Debt trap before middle -income trap: PM

By Nuwan Senarathna 

Sri Lanka is faced with the challenge of overcoming the debt trap before the country can come out of the middle-income trap, Prime Minister Ranil Wickremesinghe said on Tuesday.  

Wickremesinghe, addressing the Mega Mind dialogue held at Temple Trees to brief development activities undertaken in Colombo and the Western Province, said that the majority of country’s funds, which could have been used for development, have been spent for debt repayment. 

Prime Minister Ranil Wickremesinghe

Megapolis and Western Development Minister Patali Champika Ranawaka

However despite the heavy debt repayments, the Government has been able to achieve positive growth numbers, which proved the economy was on correct track to attain its development goals, he noted.

“The current account balance, which was a negative 2.8% of GDP in 2015, will be a positive 0.2% this year. This will be the first time Sri Lanka will have both a positive primary balance and current account balance after 70 years. The Budget deficit has been reduced from 7.5% of GDP in 2019,” he said. 

He said if the Sri Lankan economy moves towards focusing on increasing foreign exchange earnings, the country would be able to overcome the challenges in debt repayment. 

“Over the last ten years, we have increased our non-tradable goods by getting into debt in order to get out of the debt. We have to increase our foreign exchange earnings, and increase tradable goods,” he added. 

He pointed out that the Government had understood the importance of transforming Sri Lanka as the centre of the Indian Ocean, to harness the benefit of the rapid economic growth in region. 

“The Belt and Road initiative by China and new foreign policies introduced by the Indian Prime Minister Narendra Modi shows all of them are looking to connect with the region. We should capitalise on this new development in the region to develop our economy.”

Moving towards the maritime security of the Indian Ocean, the Premier pointed out that Sri Lanka should be in the driving seat to increase the maritime security of the region. 

“If Sri Lanka becomes the centre of the Indian Ocean, the entire Western Province would turn into a Megacity. If the Western Province becomes a Megacity, within the next five to ten years we can attract more groups into the country.”

The Premier pointed out that during the last five years, the Government had laid the foundation for the development, insisting within the next five years the country would enjoy the benefits of the economic growth of the country. 

Speaking at the event,Megapolis and Western Development Minister Patali Champika Ranawaka said the country should move away from populist politics to a more scientific form of governance. 

“Most of the politicians follow the populist approach, therefore when they become the Minister of Higher Education, they build a University in their villages, and when someone becomes a Minister of Transport, that particular person builds an airport in his village, despite it not the ideal place to build an airport.”

Ranawaka pointed out the importance of adopting democracy and prosperity, with inclusivity, meritocracy, and sustainability. He noted in order to follow an inclusivity approach, the Government should make sure to leave no one behind. 

He said Sri Lanka should fight againstnepotism and cronyism to establish meritocracy. He noted a strongly and firmly committed leaderwas needed for the crucial national battle of meritocracy over nepotism and cronyism. “Our eventual success or failure as a nation will largely depend on it.”

Pic by Ruwan Walpola