Lanka's economic gains lead to drop in poverty levels
Latest
stirring forecast of Sri Lanka's economic upsurge signified an
unprecedented decline in the country's poverty levels. The economic
growth rate predicted for 2011 and 2012 was 8 percent: the most positive
prognosis of growth showing a drop in poverty from 15.7 percent in 2009
to 7.6 percent in 2010
Asian Development Bank (ADB) analysis that came out last week
indicated that the trickled down benefits of economic expansion were
fairly widespread. Development was reaching a wider spectrum and easily
discernible.
The economists were also quite pleased that the country had avoided
the dilemma of exacerbating income disparities while pursuing faster
growth rate - a common occurrence in most economic growth models
elsewhere.
The economic assessment also jived with major predictions made by the
Wall Street Journal, New York Times and Fox News that the path towards
better economic times had arrived. The prospects of a booming economic
trend seen in 2009 had exceeded all expectations. Post-conflict bounce
is for real - there is no doubt about it.
Optimism well-founded
Their optimism seemed well-founded due to three primary reasons:
sustainable macro-economic stability with remittances reaching safe
levels, an environment for greater private sector participation and
urgently enforced financial sector reforms making their impact felt.
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Road
construction essential for development. File photo |
Investor sentiment was augmented by the approval of the tranches of
the International Monetary Fund (IMF) standby arrangement. FDI
strengthened sharply to an estimated $ 500 million. ADB added that at 1
percent of GDP, it needed to increase.
The 2010 budget deficit decreased almost two percentage points from
9.9 percent in 2009 to 8 percent in 2010 supported by a lower
expenditure ratio. The reason given were that revenue base had expanded
with a simplified tax system, removal of import duty, revised import
taxes on motor vehicles and cess rates. The budget deficit would come
down further, most analysts believed.
To cap it all Sri Lanka had achieved good progress in the equity
market and the bond market should be looked into as a source of further
growth according to most analysts.
Attacking poverty from all fronts
Poverty inclusive of the rural sector went down primarily due to
multiple impacts of better resource allocation: the electrification of
rural areas that increased from 75.5 percent in 2006 to 83.2 percent in
2009, the availability of safe drinking water that increased from 84
percent to 87 percent countrywide and the overall benefits of
infrastructure development sparked job creation.
The banking sector made a concerted effort to reach the widest area
of operations. The unemployment rate had dropped from 7.2 percent in
2005 to 5.4 percent in 2009 while the school attendance among children
was close to one hundred percent.
Wider development outreach
The simplest test of poverty reduction is how best citizens in
remotest areas had access to better roads, schools, medical facilities
and employment opportunities. It was amply demonstrated by the fluidity
with which infrastructure growth reached the villages.
Poverty reduction was nothing but the ability to bring development to
the remotest parts of the country. That goal was being pursued with
vigour most economists agreed. The Northern and Eastern areas received
an impetus unprecedented in terms of the investment outlays. The
electrification ratio, access to safe drinking water and overall
improvement in roads, drainage and irrigation reached an all time high.
Even basic social services and medical facilities denied by the LTTE
leadership have been completely restored. The sustained recovery of the
North and East would eventually be monumental.
Sri Lanka needed to keep a tab on the inflationary pressures that
usually accompany rapid growth. Overall inflation increased to 8.6
percent in March 2011, due to escalating food prices - food prices were
13.9 higher than a year earlier. The ADB expects inflation to average 8
percent in 2011.
Some areas of vital importance also needed be watched especially in
dealing with fuel and food prices arising from international factors
currently being experienced. Overall the balance sheet spoke of an
economy keeping to its goals.
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