Comment: Unity vital to meet economic challenges

Most of the economic issues that the country faced today are related to security and political issues. recently published ADB Outlook forecasts the higher economic growth rates in 2007 and 2008 projected by government are not reachable.

The ADB says that the economic growth rate in 2007 and 2008 would be 6.1% and 6.0%, below the 7.2% in 2006 and far below the government's dream of 8%.

The 6.1% growth figure underlines assumptions that the conflict will not escalate further, the LTTE will not succeed in destroying key economic infrastructure, gradually tightening monetary policy and low inflation. The LTTE air attack refutes the main assumption.

The ADB Outlook also highlighted the risks posed to Sri Lanka's economy in 2007 and 2008.

The falling import cover in terms of foreign exchange reserves and accelerating inflation are some of them. Increasing the Dollar dominated short term commercial debt is another point. According to the report this debt amounts to 6% of the GDP.

The report also warns of a prolonged power cut in 2007 as a result of the delay in commissioning new power plants.

In 2006 high economic growth was achieved under many adverse economic conditions such as high oil prices, impact of tsunami and political uncertainty. However, external factors will be favourable this year as there is a robust growth forecast in Asian economies.

The report forecasts that Asian economies will expand by 7.6% in 2007 and 7.7% in 2008. The projected growth in South Asia is 5.6% in 2007 and 5.9% in 2008.

Another positive factor highlighted in the report is political stability, the strong executive presidency and a majority parliament.

The hospitality industry got together and took immediate measures to counter the adverse and wrong publicity given by the international media after the LTTE attack on the SLAF base last Monday and the Bandaranaike International Airport (BIA) functioned normal as there was no damage to the BIA as the foreign media reported.

They expected the business climate in the country to deteriorate due to the attack. Due to continuous violence, false and adverse publicity the tourism industry is already in a unhealthy position. The ADB Outlook report said that the profit margin in the industry has fallen by 50% as hoteliers reduced prices to attract tourists.

Already some European countries have issued travel warnings and this new threat would worsen the situation.

Whatever the authorities may say the impact of the attack and adverse signal it sends out to the business and investment in the country is immense.

The LTTE has not secured this air capability overnight. It is another achievement in the two-decade war and all leaders are responsible for their failure in defeating terrorism.

One objective of the attack may be giving this adverse message to the world while boosting the flagging morale of its cadres facing a serious defeat in the Eastern front of the battlefield. It is the responsibility of the government to immediately neutralise the LTTE air capability and restore the confidence of the security situation in the country in general and building business confidence.

In addition to the LTTE threat, human rights issues will also adversely affect the image of the country.

In this case it is very clear that the LTTE has achieved a victory in its propaganda war. The issue is now before the UN and the general impression of the world will be that the situation in Sri Lanka is similar to Sudan or Iraq. Irresponsible political parties, pro LTTE NGOs and some mainstream media that act according to a political agenda are responsible for these exaggerated situations and adverse consequences.

To face the challenges as a country we should have unity but that is sadly lacking today. The LTTE attack is not a personal attack on President Mahinda Rajapaksa.

Though the government is responsible for its failure to repulse the attack the lapses on the part of the security forces is a challenge for all Sri Lankans.

The exaggerated allegations of human rights' violations is a challenge for the country. Political parties, the media and all responsible parties, however, do not seem to realise the gravity of this situation.