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Peace, reforms spurred Lanka's prospects, Choksy tells WB, IMF

by Ravi Ladduwahetty

Economic prospects for Sri Lanka have improved considerably with the peace process and the strengthening of the Government's economic reforms, Finance Minister K.N. Choksy told the Joint Annual Meetings of the Executive Boards of the World Bank and the International Monetary Fund (IMF) in Washington on Sunday.

"Our Government's view on reforms also tallies with the observations made by the Executive Boards of the IMF and Deputy Managing Director Shigemitsu Sugisaki at the conclusion of Article IV Consultation earlier this month. We intend moving towards deeper structural reforms and prudent management of the country's monetary policy," the Sri Lankan Finance Minister told the two Brettonwoods institutions.

The Government has taken certain bold steps, despite being politically unpopular, to reduce public expenditure on subsidies to educate the public upon the medium and long term benefits of doing so, he said.

The Government has revived the economic stabilisation program started in early 2002 and the final review of the Stand By Arrangement was successfully completed earlier this month, he said.

We are planning to enter into the Poverty Reduction Growth Facility by the end of the year, he said.

The Government has ensured private sector led economic growth with the economic reforms by freeing the business and industry from excessive bureaucratic controls, rationalisation of Customs and Tariffs, the introduction of Value Added Tax (VAT) and the establishment of the Revenue Authority, he said.

The Minister told the World Bank and the IMF Executive Boards that the privatisation of the State-controlled business enterprises and the liberalisation of the petroleum and power sectors have already begun.

Market borrowings, the Minister said, has been limited and the prevailing ceasefire has enabled the reduction of defence expenditure. "Country experiences have shown that there are no alternatives to sound fiscal and improved policies and improved governance to face these challenges."

Choksy said he shares the view that the role of the IMF needs to be re-assessed in the context of the increased complexities of the global economy.

He said: "While the financial base of the IMF needs to be enlarged in terms of its financial base, both the World Bank and the IMF need to redouble their efforts to help the promotion of growth and poverty alleviation in support of the Millennium Development Goals (MDG).

The Minister congratulated the World Bank and the IMF for their innovative role in seeking solutions to newly-emerged problems.

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