Need to construct a new growth model - Dr. Indrajith Coomaraswamy | Daily News

Need to construct a new growth model - Dr. Indrajith Coomaraswamy

Dr. Indrajith  Coomaraswamy


The Governor of Central Bank of Sri Lanka, Dr. Indrajith Coomaraswamy addressed a workshop on Development Challenges in Sri Lanka organized by the Institute of Certified Management Accountants of Sri Lanka (CMA), held in Colombo.

Dr. Coomaraswamy said Sri Lanka has significantly favorable economic geography. Being located in the strategic China’s maritime Silk Route, the country has excellent relationships with China, Japan, Singapore, Korea and India. “The location, excellent for bilateral relationships and our educated workforce is a great opportunity in terms of moving forward” he commented.

Dr. Coomaraswamy said, “We need to construct a new growth model. We do not have a fiscal space now to have a public investment driven growth program as we had in the past. A private sector led development model is needed”.

“From late 1950s for about 25 years there had been a dramatic decline in Sri Lanka’s terms of trade when economy was basically tea, rubber and coconut. Demographics showing increase in population added fuel to this scenario. Inward looking policies of the country hindered the progress further for decades.

Economy was liberalized in 1978 but the country did not derive full benefits. To move forward we need to meet some serious challenges. There are three significant paradigm shifts which we need to adjust”, he said.

A better balance in social development and wealth creation is needed. Mismatch between expectations and opportunities for young people are a major crisis. Need to move away from populist politics and entrenchment culture. Thus need of a mindset change is one paradigm shift.

We have been borrowing for recurrent expenditure from every single year since 1987. Being a donor-darling has saved the country for many years. Thus a lot of foreign aid was pumped. This saline drip enabled us to live beyond our needs.

Our access to concessional financing got steadily declined. Thus we had to reach commercial international capital markets to borrow on commercial terms. We must have a new discipline now to reach markets and markets demand discipline.

Third paradigm shift is to get rid of aging process of population. We have had our demographic transition before a major economic transition. Education of girl-child has prolonged marriages to stimulate an aging population. Implications are the need of a productivity driven growth, he further commented. 


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