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| Sunday, 17 February 2002 |
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'Package of policy reforms needed for economic resurgence' No economy will bounce back automatically unless the country redirects its investment policy. Deputy Director, International Monetary Fund, Anoop Singh, making a presentation to the members of the Ceylon Chamber of Commerce on 'Lessons from East Asian Reforms', said that to redirect the investment policy, productivity should be increased while strengthening the financial sector. Referring to the currency crisis in South East Asia, he said the main reason was the crisis experienced in the capital account. The situation in South Asia is different, but no less serious. He said: "No two crises are the same and we try to present to governments the lessons and experiences when a reform package is introduced. In most instances, we do it gradually, minimising its effects." After experiencing a long period of growth ranging from four to five per cent, Sri Lanka has recorded a negative growth while inflation stands on double digit figures. This is quite unusual, he noted. To turn around this situation, investment in and into Sri Lanka must be increased. This requires a comprehensive package of policy reforms, he said. Mr Singh said that there is a challenge and an opportunity to establish lasting peace, but the twin challenges of establishing peace and implementing economic reforms should be pursued simultaneously to get the maximum benefits. He said that the economy can and will turn around if the reforms are carried out while addressing the fundamentals to ascertain why growth has fallen to negative levels. He said that a lot will depend on the steps taken by the government in the next few weeks. The capital account must be opened to increase the investment inflow to any country, but it should be done while strengthening the financial sector. He was of the view that it is better to remove government ownership rather than trying to increase efficiency in the public sector. Markets need to be convinced that the public sector financial position is stable. Commenting on the global scenario, he said that during the last few months, there was a lot of uncertainty, but now it has changed and it should look positive. The USA is expected to recover in the second half of this year he added. (SG) |
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