ECONOMYNEXT – Sri Lanka’s central bank has stressed that rational economic policymaking was essential for the country to progress and warned against resort to policy changes to achieve political gain.
“The country can progress further only if policymaking remains rational with a long term focus on greater public good, while minimising policy swings motivated by short term political gains,” the bank said in its annual report for 2017 launched Thursday.
The central bank said it is essential that envisaged reforms are institutionalised to ensure their sustainability, enabling the country’s unhindered progression under increasingly challenging global and domestic conditions.
Notable progress has already been achieved in implementing the Inland Revenue Act (IRA), enacting the Active Liability Management Act (ALMA) and the Foreign Exchange Act, and reaching a consensus with regard to improving the independence of the Central Bank and facilitating the move towards flexible inflation targeting (FIT) by 2020.
But it said “much remains to be done in relation to strengthening public financial management and ensuring fiscal sustainability through the adoption of binding fiscal rules.”
The central bank also stressed the need to implement a trade and investment facilitation framework that could enhance the country’s overall productivity and effectively link the Sri Lankan economy to global production networks.
“The formulation and implementation of policies must also take into consideration the effect of such policies on the vulnerable segments of the population as it is the poorest of the society who suffer most from failed policy experiments.”
(COLOMBO, April 26, 2018)
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