‘Govt. must have macroeconomic plan beyond IMF Standby Agreement ’

Wednesday, 25 May 2011 00:56 - - {{hitsCtrl.values.hits}}

By Uditha Jayasinghe

Creating a framework for macroeconomic stability beyond the current International Monetary Fund (IMF) and showcasing it to the world is one of the main challenges for attracting Foreign Direct Investment (FDI), says a top economic advisor.

Former World Bank Economic Advisor and American Enterprise Institute Visiting Emeritus Scholar Sarath Rajapathirana made these statements while addressing a seminar titled ‘Foreign Direct Investment for Growth and Equity in Sri Lanka – Challenges, Risks and Opportunities’ at the Organisation for Professional Associations (OPA).

He said practices that would strengthen the entire economy such as reforms for medium term macroeconomic stability, promoting law, political consistency, transparency, stamping out corruption and establishing a liberal trade regime were the points that the Government should focus on.

Referring to the IMF Standby Agreement, he insisted that the Government should formulate and publicise how the country would keep its macroeconomic stability after the programme ended. In addition he called for the same incentives to be given to both domestic and foreign investment.

“We should not differentiate between domestic and foreign investment,” he insisted, adding that local companies should also be given tax incentives to engage in development. Stressing on the need for the Government to strengthen ease of doing business, he pointed out that more needs to be done to make Sri Lanka an attractive investment destination.

“What are the policies to ensure that macroeconomic stability will continue when the current IMF Standby Agreement comes to a close? Can we assure investors that they will be low inflation and interest rates, good governance and strong legal structure? These are the points that the Government needs to consider. In particular stamping out corruption is very important,” he said.

Rajapathirana observed that these reforms are for the development of the entire country and need not be exclusively directed at attracting FDI. Since developing countries are attracting the lion’s share of FDI Sri Lanka has a difficult task in presenting itself as an attractive trade destination.

“Sri Lanka has the worst trade regime in the world,” the delays of procedure, legal constraints and logistical hardships make Sri Lanka one of the least likely places for FDI,” according to Rajapathirana.

However, he also expressed the opinion that it would be possible to overcome these challenges if the Government establishes the right regulatory environment and implements broad policies.

Discover Kapruka, the leading online shopping platform in Sri Lanka, where you can conveniently send Gifts and Flowers to your loved ones for any event including Valentine ’s Day. Explore a wide range of popular Shopping Categories on Kapruka, including Toys, Groceries, Electronics, Birthday Cakes, Fruits, Chocolates, Flower Bouquets, Clothing, Watches, Lingerie, Gift Sets and Jewellery. Also if you’re interested in selling with Kapruka, Partner Central by Kapruka is the best solution to start with. Moreover, through Kapruka Global Shop, you can also enjoy the convenience of purchasing products from renowned platforms like Amazon and eBay and have them delivered to Sri Lanka.