By Cheranka Mendis
Sri Lanka’s biggest weakness in its journey towards economic growth and development is the delay in making quick decisions with the available data, said the Central Bank Governor, adding that the country has got accustomed to waiting until all creases are ironed out and perfect before making a decision which could affect the growth adversely, if taken too long.
Addressing the gathering at the 33rd Annual General Meeting of the Institute of Management of Sri Lanka on Monday, Central Bank Governor Ajith Nivard Cabraal stated that Sri Lankans are used to waiting until everything falls squarely into the box to make decisions. “We wait too long to make decisions. You want everything to fall into this box and then you take your decision but in reality life and the world is not like that,” the Governor said, “It won’t provide all the information you want – you need to be decisive and take the necessary steps towards the right decision. You also need to change when there is a need to change.”
Urging the managers gathered to understand their own philosophy of management and ensure us that they raise the bar in the world market with speedy actions, Cabraal stated that the country has a full-size task ahead in getting the public per capita, getting infrastructure in place, getting people to think differently and to change accordingly. “If done right there is excellent opportunity to show the world what we can do,” he said.
The ‘Mahinda Chinthana – Idiri Dekma’ that has gained international reputation, according to Cabraal outlines the plans the Government hopes to achieve through the course of a five year period in detail giving clarity, certainty, and a clear path on achieving economic goals.
“Many people wonder what ‘Mahinda Chinthana’ doubling per capita in five years really means to a nation. Managing Director of World Bank Ngozi Okonjo-Iweala who was in Sri Lanka in November 2010 identified the ‘Idiri Dekma’ as one of the few documents which contained an economic plan which set out in such clear terms as to what the country wishes to achieve.”
A strategic plan is what the country needed to move upwards in the global economic ladder and the document and its outlined plans hopes to achieve just that, Cabraal said.
The country took 55 years to reach the per capita income of USD 2000, a slow journey fought among many problems; it was only in 2004 that the country was able to reach USD 1000.
“All that time Sri Lanka was one of those eternally developing countries,” Cabraal noted. “In the past five years we were able to double it, to reach USD 2000 and, in 2010 managed to reach USD 2399. This didn’t happen by accident or out of the blue, there was clarity about what actions to be taken and there was a plan on what had to be delivered.”
Development of infrastructure, dealing of war, dealing of conflict, development of strategies to all macroeconomic fundamentals have been planned carefully and executed. “Sometimes these plans are misunderstood, and rightly so,” he admitted. The reason being that the impact on the actions taken, will take time to show.
There are a number of key changes that has taken place in the local economy, Cabraal acknowledged. Debt to GDP (in which the public debt is measured) was brought down from a high rate of104% to 81% in 2010 and would further lower its figure to 60% in the next five years. Inflation running at 28% is now at 6% and stable, unemployment which was at 14% has been gradually brought down to 4.9% he noted.
“Reserves at one time which were just about US$ 2 million and struggling is today at a comfortable US$ 7-7.5 billion so that we can relax some of the procedures we have had.”
“Earlier we remember when one bank – Pramuka Bank – a small billion rupee Bank was in difficulty and had to be closed. But during the past five years even though there were certain problems all over the world and at US where as many as 150 banks were closed in the last 18 months; we did not undergo such suffering. So that was planning that was put into the equation – that’s what management is all about. We have got to anticipate risks, improve productivity,” Cabraal said.
Since people would want different conflicting aspects of the same unit it is the task of the management to create a balance in the equation and to ensure a continuous process to bring about the results which we are today enjoying.
“And that’s not easy,” he stressed, “We need to communicate in management, same practises you do in organisations we do in macroeconomic levels as well. We need to tell people look you are not going to get what you are asking for but there is increasing productivity.”
He pointed out that 35 years ago a Japanese yen was equal to one cent. Which has risen to Rs.1.29, an extraordinary change, he said.
“Can we afford to go on like that? We need to take strong, clear, but tough steps. If you take those steps there may be initial pain and suffering, initial discomfort and adjustment but that’s part and parcel of a journey towards prosperity. It doesn’t come easy.”
Sri Lanka also needs to understand that the world is not sympathetic towards us, the Governor noted, “The whole word is in turmoil – economically, politically and every day there are new risks emerging – new situations come about which we have not been able to fathom before. There is no precedent for us to follow, no theory you can borrow from and then you need to innovate. Management is also about innovation and how do we innovate, how do we look at a new situation in the way we can make it to our advantage.”
“Every cloud has a silver lining and when you have risks on one side there will always be a way in handling it on the other side. But for that you need to stay focused and able to have all information possible and take decisions and move forward,” he said.
The AGM held at the Galle Face Hotel also saw re-election of Anver Dole as President for yet another year.