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Monday, August 30, 2010 - 05.45 GMT |
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Paradigm shift
in economic policy since 2005 - Dr. P B
Jayasundera |
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There is a paradigm shift in economic policy since 2005, recognizing the importance of infrastructure development and associated investments in the service economy, policy bias towards domestic value addition in production, integrated rural and agriculture development and placing trust on both private and public sector for economic development, stated Dr. P B Jayasundera, Secretary to the Treasury, the Ministry of Finance and Planning and the Ministry of Economic Development.
He was speaking at the 60th Anniversary of the Central Bank on 27 Aug.
Sri Lanka’s economy today is a different story and more encouraging with a promising outlook compared to the economy in 1990s, he added.
In 1990, the Sri Lankan economy with a per capita income of US$ 400 was a less developed economy. The economy performed in the midst of an island wide insurgency in the South and a prolonged conflict in the North, he said.
The Sri Lankan economy is enjoying over US$ 2,000 per capita income and has graduated to a middle income economy status. The progress has been rapid since 2005, during which period the economy has sustained an average growth of 6 percent in spite of adjustment difficulties in the midst of a global oil price hike, financial crisis and intensified conflict till it ended in mid 1999, Dr. P B Jayasundera further said.
Unemployment has declined to 5 percent from 15 percent in 1990. Reflecting a relatively high growth and a decline in unemployment, the incidence of poverty has declined from 24 percent in 1990 to 15 percent. Public debt has been reduced to near 80 percent of GDP and the budget deficit has been contained at around 8 percent, with public investment sustaining at little over 6 percent of GDP, he added.
Speaking with regard to the annual average inflation of the country he said, "More importantly, the Central Bank can proudly claim for achieving the annual average inflation of around 6 percent with lower growth in monetary expansion - a great success the Central Bank has achieved in performing its primary responsibility - the price stability. Maintaining stability in exchange rate movements and reducing interest rates almost by 100 percent from the range of 22-30 percent in late 2008 are signs of economic stability".
In this context, he said, our graduation to a middle income country status and the management of the early stage of a middle income economy over the last 5 years have been credible.
Now that the 26 year old conflict is history and contagious effects of the recent global financial crisis have been arrested and at least Asian economies have continued to sustain high growth performance, the economic outlook for Sri Lanka is promising. If the analysis done by the Central Bank of Sri Lanka and the Institute of Policy Studies are correct, the ending of the conflict alone must add 2 percentage points to our economic growth, he said.
Please click the following link for the speech:
http://www.cbsl.gov.lk/
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