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WB says Lanka needs urgent policy measures to tackle unsustainable debt, Balance of Payment challenges
The World Bank last week said Sri Lanka faces unsustainable debt and Balance of Payment challenges.
“Sri Lanka’s economic outlook is highly uncertain due to the fiscal and external imbalances. Urgent policy measures are needed to address the high levels of debt and debt service, reduce the fiscal deficit, restore external stability, and mitigate the adverse impacts on the poor and vulnerable,” says the World Bank in its twice-a-year regional update.
The latest ‘South Asia Economic Focus Reshaping Norms: A New Way Forward’ projects the region to grow by 6.6% in 2022 and by 6.3% in 2023. The 2022 forecast has been revised downward by 1.0% age point compared to the January projection, mostly due to the impacts of the war in Ukraine.
Countries in South Asia are already grappling with rising commodity prices, supply bottlenecks and vulnerabilities in financial sectors. The war in Ukraine will amplify these challenges, further contributing to inflation and deteriorating current account balances.
“The World Bank is deeply concerned about the uncertain economic outlook in Sri Lanka and the impact on people,” said World Bank Country Director for Maldives, Nepal, and Sri Lanka Faris Hadad-Zervos.
“We are working on providing emergency support for poor and vulnerable households to help them weather the economic crisis and we remain committed to the wellbeing of the people of Sri Lanka, and to a narrative of sustainable and inclusive growth that will require concerted and collective action.”
Sri Lanka needs to address the structural sources of its vulnerabilities. This would require reducing fiscal deficits especially through strengthening domestic revenue mobilisation. Sri Lanka also needs to find feasible options to restore debt sustainability. The financial sector needs to be carefully monitored amid high exposure to the public sector and the impact of the recent currency depreciation on banks’ balance sheets.
The necessary adjustments may adversely affect growth and impact poverty initially but will correct the significant imbalances, subsequently providing the foundation for stronger and sustainable growth and access to international financial markets. Mitigating the impacts on the poor and vulnerable would remain critical.
In South Asia, though GDP growth continues to be solid during the recovery, all countries in the region will face challenges ahead. On a positive note, exports of services from the region are on the rise as the pandemic subsides.
The war and its impact on fuel prices can provide the region with much-needed impetus to reduce reliance on fuel imports and transition to a green, resilient and inclusive growth trajectory. The report recommends that countries steer away from inefficient fuel subsidies that tend to benefit wealthier households and deplete public resources. South Asian countries plan to move towards a greener economy by gradually introducing taxation that puts tariffs on products which cause environmental damage.
Another challenge the region faces is the disproportionate economic impact the pandemic has had on women. The report includes in-depth analysis of gender disparities in the region and their link with deeply rooted social norms, and recommends policies that will support women’s access to economic opportunities, tackle discriminatory norms and improve gender outcomes for inclusive growth.
… successive governments sat on PCoI report handed over in Feb. 2021
His Eminence Malcolm Cardinal Ranjith yesterday (21) alleged that those who were in power from 2019 to September 2024 sabotaged investigations into the Easter Sunday carnage (2019).
Addressing the Seventh Year Commemoration of the Easter Sunday suicide attacks, at St. Anthony’s Church Kochchikade, Colombo, the Archbishop of Colombo said that unlike the present leaders of the country, almost all the power holders, since the 2019 April attacks, including former Presidents, Heads of the Police and the AG’s department officials, instead of sincerely finding out as to who and what was behind the horrific crime, tried their best to confuse the public, muddle up the investigations and appointing all kinds of committees, with highly suspect investigators, in order to come out with conclusions crafted by them, and tried to sabotage the truth from emerging.
In spite of the change of government, in September 2024, certain officials of the “deep state” were seeking to obstruct the smooth flow of ongoing investigations.
Regardless of the Presidential Commission of Inquiry (PCOI) giving clear directives to the Attorney General and to that department to take clear legal and disciplinary actions against some of the political figures, officials of the security establishment and organisations for criminal neglect of duty, very little has so far been done on this matter by them.
The PCoI handed over its report to President Gotabaya Rajapaksa in February 2021.
The Catholic leader emphasised the need to investigate possible links between the Easter Sunday massacre and attacks, targeting the Muslim community, on the night of 5th May and, once again, on 11th, 12th and 13th May, starting from the Nattandiya-Madampe area, through Kotaramulla to Minuwangoda. The Cardinal said: “This may have a link to the main attacks on 21st April 2019. One must also verify as to whether anyone in the security establishment prevented those responsible from controlling these attacks as and when they began.”
The Commission to Investigate Allegations of Bribery or Corruption (CIABOC) has directed the Secretary General of Parliament Kushani Rohanadeera to cancel an internal transfer of a senior official.
Sources said that the CIABOC intervened as the female official to be transferred is a key witness in the ongoing investigation into the conduct of suspended Deputy Secretary General of Parliament Chaminda Kularatne. The CIABOC has asked the Secretary General to delay the transfer until the conclusion of its investigation.
CIABOC initiated the investigation following a complaint against Kularatne, who himself complained against Speaker Dr. Jagath Wickremaratne over corruption and irregularities.
The female official’s transfer was to take effect on 20 April.
The United Nations has urged Sri Lanka to deliver concrete results after long-running investigations into the 2019 Easter Sunday suicide bombings that killed 279 people, including 45 foreigners.
The UN’s top envoy to the country, Marc-Andre Franche, said survivors and families of victims were still waiting for answers, despite multiple probes and renewed political pledges following the formation of a new government in September 2024.
“Public commitments by the government to pursue justice are important and must be welcomed,” he said, as the nation marked seven years since the bombings on Tuesday.
“But what matters now is results,” he said at a remembrance service in Colombo.
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