Steering a new era of development

North and East will boost economy:

Lakshmi DE SILVA

Minister Ranjith Siyambalapitiya

The economic outlook of the future of Sri Lanka was predicted to become positive by the Central Bank and senior Government Ministers since the war against terrorism was over and even while the war was on an average macro economic growth rate of over four percent was recorded for the first and second quarters of the current year. The Daily News interviewed State Revenue Minister Ranjith Siyambalapitiya to ascertain the strategies used by the Government to sustain the growth rate and further develop the dormant regions and sectors to accelerate economic development. Following are the highlights of the interview:

Q: Now that there is peace in the country and the economic outlook is positive what strategies will the Government employ to enhance economic growth?

A: Under the Mahinda Chinthana policy program in the next few years Sri Lanka would gain more development in agriculture, fisheries and tourism sectors and would be lucky to receive oil resources as expected. Sri Lanka’s economy has recorded a 3.5 percent to four percent growth during the global economic downturn while the developed countries recorded a minus growth rate. Next year we hope to increase our growth rate up to six percent or more with the global trends improving.

Now things would change for the betterment in agriculture, fisheries and tourism sectors especially in the Northern and Eastern regions. The Government had allocated Rs. three billion for fishermen and farmers in the Northern province to uplift their livelihood. Permanent residents of the North could apply for loans under a special scheme and they could get up to Rs. 300,000 on a 10 percent or a lower interest rate from any of the public sector banks.

Q: For the past three decades there was very little or no contribution from the East and North to the national economy due to terrorism. Now there could be progress of these regions. How would the revival of economic activity be channeled for a greater share of growth?

A: The tourism sector in the Northern and Eastern parts of the country too would be developed with special concessions to entrepreneurs to build new hotels. The contribution from the North and East to the economy would be like a leap forward. The two provinces are fertile and rich.

The damaged roads, bridges and electricity in those two provinces had to be reconstructed and restored and the Government has allocated Rs. 40 billion. Infrastructure development in the two provinces has been accelerated and not only the residents but also the entire country would gain the benefits in the future.

Q: How soon normality would return to the North and East?.

A: We cannot do wonders within a short time from May to September but in the years to come, a gradual development progress could be seen in all the sectors. Other than the defence expenditure we had to spend Rs. 2.5 billion on welfare of the IDPs. People should learn to look at those developments with a balanced view without taking malicious corners that the Opposition was trying to spread by creating false documentations against the Government.

The North and East are full of resources. The farmers were once self-sufficient and hardworking. Their contribution would certainly not add just development but would be a leap forward to development and it was just like letting loose someone who had been tied for many years.

Even the fisheries industry that was crippled due to terrorist activities would come back to its normal production with two thirds of the sea area being utilized for fishing industry from all parts of the country.

Agriculture and fisheries in the North gaining a new lease of life. File photo

The factories that were closed in Kankesanthurai, Valachchenai, Pulmodai would be started and it would create more employment opportunities. All in all these facts would show you that development and employment would go hand in hand providing more benefits to the people.

The factors that were against our economic development during the past three decades would now turn for the betterment and would lead towards a better future.

Q: Does the economic growth mean that people having a better living standard than before? If so what is the increase in their incomes?

A: The per capita income had reached 2,014 US dollars at the end of 2008 but there was a vast disparity. There is a percentage of low income groups of people . Therefore the Government had provided many relief measures, through concessions like Samurdhi, free education, health and other social benefit schemes. It also provides better transport and improved roads to more people in rural areas. Development schemes like Moragahakanda built with the tax payers’ money mainly from Colombo would provide benefits to rural farmers. Those are indirect benefits and are not reckoned in monetary form but beneficial to people. Also the amount of concessions has increased from 2004.

Q: Any other fiscal measures you propose to accelerate the economic growth and development?

A: The tax system would be changed and a tax commission would be appointed with professionals and representative of tax payers which would make recommendations to have a simple tax system. The Government expects to increase direct taxes and reduce indirect taxes.

Q: There was much criticism in certain quarters about the foreign reserves and there was also an allegation that the Government was selling gold reserves. Any comments?

A: The position of Sri Lanka’s foreign reserves is officially announced by the Central Bank monthly. In March this year, foreign reserves declined to 1.2 billion dollars. There was nothing to hide but we disclosed the truth. And now we have a stronger position with dollar 4 billion foreign reserves .Therefore it was nothing new but a formal announcement.

Selling of gold reserves was also another story cooked up by the Opposition Leader who went round the world some time back trying to influence foreign authorities not to release the IMF funds to Sri Lanka. I think it was also a conspiracy against the country by him who only wants to grab power by betraying the country.

When the Government wanted to obtain a loan from the HSBC the UNP led a campaign to stop it. When the Government was trying hard to get the loan the UNP with its full force tried to prevent it. Finally the Government got the loan but at high interest rate of 8.5 percent.

We could have got it at least for 7.5 percent interest if not for the UNP’s bad propaganda drive. Even if the UNP comes to power they would also have to pay that interest rate.

Q: Can you comment on the inflation rate?

A: Sri Lanka’s inflation rate went up to 28.4 percent last year but now the prices of goods have come down and we hope to bring the inflation to one percent or less than that.