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Wednesday, 6 August 2014 01:19 - - {{hitsCtrl.values.hits}}
By Uditha Jayasinghe
Sri Lanka is well on its way to achieving $ 7,000 per capita income by 2020, believe the two top finance officials of Sri Lanka but acknowledge a “to do” list exists for both the public and private sectors.
Speaking at the Ceylon Chamber of Commerce Economic Summit 2014 under the title ‘Sri Lanka 2020: Towards surpassing the $ 7,000 Per Capita’ Treasury Secretary Dr. P.B. Jayasundara and Central Bank Governor Ajith Nivaard Cabraal were in fine mettle spending over two hours discussing the various aspects of the economy and future plans.
The camaraderie of the two officials was apparent from the start when Cabraal likened their synergy to two batsmen at the crease. “When one runs the other must also respond for a run to be completed,” he said, capturing the relationship between the Central Bank and the Finance Ministry to smiles from the large audience.
Both spent extensive time explaining the infrastructure development and economic targets set out by the Government for the next decade and insisted the $ 7,000 goal was merely a milestone in the journey envisioned by President Mahinda Rajapaksa.
“Sri Lanka has the chance to become an advanced country by 2035. When you see the slogans ‘sell Singapore buy Sri Lanka’ we have confidence our vision is gaining increasing attention around the world. Trade has grown nearly fourfold over the last few years and is breaking into new ground including IT, tourism and stronger financial sector,” Dr. Jayasundara said.
He also insisted that the 7.8% growth prediction for 2014 will be achieved given the performance in exports, tourism, construction and domestic consumer demand during the first six months of the year. He pointed out the service sector is moving beyond 60% of GDP, year on year inflation is 4.9% and there is a steady buildup of reserves along with a fiscal deficit of around 3.7% of GDP.
This combined with reduced interest rates and stable exchange rate would help push debt to GDP closer to 70% by the end of the year.
“We need to find new avenues of revenue, and that is why new growth areas need to be promoted. While allowing a long term tax base expansion strategy to work the government has transformed loss making enterprises such as the Ceylon Electricity Board and Ceylon Petroleum Cooperation creating valuable lending space for State banks,” he added.
He also insisted the “time is right” to pay taxes to the Government rather than expecting tax holidays and other concessions. He also called on the private sector to train and pay its labour well; pointing out that training is no longer the exclusive purview of the Government.
“It is time we appreciate running a government is far more complex than running a business. Private sector needs to value the Government’s national vision and capitalise on it, place country first and be proud of it. This tie between the private and public sectors is the pinnacle of partnership, far more important than the often spoken PPPs in trade and infrastructure.”
Central Bank Governor Ajith Nivaard Cabraal presenting his “to do” list to the private sector admitted that it was challenging but stressed on the possible.
“Every cent we do not get we have to borrow,” he said following up on the Finance Secretary’s appeal for the private sector to pay taxes. Moving onto expectations of 2020 Cabraal noted that the best way to look at the future is to create the future, especially through creating a new financial structure for the country.
“We have new drivers in the country. New roads, new ports, new airports that have created a new future. In 2020 growth will be 8%, unemployment limited to standard levels, abject poverty eradicated, single digit inflation, current account surplus and a gently appreciating rupee. The Government also aims to be on the top 20 in ease of doing business, equitable contribution by provinces to growth and high productivity levels.”
He noted any teams are also working on improving Sri Lanka’s sovereign rating and he requested private sector to help. Financial consolidation was also praised by him as a stabilising move. Overcoming old age is another challenge, Cabraal pointed out, suggesting extended retirement periods and adjustments to labour laws.
Investment channels also need to be made smooth with legal risks and policies being ironed out, he added. “The aim is to make Sri Lanka project a new image. Even encouraging Sri Lankans to invest outside the country.”
The five hub strategy would also ensure inclusive development, less wage pressure, higher employment, productivity and sustainable development, he assured.
