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| Tuesday, 6 July 2004 |
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Economic growth trends The United People's Freedom Alliance (UPFA) Government unveiled its economic policy last week. As widely expected, the policy focuses on the promotion of agriculture, fisheries, livestock, exports and small and medium scale enterprises. Finance Minister Dr. Sarath Amunugama, who announced details of the economic policy, was optimistic that the Government would be able to maintain current economic growth trends and work towards achieving an eight per cent growth rate by end 2004. This may not be impossible given the 6.2 per cent economic growth in the first quarter, the highest in the last seven quarters. The Government also hopes to get the budget deficit below eight per cent. Its economic policy hinges on several fundamental pillars. Essential sectors such as agriculture, fisheries, livestock and small and medium scale enterprises have more or less been neglected in the recent past, with the advent of the open economy and unrestricted worldwide trade. We are awash with imports of everything from foods to vehicles. Even items which can be cheaply manufactured here are imported and sometimes sold at prices lower than those of the local equivalents. As Dr. Amunugama has rightly pointed out, it is disappointing to note that Sri Lanka still spends heavily on importing sugar, potatoes, onions, canned fish and several other commodities in which Sri Lanka can be self sufficient. The best way to fight the glut of imports is developing local agricultural and industrial products. Infusing new methods to traditional sectors such as agriculture and fisheries is essential. The SMI sector, with its vast potential for creating self-employment avenues, has also been recognised in the economic policy as a vital cog in the economic wheel. An emphasis on developing the whole island's economy will also address another issue raised in the economic policy: the vast disparity between the Western province and other provinces in terms of economic growth. The new economic policy pledges to bridge this gap by introducing new development strategies and technology with State assistance to develop under-developed areas. Privatisation has always been a controversial issue, with some passionately arguing for the divestiture of public enterprises and others vociferously opposing any such moves. There is, however, a general perception that a Government should keep at least some strategic institutions under its control. It does not mean that these enterprises should be able to do as they wish - they must move ahead with the times and be able to compete effectively with the private sector on equal terms. Dr. Amunugama did not mince his words recently when he said that some of the State-owned behemoths were overstaffed, badly managed and acting irresponsibly. The Ceylon Electricity Board, the Sri Lanka Central Transport Board, the Government Railway and Ceylon Petroleum Corporation were mentioned in particular. The Treasury simply cannot keep subsidising these non-profitable State ventures. The answer is reforming these institutions to make them self sufficient, efficient and competitive. This is precisely the goal of the Strategic Enterprises Management Agency (SEMA), which has been set up by the Government to oversee 12 loss-making State ventures. In addition to these four, it includes Bank of Ceylon, People's Bank, National Savings Bank, State Mortgage and Investment Bank, Sri Lanka Ports Authority, Airports and Aviation Authority, National Water Supply and Drainage Board and the State Pharmaceutical Corporation. The UPFA has clearly stated that privatisation would not cure their ills. The aim is to improve the efficiency, effectiveness and financial viability of these vital institutions without privatising them. The 12 enterprises will work according to a strategic business plan to be prepared in consultation with and endorsed by the SEMA. If these plans are successful, they will be able to give the private sector a good run for their money. This, in essence, is a sign of a good economy. Both private and public sectors must compete with and complement each other for consistent economic growth and prosperity for the people. |
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