Posted on December 9th, 2019


Mr. Bandula Gunawardane, Minister for Information Technology, Higher Education, Technology and Innovation and Co-Cabinet Spokesman has made a public statement on ten principles of government and the national policy in relation to priorities.  This statement further included major economic targets, which seemed to be not unrealistic as the targets could be easily achieved by structural changes in economic management and successful monitoring and remedial management required during the next five years to get the economy to right track and boost production. The most impressive targets included 6.5% annual GDP growth, Unemployment below 4%, 5% inflation and controlling the budget deficit to 4% of Gross Domestic Product.  In addition to these targets, it indicated that current per capita income to reach US $ 6500, however, the level of foreign reserves and the foreign value of Sri Lanka’s monetary unit have not mentioned, most probably current international uncertainty would have contributed to the difficulty in forecasting external performance.  There is no doubt that ten principles of government will motivate policy makers of the government sector as well as public who are looking at the policy implementation process of the government.

In terms of annual GDP growth, it appears that it will take ten years to double the economy, however, the monitoring and remedial management process remain at a higher level of motivation and administration free from corruption and the principle of people centric-development would support to maintain a strong public support to the national policy implementation process.

GDP growth, lower budget deficit, and lower rate of inflation direct to attract private investment and to maintain a healthy interest rate for borrowers to maintain profitable outcomes in investment firms and technology-based society gives incentives for creating many job opportunities.

If there is a healthy rate of growth and lower budget deficit, they would be the best incentives for debt problems in the country and the government could borrow more for new projects to create job opportunities.  The achievement of Productive citizenry needs technology-based society and wider disciplinary in management of firms with a higher-level productivity reducing expenses.  

I read a report in a newspaper which stated that the productivity of public sector employees is lower than the private sector and this should be a serious concern of the relevant authorities to identity if employees are paid equal salaries, wages and allowances, why public sector employees’ productivity is lower than private sector. In this environment, the government should develop criteria for changing salary and wages based on the productivity of employees and such a procedure should be used to job evaluation of individual employees in the workplaces. The government needs to negotiate the concept with trade unions and come to an agreement.

It is also recorded that Colombo Stock Exchange allowed to list and trade shares in foreign currencies. It is a very good move but needs to understand the risk of the procedure considering what happened in Malaysia and Indonesia late 1990s during the Asian crisis. Risk monitoring should be a priority in this policy changes because there may be manipulators against the government policy and to gain unfair advantages from the progressive policy of the government.  The liberal policy of the Colombo Stock Exchange would help to increase foreign reserves of the country, but expected results could be achieved only if the firms listing in CSE maintains a higher level of profitability to attract buyers.  Therefore, factors for bull and bearer markets need closely monitoring and taking appropriate remedial management on time rectify problems.

Sri Lanka also needs to establish regional or district level sub-stock exchanges to list regional small companies and combined firms of regional stock exchanges should be listed in the Colombo Stock Exchange. The current regulations regarding the listing of firms in the Colombo Stock Exchange has become a barrier to participate rural companies to listing and for this purpose Central Bank needs to develop applicable guidelines and legal changes to current system.  The development of a practical finance course with good English Communication skills for one-year period and offer to unemployed graduates and train them for successful workers in finance business will a good solution to unemployment and make cultural changes giving rural youth to be leaders and contributors to the economy.  This type of policy action created 100000 new jobs in the country and boost rural economy by modernization.  Sri Lanka can create restoration like Meiji Restoration took place in Japan.

The regional firms need to attract foreign investment from India, China, Japan and other Asian country, which bring technology to rural sector and entrepreneurial knowledge and skills to rural people. Maintaining successful controls to protect investors will be a key to success new policies

Sri Lanka needs to achieve a higher level of foreign value to Rupee and down the prices of imports to radically control inflation.  In this area Central Bank has an excellent role to play as a regulator but not a market operator.

The other vital problem in Sri Lanka is mobilization of debt capital for rural firms as trading banks and non-bank financial institutions have limits to credits as the capital structure and deposits for loanable funds has become a constraint and promoting share capital through regional stock exchanges would be profitable for rural firms and the banking sector release from the pressure to provide working capital for rural firms.

The government consideration for modernization with new ideas and maintain proper control and transparency in such control would support to achieve the reality of economic targets. However, the government and regulators must not forget dishonest elements which will create to the government.

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