Economist says, holes in some of Sri Lanka’s Economic indicators

Economic downturn       An economist picked holes on some of Sri Lanka’s economic indicators, which on the surface showed that the economy was doing well.

Indrajit Coomaraswamy, a former Director of Economic Affairs at the Commonwealth Secretariat in London speaking at a seminar in Colombo on Wednesday (July 31) said that though absolute poverty had declined to 8.9%, how was it that 35% of the population was still Samurdhi recipients?

He further said that unemployment had been brought down to under 5% largely due to a great number of Sri Lankans working overseas. But Coomaraswamy said that when a country progresses economically, its citizens return to the home country seeking for employment opportunities back home, and not overseas.
He also said that the reason for the drop in poverty levels was due to remittances, which totalled US$ ($) 6 billion or Rs. 750 billion last year, coupled with military transfers.

Coomaraswamy said that a research firm had recently pointed out that though Sri Lanka’s economy grew at 8% in 2010 and 2011 and 6.4% last year, there was however no growth in employment.

Terming this as jobless growth, he however pointed out that when the economies of East Asia and South East Asia grew, it was growth with equity, inclusive growth.

The growth of the economy is crucial to bring poverty levels down, he said. Coomaraswamy also said that economic disparities in the country have been increasing as shown by the gini coefficient which had had increased from 0.43 to 0.48.

He further said that though poverty levels had declined, large numbers of pregnant women were anaemic, while malnourishment and stunting levels were high among children.

Coomaraswamy said that the critical period for a child’s cognitive development was the nine months it was in the mother’s womb and the first 1,000 days thereafter.

A child’s learning abilities is shaped in its first five years, if those are lost they can never be regained, said Coomaraswamy.

He said that previously Sri Lanka was able to survive due to the receipt of generous donor assistance virtually given on a “never never” basis because Sri Lanka was the darling of the donor community then, a reference to the immediate aftermath of the post 1977 era when Sri Lanka opened up its economy where it received generous amounts of donor aid virtually free.

But now that money has stopped, said Coomaraswamy.

Therefore the borrowing channels open to the country at present is to borrow at commercial rates, he said.

As such Sri Lanka has to take some painful decisions in order to get its budget and current account deficits in the balance of payments right, said Coomaraswamy.

That means by making sure that every rupee spent is spent right, he said.

This needs to be done without jeopardising health and education spends.

“On the supply side what is needed is marketable education, and health and on the demand side it’s about getting investments and development going,” said Coomaraswamy.

Another negative aspect that he pointed out was the bloated public service where the headcount had increased from 400,000 to 1.3 million.

Coomaraswamy also said that there was the need to improve the island’s investment climate so that investments would grow from the current 30% of GDP to the desired level of 35% of GDP, reforms in education so that educational institutions will produce employable youth, making use of IT and the mobile phone to provide the farmer and such like the required information on time, productivity improvement, proper “Samurdhi” targeting and the development of public-private partnerships.

The seminar was organised by Lakshman Kadirgamar Institute, a Government sponsored think tank.(Sunday Leader)

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