Stronger economy to face future challenges

Disgruntled politicians in the Opposition will leave no stone unturned in their quest to capture power. None of them could diminish President Mahinda Rajapaksa's soaring popularity and the UPFA Government under his leadership.

Knowing that they are unable to pose a challenge to him at an election, those in the Opposition stoop to the lowest level to disseminate stories about the President.

Whenever Opposition politicians tried to sling mud at the Government, the masses get the better of them. The United National Party (UNP) leader Ranil Wickremesinghe should hold his head in shame for having lost 30 consecutive elections, including two Presidential elections and an equal number of Parliamentary general elections.

The forthcoming elections to the Uva Provincial Council would expose further the UNP's political nudity, its mud-slinging politics and concocted stories to gain cheap popularity. The UNP, even at this late stage, should realise that the masses are by no means gullible and, moreover, that it could not woo the masses' support through its abominable tactics.

The UNP's self-acclaimed economic pundits have trotted out their own theories to project a dismal picture. They rue Sri Lanka's march towards new economic horizons after terrorism was wiped out. The milestone achievements in economic development and Gross Domestic Production (GDP) are a clear indication that Sri Lanka is on the right track to achieve its cherished dream of becoming the Wonder of Asia.

The Gross Official Reserves of the Central Bank of Sri Lanka crossed the USD nine billion mark recently for the first time in history. Sri Lanka aims to increase its gross reserves to USD 10 billion by the end of this year.

The Gross Official Reserves reaching USD nine billion proves Sri Lanka's economic stability. The increase in Foreign Direct Investment (FDI) inflows, foreign exchange earnings and exchange inflows in the corporate and Government sectors had paved the way for the Gross Official Reserves of the Central Bank to reach this unprecedented level.

Sri Lanka's economic growth has been one of the fastest among Asia's developing economies in recent years. The country's economy rebounded strongly in 2013 with an annual real GDP growth of 7.3 percent while inflation remained at a single digit for the fifth consecutive year.

It is evident that Sri Lanka's economy will soon reach a GDP of USD 100 billion up sharply from the slow-paced economy of about USD 24 billion GDP in 2004. The per capita income too will rise to over USD 4,000 - a rapid increase from under USD 1,000 at the time President Rajapaksa took office when the country was plagued by terrorism.

The economic pundits, true to form, always projected a negative outlook of the country's economy.

The global uncertainty which prevailed a few years ago, posed a big challenge to many countries, including the so-called developed nations. Sri Lanka, however, even during the time of global recession, faced this daunting challenge courageously. When the Western markets and economies were on the brink of collapse and some leading banks in the world put up shutters, the situation in Sri Lanka was comparatively stable.

Even when certain economies in Asia went through a lean period, Sri Lanka's economy was resilient due to the far-sighted vision outlined in the Mahinda Chinthana. This was despite the country spending a colossal sum of money on defence as Sri Lanka at the time was fighting a deadly battle against the world's most ruthless terrorist outfit. On the other hand, mega development projects have continued at a rapid pace since 2006.

With Western countries restricting imports due to the negative trends in their economies, export values of countries such as Sri Lanka also dropped. When the purchasing power of people in those countries for which we supply goods and services dropped, the country's foreign exchange earnings are also affected.

This simple economic theory has been given a vicious twist by the UNP's economic pundits to make it a political slogan. Do the UNP's spin doctors in economics understand these basic facts which are known even to a Turk?

It is deplorable that Sri Lanka's image is sullied due to what is being dished out to the public by certain Opposition politicians and a coterie of UNP businessmen. Market experts have ignored the fact that many banks have reported huge profits in their half-yearly performance.

Sri Lanka's stock market, which was in the doldrums for many years, after terrorism was vanquished under President Rajapaksa's illustrious leadership. The ultimate objective of the Securities Exchange Commission is to protect investors. A protracted period of positive activity had brought about a positive sentiment to the market.

Sri Lanka's economic growth has been one of the fastest among Asia's developing economies in recent years. After falling to 6.3 percent in 2012, real GDP growth accelerated to 7.3 percent in 2013 - driven primarily by a pickup in services and supported by manufacturing and construction, thereby benefiting from an increase in net exports, according to the International Monetary Fund (IMF) Sri Lanka Mission.

Inflation has remained low, falling to 4.7 percent at the end of 2013 and 3.2 percent year-on-year in May 2014, Fiscal consolidation has continued, with the overall fiscal deficit falling to 5.9 percent of GDP in 2013.

A strong recovery in exports in the second half of 2013 and 2014, combined with declining imports and continued inflow of remittances and services receipts, has bolstered the balance of payments with the issuance of external debt, helping the Central Bank to accumulate international reserves.

The monetary policy has been accommodative, but private credit growth has been slow. The short-term outlook appears broadly positive, as Sri Lanka is well positioned to benefit from the global economic recovery and particularly strong growth in advanced economies.

Real GDP growth is expected to remain robust - about seven percent in 2014, while inflation is likely to remain in the mid-single digits. The government has targeted a further reduction of the fiscal deficit to 5.2 percent of GDP, which should allow for even more reduction of public debt.

With a continued robust export performance, the current account deficit is expected to narrow further for some additional accumulation of international reserves.

The tourism sector has shown an all-time high since the dawn of peace with more new star-class hotels being built around the country. Sri Lanka reached the milestone with the arrival of the one millionth tourist last month, increasing investor confidence in the hospitality trade.

If this trend continues, Sri Lanka could strengthen its advance in tourism, making it one of the most sought-after destinations in the world. It will also generate a greater volume of employment opportunities.

In this scenario, everybody should take advantage of the prevailing peaceful atmosphere not only to develop infrastructure, but also to have a stronger economy that would enable Sri Lanka to face future challenges courageously.