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| Tuesday, 5 October 2004 |
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Cooperative efforts to mitigate adverse effects of oil vital - Dr. Amunugama Finance Minister Dr.Sarath Amunugama told the Joint Annual Discussion in New York on Sunday that cooperative efforts by fuel supplying and consuming countries are vital to mitigate the adverse effects, which affect developing countries such as Sri Lanka. He said it is encouraging that there has been a firming of the global economic recovery. The buoyant global demand has led to a pick up in commodity prices that have benefited many emerging economies. The world is entering a period of higher inflation and interest rates. The policy responses by many countries have helped to bring about orderly changes in interest rates. Nevertheless, the transition to the new phase needs to be carefully managed so as not to stifle the ongoing recovery. There are significant vulnerabilities in industrial and emerging market countries. If the current positive developments in the world economy are to be sustained, fundamental problems such as difficult fiscal positions, structural weaknesses, financial vulnerabilities and global current account imbalances need to be addressed. This requires a further strengthening of international cooperation, particularly in macroeconomic policy co-ordination, by the industrial countries. The Fund and the Bank have important roles to play in strengthening the global economy, and we appreciate the efforts being made by these institutions. We welcome the cooperative efforts by the Fund and the Bank to support multilateral trade liberalisation and in this regard, we welcome the activation of the Trade Integrating Mechanism by the Fund to help ease the related temporary balance of payments pressures. The economic recovery in Sri Lanka has continued, although we have been affected by a severe drought and the very high international prices for oil. Growth in the first half has been 5.7 per cent and we expect the annual growth for 2004 to be in the region of 5-5.5 percent. The high oil prices have increased our expenditure by 50 percent and strained the balance of payments position. Our government is committed to promoting regionally distributed pro-poor pro-growth within a consistent and sound macroeconomic framework. In particular, we are taking steps to ensure that the disadvantaged segments of our population would rapidly reap the benefits of economic growth. We envision that the public sector and the private sector together will play proactive roles in developing our economy. We are increasing investment, particularly in infrastructure and in rural development. Increased emphasis is being placed on developing agriculture, small and medium scale enterprises and tourism. Our government is making a determined effort to carry forward the Peace Process and establish a permanent peace through a negotiated solution, he said. |
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