The Sri Lanka Economic Forum, the brainchild of Prime Minister Ranil Wickremesinghe opens today (7), and for two days the Prime Minister will discuss ways in which we can ‘Steer Sri Lanka Through Sustainable and Inclusive Development’.
The Prime Minister has also managed to get a number of prominent economists, including George Soros and Joseph E. Stiglitz to take part in the Forum.
The Sri Lankan Economic Forum is being held at a time when President Maithripala Sirisena is gearing up to celebrate his first anniversary in office. While the President took office promising an era of good governance and gentlemanly politics, Wickremesinghe added to the bucket full of promises the dream of a prosperous and vibrant economy.
A year later, an Economic Forum is held to discuss how our economy has really fared. What have we got so far? In the third quarter of 2015, the Department of Census and Statistics recorded a positive growth rate of 4.8 per cent and the Department predicted the growth rate in the first three quarters of 2016 to be 5.2 per cent.
While this seemed positive, the International Monetary Fund (IMF) warned us that we needed to tighten our monetary policy and raise our taxes in order to avoid a bleak economy in 2016.
The bitter truth, which successive governments have been striving to hide from the public, was that Sri Lanka is facing serious economic issues, which is likely to end in a crisis if proper short-term as well as long-term solutions are not found for the burning economic issues. Government revenue has been declining as a percentage of the GDP over the last decade while the exports have been reducing as a percentage of the GDP. These are not healthy economic indicators for a developing country such as Sri Lanka. In addition, Sri Lanka is leading to a Balance of Payment (BoP) crisis as result of the reduction of exports and the large sum of cash outflows resulted due to the rapidly increasing foreign commercial borrowings.
Thus, the Prime Minister’s focus in this Forum has turned to; Macroeconomic and Fiscal Stability; Structural Transformation and Competitiveness, Urbanization and Development and Regional Development and Social Inclusion as well as looking for new avenues to strengthen the external sector through increasing exports.
Why has he added ‘Social Inclusion and Sustainability’ here? Because in simple terms the rich are getting richer and the poor are becoming destitute. The government needs to find ways to get employers pay their workers more while encouraging businesses and a means to distribute wealth evenly across the population. If we do not do this, they are going to have another revolution in their hands and it would not be as peaceful as the ‘8 January revolution’.
As the Prime Minister prepares to start the conversation on the economy in Sri Lanka, he hopes that this would be the foundation for the upcoming World Economic Forum (WEF) to be held in Switzerland on 20 January. The 46th annual meeting of the WEF however is set to discuss the ‘Fourth Industrial Revolution’, which is the revolution in technology.
“Central questions that will be asked of the Fourth Industrial Revolution include: how will it transform industry sectors, including health, mobility, financial services and education? How can technology be deployed in ways that contribute to inclusive growth rather than exacerbate unemployment and income inequality?” stated the WEF.
As the Prime Minister contributes to the discussion at the WEF, we would like to remind him that our computer literacy stood at 25 per cent and that technology advances would not help much if the Treasury cannot get the basics of fiscal management and budgeting right.
However, the government has not been very successful so far. One of the reasons for that is the bag of pledges it gave to win elections continue to act as constraints to develop the economy in the long run. On top of that, the government had not formulated a proper economic vision regarding the development of industries. The economic policy statement delivered by the Premier prior to the budget did not have enough focus on industrial development. Given the economic situation the country faces, the government will have to implement major economic reforms. Such reforms neither will be popular nor will they be easy. Therefore, it is easy to have forums and suggest policies, but what matters is the implementation of such policies. Sadly, that is what Sri Lanka has been lacking over the years. Many economists, who have mastered in various economic subject matters, have come up with many policies to address the economic issues, but most of these remain unimplemented. In that context, the country expects this forum to not be one of those forums that produced unimplemented policies, but to be a forum which would make a breakthrough in economic reforms and implement them for once, so that the public benefits.