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IPS sees path ahead for Sri Lanka even as economic challenges mount

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by Sanath Nanayakkare

Even though macroeconomic pressures and external challenges are weighing on Sri Lanka’s fiscal situation, the country has a path ahead for growth and sustainability if it puts its fiscal house in order over the next three years, Dr. Dushni Weerakoon, Executive Director of the Institute of Policy Studies of Sri Lanka (IPS) said last week.

She made this remark while speaking at an online seminar after launching the State of the Economy- 2020 Report compiled by the IPS titled “Pandemics and Disruptions: Reviving Sri Lanka’s Economy COVID-19 and Beyond.”

Elaborating further she said, “Policy environment is critical to achieving resilient growth and economic stability in order to position Sri Lanka as a middle income country in the next 2-3 years”.

“Prevailing macroeconomic conditions in Sri Lanka are challenging. The debt overhang is the prime concern. This debt situation didn’t happen overnight, It crept up over the past decade or so. It hasn’t left room for more robust support packages for people and businesses affected by the COVID-19 pandemic. We need to rethink our policies not only to achieve a sustainable growth path, but we need to build a firewall to withstand any external shocks in the future”.

“Sound fiscal policy in order to put the public finances in order should be the focus of the upcoming budget and government policy in the coming years”.

“If a sovereign rating assessment goes against Sri Lanka in the offing, it could cause a sudden devaluation of the rupee and as a result of it, the size of our foreign currency loans will balloon”.

“The pressure on our forex reserves needs to be eased. FDIs need to be attracted to the construction and real estate sector to ease the immediate pressure and thereafter move on to a growth strategy driven by productivity and technology to become a middle-income country”.

“The minimizing of wasteful expenditure in the public sector won’t make much of a difference. The government will have to lead social welfare. We will have to spend more on health, education and social protection in the recovery phase”.

“The debt stock will persist in the next decade albeit a brief break in between. So, we need to shore up our forex buffers – not with borrowed funds but with investments that bring in manufacturing and services with knowledge transfer on technology”.

“The government has decided not to obtain large loans for infrastructure projects in the next 2-3 years to control the debt stock. Fiscal re-balancing and ensuring systematic tax revenue would be vital for medium-term stability”.

“We needed certain monetary policy stances and import restrictions to face the current situation, but we should see them as necessary short term measures only. Beyond recovery, we need a new system which is agile enough to integrate with the global supply chain and be part of that success as they jump start their economies”.

“We need to raise funds through international sovereign bonds, foreign term deposits etc. For the past one and a half decades, Sri Lanka has had experience on foreign funded projects. We have experience on capital spending, converting debt to equity in infrastructure development projects etc. We can learn from them and seek funding on our terms”.

“Wider fiscal space will also assist the government to provide better social welfare support to the poor. Sri Lanka’s budget deficit is estimated to be between 9-11% in 2020, and public revenue streams remain uncertain even in 2021, according to analysts. This together with low debt sustainability was partly why Sri Lanka’s sovereign rating was downgraded earlier this month by international rating agency Moody’s”.”Sri Lanka cannot afford to lose out by holding onto protectionist measures. A seamless tariff regime is needed to join international value chains, and as the world recovers, we must rethink our approach to trade”.

“On the back of Sri Lanka’s political stability, the country can rethink its economic policies and come through its macroeconomic challenges,” Dr. Dushni Weerakoon noted.



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‘Revenue collecting PCs had only Rs. 40 billion for public service in 2021’

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Pasanda Yapa Abeywardena

By Sanath Nanayakkare

There wouldn’t be a better time for major political parties to discuss and arrive at a consensus for abolishing the revenue-collecting provincial council system which hasn’t done anything more than just distributing government-sponsored welfare goods to the people, Pasanda Yapa Abeywardena, chief organiser of Lankalokaya and former provincial councilor said at a press conference in Colombo on January 19.

Pasanda who enjoys familial relationships with political higher-ups in the country while being the current chairman of Sathosa said that the President of Sri Lanka can travel across the island by helicopter in just one and a half hours which is only the size of Virginia in the United States, but has so many layers of governance including executive presidency, parliament, provincial councils, district secretariats, local government institutions etc.

“It is a known fact that provincial councils are mere training centres for the offspring of senior politicians and there is a demand in the country for cost-effective small government. In such a context, all political parties should have a dialogue in the next six months to abolish provincial councils, and strengthen the local government bodies through district development councils administered by the central government. Such a mechanism would reduce administrative layers while expanding the effective understanding of policies made by the government. Then the decisions made by the cabinet of ministers will easily flow to the ground level and the implementation process will be more dynamic. The President also has expressed similar views in this regard, he said.

“In the year 2021, revenue of provincial councils amounted to Rs. 331 billion while total expenditure was Rs. 316 billion, out of which Rs. 279 billion was spent on the payroll without having to bear the costs of provincial councilors. All in all, the provincial councils had only about Rs. 40 billion to spend on public services,” he said.

“In fact, I know from experience that nothing meaningful could be achieved through provincial councils other than merely being an institution of the central government that distributes chairs, mammoties etc., given by the government where provincial councilors claim to be the benefactors.”

“Provincial councils came to its end of term in April 2019 and five years have lapsed since the defunct of the system. Nevertheless, there is no public outcry to restore the system. PC system has never contributed to making any laws of the country or has never initiated a good programme on its own. So, we urge the political parties to engage in a meaningful discussion in the next six months before the country goes to presidential and parliamentary elections.”

