Lanka beats global recession

Lanka beats global recession
*Targets six percent growth rate in 2010
*Stable macro-economic environment vital
Lakshmi DE SILVA
Sri Lanka has come out of the global economic crisis and would achieve a economic growth rate closer to six percent in 2010, Institute of Policy Studies Executive Director Dr. Saman Kelegama said.
Sri Lanka should bring down the budget deficit and create a stable macro economic environment to make this growth sustainable and move further, he said .
Addressing a press conference at the launch of ESCAP report 2010 at the Sri Lanka Foundation Institute, Colombo, he said Sri Lanka’s actual potential growth rate was above eight percent and can reach even nine to 10 percent like India and China. The two key impediments to achieving high growth are now out of the way.
The war that ravaged the economy for two and half decades and a lack of political stability and the need to give priority to political coalition management over economic management issues is no longer prevalent, he said.
Making a presentation with a special focus on Sri Lanka’s economy from economic recovery to sustainable growth Dr. Kelegama further said though inflation was brought to a single digit level in 2009, on the fiscal side, expenditure far exceeded revenue, thus resulting in a budget deficit of 9.8 percent GDP.
Though the two and half decade war came to an end the government expenditure on the IDP resettlement programs, North and East reconstruction work and infrastructure development work was high and the capital expenditure cost was 5.7 percent of GDP
The Current year’s international oil and food price escalations would also be a challenge, he noted.
There were six State-Owned Enterprises making heavy losses. The Ceylon Electricity Board, Ceylon Petroleum Corporation, Sri Lanka Postal Services, Sri Lanka Railway, SriLankan Airlines and Mihin Lanka were making a loss of around Rs 45 billion which was close to 1 percent GDP during 2009. These enterprises need to be made break-even and then profitable, he explained.
The Economic Development Ministry has to play a vital role similar to the role played by the Trade and Industry Ministry played in Japan after the World War during its development drive, he noted.