Minister calls for long-term debt rescheduling

FINANCE Minister Dr. Sarath Amunugama urged the international community and Sri Lanka's development partners to place long-term debt rescheduling high on their agenda.

Addressing the 'Ministerial Regional Meeting on MDGs' in Jakarta, the Minister said the international Community's support was instrumental in addressing the post tsunami development challenge.

He said, Sri Lanka has achieved or is already on track on many of the MDGs and targets. However, we need to make further progress in some areas.

"Although we have had considerable success in the areas of primary education, infant and maternal mortality and gender equality in education, income poverty remains a major concern. All in all, Sri Lanka has a good record in the field of human development.

The development policies implemented have enabled the economy to grow by about 5 per cent per annum during the last two and a half decades. There has been a considerable reduction in the overall as well as extreme poverty levels.

Nevertheless income poverty remains high. It is only last year that the country reached a per capita income level of over US$ 1,000. Sri Lanka's economic growth has been lagging behind those of many of our Asian Neighbours.

Based on our own national poverty line, 23 per cent of the population is in poverty. There is significant disparity in regional income levels and our policies are geared to addressing these concerns."

Dr. Amunugama said: Sri Lanka's trade and exchange system is one of the most liberal in South Asia with an external openness indicator of 70 per cent. The trade and exchange system is very liberal, except for some capital controls.

In fact some of these capital management procedures are not really controls, they are prudential measures, to ensure stability of the exchange system.

'Sri Lanka is firmly committed to support international efforts towards achievement of MDG. In this regard, we support the ongoing efforts to promote debt relief to the needy countries.

We are actively pursuing the promotion of trade through both multilateral level as well as through active participation in regional free trade arrangements'.

'In addition to on going efforts to strengthen macro-economic conditions, the regulatory environment and other structural improvements in the economy and our efforts towards a permanent solution to the ethnic conflict, we were faced with two major challenges, i.e. the tsunami disaster and the macro-economic problems related to the excessively high oil prices'.

If oil prices continue to remain high, it could pose a major threat to our development efforts. We are addressing this issue through both short-term financing and corrective price adjustments, and through other measures to improve efficiency in energy use.

I would also like to point out the need for setting up of a special oil financing facility to assist oil importing developing countries.

'The Government has taken steps to strengthen fiscal consolidation despite additional post-tsunami expenditures, keep inflation under control and maintaining a conducive environment for investment.

The exchange rate is managed flexibly and the independently floating exchange rate system has given the Central Bank greater freedom in monetary management.

There have been efforts to increase financial sector competitiveness and to direct funds to priority sectors to facilitate the growth process. These measures have created the environment for the private sector to act as an "engine of the growth" the Finance Minister said.