ECONOMYNEXT – Sri Lanka’s ruling coalition has made progress in key areas restoring rule of law, making the judiciary independent, reconciliation and wining back the good will of the international community but much more needed to be done, President Maithripala Sirisena said.
He said the government made progress despite a massive debt burden, volatile international conditions and a drought amid climate change which hurt the farming community in particular, delivering a policy speech at the commencement of a new session in the parliament.
President Sirisena said Sri Lanka has got back the goodwill of the international community, the GSP+ trade benefits had been restored and exports had reached a historic high.
Progress had been made in reconciliation, 85 percent of the land taken by the military being had been handed back to the people, an office of missing persons had been set up.
Whatever people said, he said the problem of the people in the north must be solved.
He believed the provincial council system had to be strengthened.
The government alone could not do it and all sections of society had to get together he said.
The government was working to clear up a debt mountain without burdening the people he said.
His government had ended the arbitrary powers of the President, strengthened the independence of the judiciary and was acting against bribery and corruption.
He said state works were given a 10,000 rupee salary increment, Samurdhi subsidies were doubled and benefits were given to war veterans.
Sri Lanka’s economy hit a balance of payments crisis, as a 2015 as the budget deficits rose with the salary hike and subsidies but interest rate were held down by the central bank by printing money, undermining the credibility of a rupee peg and triggering capital flight.
The rupee collapsed destroying real salaries of private sector workers, while state workers who got a large salary increase managed to keep their head above water for some time.
Sri Lanka’s central bank and its devaluationist-inflationism has been a key driver of falling living standards and political instability in the country, according to some analysts.
They say diametrically opposite policies followed by high performing East Asian nations with better central banks.
The devaluation-inflation also kicked out hopes of the promise of a ‘social market economy.’
President said better conditions for domestic and international investors will be created. For farmers, new technology and measures to deal with volatile rains from climate change was needed.
The government had spent 38,000 billion rupees last year on drought relief he said. (Colombo/May08/2018)