He pointed out that the abolition of the PC system would help reduce the tax burden on the people, and that decision has to be taken well before PC elections are held.

Pasanda added that neither the people in the North of Sri Lanka or the government of India are interested in provincial councils anymore though the system was introduced by then government as a means of power decentralisation in Sri Lanka.”

“India is keen to have an equitable solution to the ethnic issue in Sri Lanka. However, I have reliable information that India doesn’t see provincial councils in the North and East would be an enabler in that quest. So, the abolition of provincial councils won’t trigger any geopolitical tensions with India,” he said.

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HNB Assurance Group surpasses 20% growth mark for the third consecutive year

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HNB Assurance Group recorded yet another year of exceptional performance, marking the third consecutive year of achieving a growth rate exceeding 20% in terms of GWP (Gross Written Premium). The year 2023 witnessed the Group achieving remarkable financial milestones and an array of local and international awards, solidifying its position as a frontrunner in the insurance industry.

HNB Assurance Group recorded a substantial GWP of LKR 18.7 Bn, showcasing a remarkable growth of 20% compared to the previous year. Reflecting on this achievement, Ms. Rose Cooray, Chairperson of HNBA and HNBGI, expressed her delight, stating, “To me personally, the remarkable growth trajectory of the HNB Assurance Group stands as a testament to our commitment to delivering value to our stakeholders. Both teams at HNBA and HNBGI performed an outstanding job, leaving no stone unturned, meticulously analyzing every challenge, and capitalizing on every opportunity. This approach to business was imperative, particularly in the aftermath of COVID-19 and the subsequent economic and social upheaval, where we as a nation encountered numerous challenges in diverse forms. In addition to our consistent growth of GWP, over the past three years, we as a group have so much to celebrate. Our Group assets grew by LKR 10 Bn during the year, well exceeding a remarkable total of LKR 51.2 Bn. Further, investment income for the Group surged to LKR 7.2 Bn, representing an outstanding growth of 49% from LKR 4.8 Bn in the preceding year. In terms of the Group’s profits, we recorded a commendable LKR 1.76 Bn in PAT.”

Honoring claims plays a vital role in maintaining the trust for any insurance company, “I am proud to note that the HNB Assurance Group honored claims of LKR 6.6 Bn, showcasing a growth of 19% compared to the previous year, aptly demonstrating our position as a reliable partner during our policyholder’s time of need.” explained Ms. Cooray.

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Sri Lanka College of Endocrinologists partners with Morison to address the rising challenge of diabetes

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The team members from the Sri Lanka College of Endocrinologists and Morison Ltd, present at the MoU signing

The Sri Lanka College of Endocrinologists (SLCE), the leading authority at the forefront of diabetes management and education in Sri Lanka, has announced a collaborative partnership with Morison Ltd, a pioneer in the Sri Lankan pharmaceutical manufacturing industry, to launch a certificate training program for primary healthcare professionals on diabetes management.

Sri Lanka faces a growing epidemic in diabetes, with an estimated prevalence of one in five Sri Lankans living with diabetes. Primary healthcare doctors are often the first point of contact for patients with diabetes, hence equipping them with specialized knowledge and skills is crucial for early diagnosis, effective management, and preventing complications. The Memorandum of Understanding (MoU) signed between SLCE and Morison on 13th February 2024, reflects a shared commitment to bridge this gap in diabetes expertise and establish primary care as the first line of defence.

The course content developed and delivered by the SLCE, features an evidence-based curriculum, combining theoretical knowledge with practical applications, ensuring participants receive up-to-date knowledge that adheres to the latest Clinical Practice Guidelines and international standards. The program aims to empower primary healthcare professionals to deliver comprehensive diabetes care in their daily practice, including therapeutics, lifestyle counselling, and complication prevention, ultimately leading to improved patient outcomes and reduced burden on the healthcare system. The course, spanning four months, is now open for registrations for the first intake, and the collaboration aims to conduct two such programs per annum.

Dedicated to advancing endocrinology and diabetes care in Sri Lanka, the SLCE spearheads numerous initiatives to educate healthcare professionals on best practices in diabetes management. Dr. Niranjala Meegoda Widanege, President of the Sri Lanka College of Endocrinologists stated, “Equipping our primary healthcare doctors with specialized diabetes knowledge and skills is essential to tackle the growing epidemic effectively. This training program marks a significant step forward in ensuring accessible and quality diabetes care for all Sri Lankans.”

Dinesh Athapaththu, Managing Director, Morison Ltd commenting on the partnership added, “We are pleased to collaborate with the SLCE to bring this meaningful initiative to life. With a patient-centric approach across our value chain, we believe our latest efforts with the SLCE reflects our commitment to deliver a refreshing difference at a time it is most needed by the nation.”

Staying true to their purpose of “Making Premium Healthcare Affordable”, Morison strives to play a major role in the fight against diabetes by bringing the latest therapies closer to the nation with an offering that stands distinctively different with the best of quality and price.

Morison is a truly Sri Lankan pharmaceutical manufacturing company, with a rich legacy of over 60 years of industrial expertise. Their new state-of-the-art manufacturing facility in Homagama, is the largest investment to date in the local pharma manufacturing industry. Being the country’s largest pharma manufacturing facility for general tablets and liquids, it is also the first such facility in Sri Lanka to comply to European Union Good Manufacturing Practices (EU GMP) specifications.

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