Paradigm shift needed in economic thinking, policies and strategy

Sri Lanka GDP growth rate needs to rise above 8% over 10 years to achieve a GDP of $ 200 million and a GDP per capita of $ 9,000 to qualify as an upper middle-class status. A high-income status requires a per capita of $ 13,846 or more. Can Sri Lanka achieve these targets? It is noteworthy that Singapore GDP in 2024 was $ 547.4 billion and per capita $ 90,674.07 while Sri Lanka’s GDP was $ 98.96 billion with a per capita of $ 4,515.57. Singapore’s projected GDP will be $ 900 billion in 10 years with a per capita of $ 130,000. Sri Lanka must decide where it wishes to be in 10 years

- By Raj Gonsalkorale

Sri Lanka has to develop its economy in order to provide a fair, equitable, healthy, knowledgeable and dignified lifestyle for its citizens and its future generations.

DESPITE some economic progress in Sri Lanka over the years, the fact that the country was declared bankrupt in 2022 negates such achievements from the point of view of sustainability of the country’s economy and shows a structural weakness in economic fundamentals.

Excessive borrowings for projects without a proper return on investment assessments, spending far in excess of actual costs for infrastructure projects, operational expenditure in excess of income, accumulating large foreign debts and using some such borrowings especially International Sovereign Bonds for consumption rather than for specific projects with a return on the borrowings in excess of the cost of borrowing, are but some of these structural shortcomings.

Thanks to the often-criticised entry of the IMF Sri Lanka has been able to instil some financial discipline in economic management and virtually compel the Governments since 2022 to adhere to an economic framework in return for the $ 2.9 billion bailout package negotiated with them. It is well for those who were and still are critical of the IMF to remember that their entry was a result of successive Government's financial indiscipline and politically influenced monetary policies, and had economic fundamentals been strategic and sustainable, there would not have been a necessity to seek IMF assistance to save the country and assist it to overcome its bankruptcy.