Mr. Minister:
War and economy: a balancing act
Shirajiv Sirimane
WHEN SRI LANKAN Security Forces can take full control of the Northern
Province, as they did in the Eastern Province, Sri Lanka can be made a
Singapore, in less than 10 years, Minister of Finance and State Revenue
Ranjith Siyambalapitiya is optimistic.
Speaking to the Daily News Business, at the Finance Ministry he said
the Government has achieved a 7.4 per cent economic growth despite
spending heavily for the war and also continuing with the handouts
rolled out to the poor people.
"This is very creditable as it's being achieved while the Government
is fighting a war," he said. "You can just imagine what we can do if
there is no war and this is why I am saying that Sri Lanka can easily
become another Singapore," he said.
The Government has spent Rs. 3.4 billion in the first five months of
this year for handouts which included Rs. 575 million for printing of
school books, a further 389 million to provide a nutritional meal to
school children, Thiposha (Rs. 115m) and many more. In addition a
further Rs. 6.6 billion had been reserved to provide the fertilizer
subsidy and 3.85 billion for the Samurdhi for about 2 million people.
The Government is committed to spend for free education and health
and on top of all these we have to pay salaries for over 200 State
institutions running at a loss.
"The Government can easily give these institutions that are running
at a loss to the private sector. However the Government is not in for
privatisation as it was an election pledge made by President Mahinda
Raja- paksa.
The Government also loses revenue by way of taking off taxes imposed
on the imports of some essential goods. The Government had to forego
around Rs. 5.4 billion in the first six months of the year as a result.
The cost of living is the pet subject of any Opposition party.
"However I want to emphasise that meaningful steps have been taken to
minimise and caution the ever increasing oil prices and other
commodities that are being imported. "This is why it was decided to
provide diesel to the Ceylon Electricity Board at a discounted price,"
he said.
The Deputy Minister recalled that while reading an old magazine which
was published in 1920 he noted that a measure of rice was sold for 10
cents, Maldivefish at 17 cents a kilo of sugar at 6 cents.
However the daily wage of a labourer during that time was between 35
to 40 cents and this clearly shows that even 88 years ago the market was
driven by the earnings of people. "This has not changed even today and
would remain so under any Government," he said.
The highest inflation was recorded in 1980 soon after the
introduction of the open economy. This was at 26.1 per cent and later it
was brought down to under 20 per cent. "It's noteworthy to mention that
inflation was at 1.2 per cent during the 1970 to 77 era where the
country was heading towards self sufficiency. "Our aim is to bring the
inflation to a single digit by the end of the year," he said.
He said the lowering of the unemployment ratio to 6.3 per cent too
would helped to bring down inflation. The attractive bank interest rates
have also help towards increasing savings.
The Minister said action has been taken to make the public sector
more efficient and they have paid almost Rs. 6 billion as an incentive
for employees who had taken 'less leave'. The Government is now in the
process of introducing new thinking to increase productivity and
technology by way of computerisation.
The Government is far thinking and have gone ahead with many power
generation projects such as Norochcholai, Sampur, Kotmale which never
got off the ground due to various reasons.
"The country had provided electricity to around 35 per cent of
households a few years ago and today this has increased to 78 per cent.
When these projects along with other power generation plants are
completed the whole country would have electricity within the next five
years," he said.
Airing his views on the foreign aid utilisation he said that this too
is being used in a more productive manner. "However I must admit there
is still some aid that is being unutilised due to red tape," he said.
The Government is working very closely with the World Bank, Asian
Development Bank and various other donor countries. They are happy with
the rapid development of the country.
Foreign debt as against the GDP was in 2003 was 105.9 per cent and it
has narrowed to 93 per cent last year. The target is to lower it to 91
per cent by the end of the year.
In addition the highway development, construction of the harbour in
Hambantota, expansion to the Colombo Port and other mega infrastructure
development projects would provide the most needed infrastructure to
attract more investors.
The investments for the Eastern province too would also open a new
window of opportunity for both local and foreign investors.
'The budget to be presented in November would be people friendly',
Siyambalapitiya said. |