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| Sunday, 19 December 2004 |
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Imbalance between poverty reduction and income equality Poverty reduction has been slow while income equality has increased in the country during the recent past, according to a report released by the World Bank. The report titled "Sri Lanka Development Policy Review" states that the 27 percent national poverty headcount ratio is high for a country with a US$900 per capita GDP. Poverty in the urban areas has been halved . It has declined by less than five percent in rural areas while poverty levels in the estate sector have risen by 50 percent. The poverty headcount ratio in the Western province was 11 percent while it stood at 35 percent in Uva and Sabaragamuwa. It states that Sri Lanka's highly uneven poverty record over the period reflects a stagnant agriculture and uneven development across regions, a heavy bias towards Colombo and the neighbouring districts. The report further states:"The disappointing trend in national poverty incidence reflects a long-term growth performance significantly below the country's potential. Despite its early lead in social development Sri Lanka has been left far behind by high-performing East Asian countries like Korea, Malaysia and Thailand. It is largely attributed to the pursuit of policies favouring public sector control over economic activity and resistance to international market forces and the 20- year- old civil conflict." Much of Sri Lanka's skewed growth record and increased income equality are a reflection of the unfinished reform agenda, it states. Sri Lanka has one of the largest bureaucracies in the region with a ratio of 3.9 civil servants per 100 people. Although the size of the wage bill is not unmanageable at present the trends are worrisome.Between 1991 and 2001 public sector employment grew at 3.6 percent annually outpacing growth in population and the labour force. It is stated that while keeping the wage bill in check strong political commitment will be needed to address well-known constraints in public service delivery,the report added. The country at present is at cross roads in its development path and any resumption of the conflict poses a major risk to its development prospects especially in a world which since 9/11 is much more sensitive to conflict and terrorism. In addition, being a small, open economy the country is also vulnerable to external shocks. According to the report the best insurance agent against unforeseen external events and trends is diversifying the export base, creating a more flexible economic structure with conditions for easy entry and exit and a sound investment in education and skills. |
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