Sri Lanka’s galloping economic progress

Dr Mathu H Liyanage

Warring African countries - Ethiopia, Kenya, Somalia and Sudan - are in the grip of an unprecedented famine caused mainly by tribal warfare, severe droughts, climate change, rising food prices and diminished farming investments.

In contrast, Sri Lanka was fortunate in escaping the rigours of the ruthless 30-year old civil war which not only halted the progress of the economy but also caused inestimable damage to human resources and the infrastructure, the peace and tranquillity of the country.

It was due to the foresight, astuteness and solid determination of President Mahinda Rajapaksa that it was possible to wipe out terrorism and implement huge development programmes and agricultural revival schemes mainly in the North and East that were almost totally destroyed by the war. The President did not only win the battle of Kilinochchi but also the Economic War.

According to Bloomberg, an Indian news site, Sri Lanka’s estimated GDP growth of 8.5 percent is expected to surpass the growth rate of India’s 8.2 percent during the year. Ironically, the historical and warm working relationship between the two countries, coming down from times immemorial, is getting stronger and stronger than even the GDP growth rate.

Humanitarian crises

The current devastating famines in the African countries ever recorded in history and the resultant humanitarian crises are, in fact, reported to be larger in scale than the Japanese tsunami and the Haiti earthquake. It has caused about 1.5 million people to flee Somalia over the past several years and the Kenyan refugee camp at Dadaab across Somalia’s border that was designed for 90,000 people now has 400,000 and with 10,000 new arrivals per day is overtaking Kisumu as Kenya’s third largest city, according to Epi Analysis (epidemics, data, and analysis).

US Aid, in its report dated 23/08/2011, says about 3.7 million people in Somalia, another about 3.7 million people in Kenya, about 4.8 million in Ethiopia and about 0.16 million in Djibouti are in urgent need of assistance. It suggests that a multi-sectoral response is critical to prevent deaths and collapse of livelihood, and social systems across the region.

Compared with these famine-affected countries, Sri Lanka is now free from terrorism and is basking in peace and tranquillity.

A lucky country, Sri Lanka is richly rewarded by natural resources such as an equilateral climate with high average rainfall, fertile land and land suitable for growing a variety of crops including cash crops, ample arable land and rivers to generate hydropower.

GDP growth

According to the World Bank’s Global Economic Prospect Report of June 2011, as reported in the Asian Tribune of 07/06/2011, “India and Sri Lanka will lead the South Asian growth path -reaching 7.9 percent in 2013.” It further says that the “Real Gross Domestic Product (GDP) growth in Sri Lanka remains buoyant, GDP growth in 2010 (calendar year) registered 8 percent and has been strongly underpinned by the peace dividend following the end of the decades-old civil war.”

Sri Lanka’s foreign exchange reserves rose to US $ 7 billion, skipping over the target, according to a recent announcement made by Economic Development Minister Basil Rajapaksa.

Remittances from Sri Lankans employed in overseas countries were a significant contribution to the foreign exchange reserves. According to the Central Bank, they sent home a record sum of US $ 4.11 billion in 2010 up by nearly 23.6 percent from the previous year. Over 1.5 million people are employed overseas, especially in the Gulf States, mainly as unskilled and domestic workers.

Foreign exchange earnings

Foreign exchange earnings from tourism had increased considerably to US $ 497.4 million in 2010 as compared to US $ 326.3 million in the previous year, amounting to an increase of 52.4 percent.

Meanwhile, international trade expanded tremendously and the export earnings during March 2011 surpassed US $ 1 billion and that it grew to US $ 5,106 million from US $ 3,642 over the corresponding period of 2010, according to the Export Development Board.

There is no doubt that the growth of the economy is shaping extremely well due to the energetic and sustained efforts of the government, and the great day to call Sri Lanka the ‘economic hub of Asia’, as envisaged by President Mahinda Rajapaksa, may not be far away.