Thursday, 19 June 2014 00:52
Commends remarkable growth but wants revenue increase, public enterprise reform and PPPs
Emphasises on upholding law and order to attract investment
Taking the good with the bad, Asian Development Bank (ADB) President Takehiko Nakao yesterday described Sri Lanka’s economy as “remarkable,” but warned increases in Government revenue, attention to law and order as well as reform in State-Owned Enterprises are crucial to become an upper middle income country.
On his first-ever visit to Sri Lanka, Nakao met President Mahinda Rajapaksa upon his return from Bolivia on Wednesday morning, as well as several ministers and senior officials, to discuss global, regional and bilateral issues, including challenges and opportunities for the Sri Lankan economy over the short to medium term. He then visited the Colombo Port that the ADB is helping to fund.
Following a short media briefing he visited several ADB-supported projects across the country.
At the meeting with President Rajapaksa, he had commended the country’s strong economic growth, as well as its ongoing efforts to lift the country into upper middle income status.
“Sri Lanka has achieved remarkable growth and stability, especially in the conflict-affected regions where growth has expanded almost twice as fast as in the rest of the country. Inflation has been reduced and the exchange rate is stable,” he told reporters.
However, going forward in order to sustain growth, President Nakao stressed the importance of maintaining sound macroeconomic policy including the reform of State-Owned Enterprises and strong investment in physical infrastructure by promoting public private partnership to mobilise private sector resources.
He was also focused on investing in skills development through technical and vocational training pointing out that while Sri Lanka’s investment in infrastructure was a high 6% of GDP investment in healthcare and education need to be stepped up.
He particularly dwelt on improving the business climate and upholding rule of law insisting a level playing field is not just for attracting foreign investment but also to prevent people from focusing on circumventing the system. Nakao also called for inclusive growth and a clear strategy for development shared with the people.
“There are many areas to commend. While Sri Lanka is not a country rich in resources like oil or gas, it’s geographical location and human resources gives serious potential to become an upper middle income country,” Nakao opined.
ADB forecasts that the Sri Lankan economy will expand 7.5% both this year and next, one of the fastest growth rates in the region. That would follow a 7.3% expansion registered in 2013.
Sri Lanka joined ADB as a founding member in 1966. As the end of 2013, ADB had approved 176 in government and non-government loans totalling $ 6.17 billion for Sri Lanka. In addition, ADB has provided $ 358 million in grant assistance (including ADB-administered, co-financed grants) for projects and $ 122.8 million in 259 technical assistance grants.
ADB helped finance Sri Lanka’s first highway and is in discussions to fund the Colombo-Kandy Expressway, Nakao noted.