Saturday Dec 14, 2024
Saturday Dec 14, 2024
Monday, 27 May 2013 01:16 - - {{hitsCtrl.values.hits}}
The main opposition United National Party yesterday warned that new evidence had emerged to suggest that the Sri Lankan economy would grow by only 6.8% in the medium term, despite projections by the Government that growth rates would remain in the 8% plus range.
UNP National List Parliamentarian and Economist Dr. Harsha De Silva told a news conference yesterday that the latest report by the International 
Monetary Fund (IMF) had used technical analysis to show that there had been no structural shift in the growth path of Sri Lanka’s economy.
“Instead, last two years, the report indicates that the 8% plus growth has been based on changes in monetary policy particularly in bringing down interest rates artificially and artificially strengthening the rupee,” De Silva explained.
He said that meant the Sri Lankan economy had seen boom bust cycles along a growth path that would have been in the range of 7%, but no more.
De Silva said that an important finding of the IMF report had been that if Sri Lanka was to sustain 8% growth, there has to be serious adjustments in fiscal policy particularly in increasing tax revenues and reducing state expenses.
However he noted that with regard to increasing revenue, the IMF has been appreciative of the recent increase in electricity tariff and fuel but that noted “this is not sufficient and large scale changes need to be undertaken.”
According to De Silva, the IMF had warned Sri Lanka to refrain from loosening monetary policy, but the warning had been ignored.
“Soon after the warning was given the Central Bank went ahead and loosened monetary policy via unexpected fifty basis point reduction in policy rates,” he said.
The Economist also put the Government on notice with regard to the Government’s obligation to present estimates and actuals for income and expenditure and loans obtained to Parliament by 30 June under the Fiscal Management Responsibility Act.
“All these years the Government has failed to do so in violation of the constitution. We want to warn the Government ahead of time. They have one more month. They must abide by the law and table these accounts in Parliament,” De Silva said.
