DailyMirror
The government has said they aim to achieve a target of $4000 per capita in 2014. In 2004, our per capita was around $1000. By end 2008, our per capita had doubled. By 2014, our per capita according to a government official is expected to be around $4000. Now to achieve that government spending, commercial lending and productivity in the work places will have to increase.
Many of us know how the per capita is calculated (total national income divided by the number of population) and how misleading it can be when assessing the real living standard of the average man on the street. By putting more money in the hands of the rich, the per capita can in effect distort the real standard of living in the country. We all know Sri Lanka has enjoyed some economic growth annually over the last few years. However, the pattern by region has been alarming as growth has been lopsided.
We Sri Lankans’ all know that economic growth has been concentrated in the Western Province with other regions lagging behind. In fact, while the Western province has grown by over 40% over the last five years other regions have grown by only 20% . The issue the government needs to be more focused today is poverty reduction in the regions. In general, poverty reduction in many regions have been much slower than in the Western province because successive governments have failed to integrate the rural economy with the Western province. To realize this the private sector and the public sector should work together to create a conducive regulatory framework by improving infrastructure and access to capital. An effective financial services sector and a provincial administration would contribute significantly to economic growth and poverty reduction.
The other issue we need to address urgently to reduce poverty is to develop our rural Human capital. The more global and information based and fast moving the economy becomes the more economically valuable are the human elements in a country. Therefore, more emphasis should be given to develop our human capital, both raw and trained.
Strategy
For this we need to make more and more investment in our human capital and economic and social infrastructure. So far official flows have not come in the way we would have liked despite the war becoming an issue of the past.
However official aid will not solve the problems we have forever. Most aid has to be paid back. Therefore exports and FDI must fill the gaps. To get more productive FDIs and support, real investment and investor friendly policies are needed. Telling the West to keep their money or the EU to keep their GSP+ to simply get votes does not strengthen the confidence levels or help the poor. We must all realize that a government that fails to safeguard democracy will not have the support of the people and Sri Lanka would be reduced to an international pariah status for no fault of its people. A better strategy for the government would be to co-habit with the opposition and conduct the IDP resettlement more transparently until the economy and the peace process is put back on track.
After all it is public money that is being spent. We need international support to develop our infrastructure, for the North- East reconstruction and to bridge our huge budget deficit. We cannot continue borrow money this way and run this country. Therefore, without international support we will find it hard to balance our books resulting in further chaos. On the other hand printing money to give subsidies and to meet government expenditure only pushes inflation and does not help the poor other than showing an artificial increase in the GDP.
Then lending rates have now been forced down so that business can now borrow and run a viable business. Therefore, SMEs should now become more engaged in the development and reconstruction process. On the other hand, deposit rates are now around 8% and would affect the poor pensioners living on fixed income. For the government the rate cut would help them to save billions in their debt servicing. We all know the state coffers are relatively empty and government revenue is not keeping up with the ever-increasing demands. As a result the government overdraft has increased. The money the government collects may be sufficient only to meet our current expenditure.
The government at current levels of economic growth cannot fund the reconstruction and rehabilitation process. Our prospective donors should not wait for the peace process to reconvene to release their funds for rehabilitation. Lack of funds can surely endanger the social support programs that the North and East people need. What this country needs is development and peace to travel together.
This is the only way Mahinda can rally all Sri Lankans to support the rebuilding effort. Therefore Sri Lanka needs all the support it can from the donor community to put the economy back on the fast track. Today a mutually beneficial resolution to the North East problem is some thing that all citizens truly desire. Mahinda must realize that the expectation of a large economic dividend is truly high.
However as important as it may be, it will certainly not be the panacea for all the economic and political ills ingrained in the country. Therefore, the government needs to simultaneously work on removing the roadblocks that have impeded growth. What the people want is the implementation of development projects in a transparent way and to stop the abuse of state resources for political gain.
Because that is where the jobs are. Mahinda should make every effort to find a political solution and the opposition should support him. The people of this country want our leaders to articulate a clear vision, display an exemplary commitment to the law and deliver on their promises, which they have so often failed to deliver.
The opposition must support the government of the day to deliver while curbing government’s excesses. In the final analysis, what Sri Lanka urgently requires is for the executive to work for the betterment of the people, the opposition to renew itself and pressurize the government to do what is good for this country.
Finally our so-called civic conscious leaders need to become more assertive and do something about our future. Their deafening silence on corruption and governance is not helping their cause.