Prudent fiscal management

Central Bank Governor Ajith Nivard Cabraal has not been everybody’s favourite but there is no denying that he has steered the fiscal policies of the State in such a manner that has seen the country weather the economic storm brought on by the current global financial crisis.

That despite the many gloomy predictions the country’s economy is ticking is indeed testimony to the sound management of the Government’s fiscal policy and financial discipline enforced to ensure the economy would not fly off into a tailspin.

What the critics fail to realise is that these are not normal times when even hitherto sturdy economies were falling like a pack of cards. It needs a person of immense skill and resourcefulness to juggle the many variables in order to see through the critical phase. This task the Central Bank Governor has performed with aplomb.

That the country has recorded a real growth of 6 percent in 2008 in the midst of severe odds when the world economic recession has swept asunder many economies in the West is no mean achievement.

This despite the many cassandras writing off the country’s economy. The overall picture should also include the many attempts by various forces to cut economic aid to the country using the human rights bludgeon. That the country’s economy was emerged from all these challenges is but a testament to the prudent handling of the economic fundamentals.

Releasing the Annual report of the Central Bank for 2008 the Central Bank Governor said the CB was targeting an economic growth rate of between 4.5 percent to 5 percent for the current year. He is optimistic that this could be achieved since all economic fundamentals were in place. In this respect credit is also due to President Mahinda Rajapaksa for putting in place all the basics to ensure the country’s economy would not falter in the wake of the unprecedented challenge.

It was his strategies that ensured the country would not suffer a food crisis when the world was on the brink of a famine. According to the Central Bank Governor “despite the tight monetary policy restraining the expansion of domestic demand and the looming global recession decelerating external demand, agricultural production recorded a favourable development.”

In the same way we overcame the world food crisis the country is now facing the global financial crisis and is poised to emerge out of the situation thanks to sensible management of the economy.

The Central Bank Governor has often come in for flak in certain quarters over figures. However it has to be conceded that he had been keeping a finger on the country’s economic pulse, not allowing things to get out of hand. The stability of prices, the absence of scarcity of essentials that are features of an economic depression have been spared the masses. Those who accuse him for printing money has to admit that the decline in the rate of inflation was due to restricting monetary expansion through quantitative targeting.

Like he said, the steady control made with regard to price stability and financial stability in the midst of the extraordinary challenges has helped keep the economy on an even keel. His job no doubt is like that akin to a physician having to keep a constant eye on the country’s fiscal gauge.

That he is called upon to perform this task at a time when the economy is buffeted on the one hand by a costly war and on the other by the vagaries of global trends does not make matters easier.

It is hoped that with the end of the war in sight and dawn of peace offering many prospects the economy would take off to fresh heights ushering progress and prosperity to a once beleaguered nation. The avenues that would open up with the dawn of peace no doubt would lead to unprecedented growth.

There is therefore a need for a concerted effort by all parties putting aside all parochial differences to unite to achieve this economic prosperity. This is vital if we are to catch up with the rest of the world and not left behind.