Jul 12, 2017

Sri Lanka-owned reforms key to drive economic growth

Sri Lankan Government led reforms to improve competitiveness, maintain macro-fiscal stability and strengthen institutions, with broad support in the country, are key to robust economic growth, job creation and poverty reduction. The new Sri Lanka Development Update (SLDU) of the World Bank launched today underscored these priorities.

The SLDU, which is a half-yearly report on the Sri Lankan economy and its future directions, notes that despite challenges posed by natural disasters, Sri Lanka’s economic performance was satisfactory in 2016.

The island nation celebrated a few recent landmark achievements, including the passing of the Right to Information Act and the regaining of General System of Preferences Plus (GSP+). The fiscal deficit narrowed from 7.6 percent in 2015 to 5.4 percent of GDP in 2016. The real GDP growth for 2016 slowed to 4.4 percent, as sustained drought took a toll on the agriculture sector.

In addition to building resilience to meet natural disasters, among the report’s recommendations, are the need to raise more revenue while controlling current expenditures to bring public debt to a sustainable path. Implementing the new Inland Revenue Act, soon to be submitted to the Parliament, will make for a good starting point..

Among the risks identified by the report are delays in implementing structural revenue measures, slower than expected improvement in tax administration, less favorable growth in the global economy and faster than expected global commodity price rises.