Commendable economic growth in 2006 - President  

[Friday, March 30, 2007 - 8.30 GMT] 

The commendable economic growth of 7.4% achieved last year despite an unprecedented series of obstacles is no accident. It is a result of careful planning and efficient implementation, said President Mahinda Rajapaksa, at the presentation of the 2006 Annual Report of the Central Bank today (March 30).

The main challenge faced by the county for the last 30 years is terrorism in the North and East and the search for a political solution to it. In addition, the country had to face rising fuel prices and natural disasters. During the last year the Government's policy was to fearlessly combat terrorism and develop the economy, without making terrorism an excuse to delay development, the President said.

President Rajapaksa said:

"Our achievements in both these fields - combating terrorism and developing the economy - demonstrate the success of our defence and economic policies.

"If we are to raise the living standards of our people to match those of the developed world even to some extent, it is essential to maintain an average growth rate of 8% for the next five years. Our Ten Year Plan is prepared with this target in mind.

"While bearing the burden of a destructive war, we have already launched several development projects. Among them are power generation, road development, and ports and airports development projects. By improving infrastructure in this manner we expect to attract foreign investment and raise productivity, and by this create the background for sustainable economic development in the future.

"Among the special projects launched in this connection during the last year are "Maga Neguma" (Road Development), "Gama Neguma" - developing 12,000
villages, 300 industries under "Navodaya" and mega irrigation projects including the Moragahakanda Reservoir, highways linking the city and village.

"What we expect from this is to extend development to all regions of the country which was hitherto confined to the Western Province.

'It is a cause for satisfaction that we have been able to reduce the incidence of poverty to nearly 20 %. At the same time our per capita income which was US$ 1,197 in 2005 has gone up to US$ 1,355 in 2006 thus
consolidating our position as a middle income country.

"For sustainable economic development the active participation of the workforce and its productivity is critical. At present the workforce in the State sector is 1 million. The majority of our workforce - nearly 7 million, is in the private sector. As a matter of policy we do not have any liking or expectation to privatize state institutions. However, we see no purpose in maintaining State institutions by using public funds to subsidize them. Instead of that, we call upon everyone to raise the levels of efficiency and productivity in state institutions and thereby contribute to future economic
development.

"In the past few years what was expected by the large increase salaries in the State sector was to raise the level of efficiency. We already notice some good results from this with this Annual Report of the Central Bank
being presented one month ahead of the legal schedule.

"At the beginning of this year the Government  appointed a National Economic Council (NEC) to find solutions to current and principal economic issues
facing the country. This is not just a formal Council. It meets fortnightly and had eight sessions so far. During the past few months we have taken urgent measures through the NEC to control inflation, which has been a major challenge. Central Bank expertise has been very helpful in the NEC. I believe the results of these measures will be seen in the next two months."

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Last Updated Date: March 30, 2007 - 8.30 GMT