first 32 years of his career in the private sector as a chartered accountant, a position he enjoyed but that, in retrospect, he says did not particularly challenge him. “In that milieu, there did not seem to be any reason for me to move to a challenging public life and to serve in a public institution,” he explains.
Political interventions
While he has no intention to enter active politics by seeking office himself at present, Cabraal is conscious of the fact that to achieve economic goals, someone in his position may at times be required to make political interventions in order to develop the right business environment.
“I have a reasonably good idea about politics, both locally and internationally,” he says. “One has to be politically savvy in order to perform.”
Since the Sri Lankan military beat the Liberation Tigers of Tamil Eelam in 2009 and brought the civil war to an end, the country has witnessed significant financial advancement, thanks partly to Cabraal’s policies.
http://www.chinadailyasia.com/people/2014-06/20/content_15142872.html
