Mahinda Chintana has accelerated economic growth -Jayasundera

Sanjeevi JAYASURIYA

The second five year strategy under the Mahinda Chintana development framework has accelerated the economic growth towards 8 percent with a reduction in poverty and income equality. The social indicators have improved and the development strategies specifically targeted integrate conflict affected areas with the rest of the economy, Treasury Secretary Dr. P.B. Jayasundera said.

“The country is moving towards achieving the 10 year development plan set out by the government. The country has been rated as a middle income country for the eight consecutive year,” he said at the launch of the Annual Report 2011 by the Ministry of Finance and Planning held yesterday.

“New challenges have emerged. The country’s rising imports undermine the sustainability of the Balance of Payments. A well- focused development strategy to raise exports and reduce imports need to be in place. New challenges in the areas of health and education include the rising trend of non-communicable diseases and capacity constraints in accommodating knowledge seekers within the state university system. Inadequate savings is also a concern in the context of required investments to sustain the growth rate in excess of 8 percent,” he said.

According to the report fiscal policy strategy of the government is designed to generate a revenue surplus by adopting expenditure management measures to economize operational expenditure and to improve government revenue through broad-basing the revenue collection. The government follows a rolling three year medium term plan to bring down the fiscal deficit to about 5 percent and the public debt level to below 70 percent in relation to GDP. The protection of public investment at 6 percent of GDP and sustaining social spending on education, health, rural development and welfare is the main thrust of this adjustment strategy as it supports growth and poverty reduction.

Economic performance in 2011, being the first year of the second 5 year framework has produced encouraging results. Among the key outcomes are economic growth which reached 8 percent in 2010 continued to 2011 on a similar pace, private investment which declined to 17.9 percent of GDP in 2009 increased to 21.4 percent in 2010 and 23.7 percent in 2011.

With this together with public investment, the country has realized a total investment ratio of 30 percent well in line with the medium term target of 35 percent to sustain high growth. Unemployment declined to below 5 percent consistent with the sustained economic growth of around 6 percent during 2006 – 2009 and over 8 percent since then. The decline in unemployment is associated with improved productivity in the labour force, the report said.