A vote of confidence
Sri Lanka is on the threshold of lasting peace and an era of
prosperity following the crushing defeat of LTTE terrorism three
months ago. The three-decade conflict drastically affected the
economy due to the heavy defence expenditure and the effect on
tourism and investment. That tragic era has finally come to an
end and the economy is now poised to grow at an unprecedented
rate. The stock market is one of the best in the world at the
moment and international investors of the calibre of Jim Rogers
have recommended Sri Lanka as one of the hottest investment
There were many naysayers who 'predicted' that the Government
would not receive any international assistance due to certain
concerns of the international community. However, their gloomy
predictions were shattered when the International Monetary Fund
(IMF) recently approved a US$ 2.5 billion facility to Sri Lanka,
with an initial tranche of over US$ 300 million. This was
actually US$ 6 billion more than the US$ 1.9 billion initially
negotiated by the Government and a massive vote of confidence in
our economy and governance.
As the IMF and the Government had agreed, these monies will
also be used for Northern rehabilitation and development, a
priority in the light of the region's liberation from terrorism.
It has now been revealed that foreign reserves had risen from
US $ 1.7 billion on July 24 this year to US $ 3.1 billion now.
During the first three days of this week alone nearly US $ 900
million had been invested in Treasury Bills and Bonds, said
Export Development and Investment Promotion Minister Prof. G.L.
Peiris. Incidentally, this was three times the IMF's initial
There is no doubt that this trend would continue. Sri Lanka
is on its way to become a Middle Income Country (MIC).
A senior World Bank official has echoed these views, saying
that Sri Lanka is poised on the crest of two great waves of
opportunity. The first wave can transform the nation from a low
income country to Middle Income Country.
The second wave can transform the nation from a country in
conflict to a country at peace.
According to the Minister, this influx of resources had come
to the country after the defeat of terrorism and the arrest of
LTTE international operator KP. As the Minister pointed out, it
would create stability for economic and infrastructure
development and the Government could provide more social welfare
measures to the people through new enterprises and generating
employment opportunities with the increased money circulation.
More investors are already flocking to the country as
evidenced by the steady stream of agreements signed by the Board
of Investment of Sri Lanka over the few weeks. These will not
only add to funds to the economy but also generate employment.
Most hotel rooms are fully booked and new hotel investments are
also in the offing. More airlines have begun operating to
Colombo, bringing more tourists. In fact, there is a substantial
improvement in tourist arrival figures. The winter tourist
season would be very successful.
The success of tourism and investment, two pivotal components
of the economy, will be vital in the march towards prosperity.
Moreover, there is every possibility of a rise in agricultural
productivity with the Northern and Eastern regions realizing
their agri potential again after 30 years. This will also make a
very important contribution to the economy. Sri Lanka has
already been billed in a recent survey as one of the happiest
places to live in, within our region. Economic prosperity
propelled by peace will necessarily lead to better times for the
With more money in their hands, there would no longer be a
need for certain welfare measures. President Mahinda Rajapaksa
has expressed this sentiment at a recent event. Indeed, as more
people emerge out of poverty and become economically
self-reliant, there will be no need for extra monetary
However, this would not mean that the State would curtail all
concessions and incentives offered to various segments of
society. In today's globalized world, the economy is not all
The 'knowledge economy' based on education is also important.
Sri Lanka has been ranked 82 out of 140 countries on the
Knowledge Economy Index (KEI). Thus Sri Lanka needs an education
system that can address the requirements of the economy and
improve the knowledge economy rankings. The economy has already
received a boost after the end of hostilities. A multi-pronged
approach is required to develop it further and take Sri Lanka on
the path to become an Asian powerhouse.