Dr. PB paints Sri Lanka with “turned around nation” story

Finance Secretary Dr. P.B.  Jayasundera on Friday described the performance of the economy in 2012 amidst severe challenges and prospects in the immediate future akin to a story of a “turned around” nation.

Jayasundera in fact related key segments of the “turned-around” nation story in his speech at the ceremonial launch of the Ministry of Finance and Planning 2012 Annual Report officiated by President Mahinda Rajapaksa.

In 2012 the Sri Lankan economy grew by 6.4% in 2012, following 8.2% growth in 2011 and 8.0% growth in 2010. The average growth during the last three years was 7.5% in comparison to 6.6% during the preceding eight years and the Finance Ministry said it underscored that the economy has shifted to a high growth momentum benefiting from post conflict peace and reconciliation, new capacity generated in the economic infrastructure through public investment and enhanced private investments in the real economy.

“The growth in 2012 was achieved in the midst of multi-pronged policy measures introduced to strengthen macroeconomic stability, adverse climatic conditions and subdued global and domestic demand, all of which impacted to moderate the economic performance,” Dr. Jayasundera said.

To describe how challenging 2012 was, the Finance Secretary said the year had twin vagaries of the weather – drought and floods – whilst external shocks included the Euro Zone disturbances and the fallout of the US fiscal cliff. These impacts were further aggravated by the spikes in oil prices, which resulted in the country spending $ 5 billion on fuel imports.

However, he said the Government used the drought as an opportunity to improve irrigation systems and took initiatives to boost food production at village level. Despite challenges on the fiscal side, he also said that the Government persisted with public investment of near 6% of GDP and there were robust private sector investments as well.

“Whilst 2011 saw the country managing challenges, the year 2012 required managing challenges for security stability. This became the key strategic policy objective,” Dr. Jayasundera said.

To substantiate his assertion that stability was secured, the Finance Secretary highlighted some key statistics. They included investment to GDP ratio of 30%, containing the budget deficit at 6.4% of GDP and a debt to GDP ratio of 79.1%.

Additionally foreign reserves were boosted to $ 7.1 billion whilst inflation was contained at 8%, thereby marking four successive years of single digit inflation, reducing unemployment to 4% and poverty reduced to 6.5%. Sri Lanka’s improvement in the World Bank Ease of Doing Business Ranking to 81 and surpassing of one million tourist arrivals mark were also emphasised. Several more positive socio-economic indicators were also listed.

In his speech, Dr. Jayasundera also took a realistic view of future prospects.

Noting that Sri Lanka had lagged behind many countries which were on par or behind the per capita income in the past, Dr. Jayasundera said despite many challenges which had to be managed, the past seven-year experience pointed at strong growth prospects for Sri Lanka. He also said the country was well-positioned to capitalise on the buoyant regional economies to capture opportunities lost during the 30-year conflict.

Going forward, the Finance Secretary listed taxation in a service economy, revenue from state-owned business enterprises, policy reorientation, public service delivery, trade imbalance, fertiliser usage and climate change as areas which the country needed to address immediately.  

The 2012 Finance Ministry Annual Report expands on these further. It said the high trade deficit was a challenge with the need to promote exports and greater import replacement activity. Greater investment in renewable energy and energy conservation was also listed a key challenge along with the adjustment to high international petroleum prices. Addressing the perennial issue of improving performance of State-Owned Business Enterprises especially CPC and CEB is another challenge.

President Mahinda Rajapaksa in his speech reiterated that the Government was undeterred by what he described as politically-tainted criticism with agendas against an otherwise progressive development path in the country.

“Ever since I assumed office in 2005, by April every year there is a chorus from the Opposition that we will collapse or fail. Despite such claims not coming true, I have been hearing this annually. In fact I am also waiting to see whether what the Opposition has been saying will happen,” said the President.

“Some people mistakenly term some of the important infrastructure projects as a waste. They ask whether we need a new port and whether there are enough ships in the world to call at our ports. ‘Why another airport?’ and ‘we need pilots to drive away birds’ they ask. Why such a negativity and cynicism?” the President queried.

“Why are people being selfish to be talking of today’s needs only? Shouldn’t a country prepare for tomorrow?” the President queried during his speech and noted that infrastructure that had been completed so far and those planned were critical and beneficial and also keeping in mind the future generations.

“When we were borrowing funds for important development projects, some staged protests outside foreign banks urging the latter not to lend. Citing human rights claims, they also lobbied with development partners not to lend to Sri Lanka. There were moves against our fight to eradicate terrorism as well. We will not be deterred by narrow political criticism and agendas,” Rajapaksa told the ceremony, attended by several Ministers, senior officials, donor agencies, bankers, business leaders, farmer organisations and trade unions.

Referring to the 2012 Annual Report, the President, who is also the Minister of Finance and Planning, said the Government via various annual publications had been very transparent with a lot of disclosure. “There was a time when reports weren’t released. In fact, thanks to our transparency and disclosure, the Opposition has more information to be critical of if they wish to,” the President said, adding that it was more productive to admit the reality and focus on real issues.

Deputy Minister of Finance and Senior Minister for International Monetary Cooperation Dr. Sarath Amunugama, Economic Development Minister Basil Rajapaksa, Minister of Human Resources and COPE Chairman D.E.W. Gunasekara and Central Bank Governor Nivard Cabraal also spoke at the ceremony.