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Central Bank warns Sri Lanka to push peace or perish
Colombo, Apr 30: Return of war could be catastrophic to the Sri Lankan economy which made a 5.9 per cent GDP growth last year, the Central Bank of the island nation warned today.
Colombo, Apr 30: Return of war could be catastrophic to the Sri Lankan economy which made a 5.9 per cent GDP growth last year, the Central Bank of the island nation warned today.
The bank said the government should pursue peace efforts with the Tamil Tigers and warned that any breakdown in the ceasefire since February 2002 could see the economy go back to recession.
In its latest annual report for 2003, the bank said inflation was contained at 6.3 per cent last year compared to 9.6 per cent increase in prices during 2002. "Sri Lanka is at present at a cross-roads," the Central Bank said, "If the country does not grab the opportunity and integrate itself successfully with the world economy, it will be another sad story of missed opportunities."
The conflict with the Tigers is estimated to have cost the economy at least two per cent of GDP growth, according to central bank studies. It urged President Chandrika Kumaratunga not to allow fiscal slippage and ensure better tax collection to main the growth momentum amid moves to increase subsidies.
It was critical of the political instability and the spate of national elections held since 2000. "Elections every year or two not only increase the fiscal expenditure, but also create political uncertainty, discouraging investment, weakening macroeconomic management and delaying the implementation of structural reforms", it said.
The bank forecast 5.5 per cent GDP growth this year.
Bureau Report
In its latest annual report for 2003, the bank said inflation was contained at 6.3 per cent last year compared to 9.6 per cent increase in prices during 2002. "Sri Lanka is at present at a cross-roads," the Central Bank said, "If the country does not grab the opportunity and integrate itself successfully with the world economy, it will be another sad story of missed opportunities."
The conflict with the Tigers is estimated to have cost the economy at least two per cent of GDP growth, according to central bank studies. It urged President Chandrika Kumaratunga not to allow fiscal slippage and ensure better tax collection to main the growth momentum amid moves to increase subsidies.
It was critical of the political instability and the spate of national elections held since 2000. "Elections every year or two not only increase the fiscal expenditure, but also create political uncertainty, discouraging investment, weakening macroeconomic management and delaying the implementation of structural reforms", it said.
The bank forecast 5.5 per cent GDP growth this year.
Bureau Report