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| Sunday, 30 April 2006 |
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CB stresses need for more economic reforms by Gamini Warushamana Deputy Finance Minister Ranjith Siyambalapitiya commenting on the economic growth results in the 2005 Central Bank (CB) annual report said that the government was happy about last year's economic performance because the economy faced the most serious challenges in 2005. "We achieved this economic growth after the tsunami devastation. After the tsunami even the Central Bank expected a 1% decline in GDP growth. Apart from the tsunami, oil prices, soared, the MFA was phased out, and there were political uncertainties," he said. There are many features in these results that we can be happy about. All sectors have grown at a satisfactory rate. The agricultural sector performance, specially the paddy sector growth was impressive and this was directly related to the 2004 UPFA government policies. Inflation has come down. Per capita income has increased significantly. The unemployment rate has dropped. Official reserves have increased and government debt as a percentage of the GDP has come down, he said. However, the Central Bank report stresses the need for economic reforms to further enhance the overall efficiency of the economy to achieve the desired high economic growth, alleviate poverty, reduce unemployment and raise the living standard of the people on a sustainable basis. The present policies of the government to achieve higher economic growth have to be complemented with reform measures, the report said. A comprehensive public awareness program on the role and the limitations of the public sector, the benefits of liberalisation and reforms and the role of the private sector in improving competitiveness and increasing access to both domestic and international markets through their own efforts, is needed to ensure public support for much needed economic reforms, the report said. Key economic reforms that are recommended by donor agencies are suspended over decades due to public protests. Several reports published by these, agencies recently reiterated the urgent need of these reforms for the country's economic development. The Central Bank report emphasises that the reform efforts are timely and the country is gradually facing serious limitations to economic growth arising from insufficient capacity expansion. The report explains how the issues in power, road, education and health affected the economy and obstructs the implementation of government policies. The Deputy Minister said that the government has realised the urgent need for economic reforms. However, the government will not attempt to forcefully introduce them as previous governments did. He said that the government will introduce them with public consent after making the people aware. We have already started this program. We could start the Norochcholai coal power project and Upper Kotmale hydro power project which were on hold for over a decade. A team of residents in Norochcholai is scheduled to visit China shortly and study the social and environment impact of coal power plants, he said. The Deputy Minister said that the government has a clear vision on the role of the public sector in this phase of economic development. But reforms would be successful only in countries where people are aware of the need for these reforms. A recent report published in The Economist magazine shows that reforms are successful in countries where the majority of the people believe in the free market economy as the best system to base the future of the world. In China 74% of the people agree while in India it is 72%. However, in France 50% of the people do not agree and this is the reason
for the recent riots against labour market reforms in France, he said. |
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