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| Sunday, 11 December 2005 |
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No reversal in open market economic policies - Siyambalapitiya by Gamini Warushamana The Government has assured the international community and the donors that the new government will not reverse the open market economic policies. Deputy Minister of Finance Ranjith Siyambalapitiya said that the international community wanted to know whether the government is continuing the open market economic policies. Last week US ambassador Jeffrey Lunstead met the Deputy Minister to clarify the matter. The economic policies in the Mahinda Chintana manifesto are not closed and inward oriented, the Deputy Minister told the Sunday Observer. The country has followed the open market economic policies since 1977. There were no changes in fundamental policies such as openness to trade and investment. However, the priorities of each government are different. The UPFA government and President Rajapakse have given the same priority to the rural economy, agriculture and SME sector while encouraging corporate private sector and foreign investments. This does not mean that the government is moving to a closed economic model, Siyambalapitiya said. The new government had to introduce a new budget due to legal and political reasons. All bills including the previous budget, presented one month ago and pending for the second reading lapsed after the new President prorogued Parliament because he wanted to address Parliament. On the other hand the new cabinet was appointed and subjects and budgetary allocations for ministries were changed. Also President Rajapakse wanted to convert his presidential election manifesto to a practical program. All proposals in the new budget target on 8% economic growth and there is no proposal outside that framework, Siyambalapitiya said. The Deputy Minister ruled out criticisms against the Mahinda Chintana manifesto as a bundle of unrealistic concessions. For example Ranil Wickremesinghe proposed to increase Samurdhi payments to Rs. 5,000. If it was granted the total Samurdhi payments would have increased from Rs. 10 billion to Rs. 65 billion. However under the new policies it would increase to Rs.16 billion. The fertiliser subsidy will be given to selected small-scale farmers of paddy, vegetable and fruits only. They represent 70% of the rural population and this subsidy would boost the rural economy and the agricultural sector contribution to the GDP will increase and it will help achieve the expected 8% growth. The Deputy Minister accused the media of not reporting the true picture of the economy. The economy is growing satisfactorily even with severe shocks. Inflation has come down from 16% to 9% but the media is still talking about the 16% inflation rate. The Government targets a low budget deficit but not at the cost of economic growth. The low budget deficit with lower economic growth is useless. The increases in government investment in infrastructure development is crucial because the private sector will not invest in mega projects such as roads and electricity, he said. |
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