The Report of the Sri Lanka Central Bank for the year
2006, which can be called a watershed year in the history
of Sri Lanka, was released today. As the President of
the country and the Minister of Finance I have come
to the Central Bank premises today to accept the report
with pride because we have been able to achieve the
highest rate of economic growth in 30 years in the first
year of my administration.
The commendable economic growth
of 7.4% achieved last year despite an unprecedented
series of obstacles is no accident. It is a result of
careful planning and efficient implementation. The two
premier institutions under my Finance Ministry –
the Treasury and the Central Bank contributed largely
to it.
The usual practice is for the Governor
of the Central Bank to come to the Ministry of Finance
and present the Annual Report of the Central Bank to
the Finance Minister. Without being confined to that
tradition, on the request and invitation of the Governor
of the Central Bank I decided to come to the Central
Bank premises to accept the Report and to activate the
new website of the Central Bank. I am glad that by doing
so I am in a position to appreciate the very valuable
service rendered by the Central Bank of Sri Lanka for
the economic development of the country.
As I mentioned before the last year
was actually a watershed because while facing very serious
challenges we were able to orient our economy along
a path of rapid development.
As you are aware, the main challenge
faced by the county for the last 30 years is terrorism
in the North and East and the search for a political
solution to it. In addition, the country had to face
rising fuel prices and natural disasters. During the
last year the Government’s policy was to fearlessly
combat terrorism and develop the economy, without making
terrorism an excuse to delay development. The progress
and results of the security measures taken by us to
protect the sovereignty and territorial integrity of
the country is no secret to anyone. Meanwhile, as the
Central Bank Report shows our economic achievements
are also now clear. I reflect over the achievements
of both these major sectors with pleasure and humility.
Our achievements in both these fields – combating
terrorism and developing the economy - demonstrate the
success of our defence and economic policies. It encourages
and stimulates all of us to continue those policies.
If we are to raise the living standards
of our people to match those of the developed world
even to some extent, it is essential to maintain an
average growth rate of 8% for the next five years. Our
Ten Year Plan is prepared with this target in mind.
While bearing the burden of a destructive
war, we have already launched several development projects.
Among them are power generation, road development, and
ports and airports development projects. By improving
infrastructure in this manner we expect to attract foreign
investment and raise productivity, and by this create
the background for sustainable economic development
in the future. This development will not be confined
to one region. It will spread island wide eliminating
regional inequalities. A large number of special projects
designed for that purpose have been initiated by the
government in the last year.
Among them are “Maga Neguma”
(Road Development), “Gama Neguma” - developing
12,000 villages, 300 industries under “Navodaya”
and mega irrigation projects including the Moragahakanda
Reservoir, highways linking the city and village. What
we expect from this is to extend development to all
regions of the country which was hitherto confined to
the Western Province .
We cannot fully enjoy the pleasure
of a high economic growth rate if it doesn’t contribute
to eliminate poverty that oppresses the majority of
our people.It is a cause for satisfaction that we have
been able to reduce the incidence of poverty to nearly
20 %. At the same time our per capita income which was
US$ 1,197 in 2005 has gone up to US$ 1,355 in 2006 thus
consolidating our position as a middle income country.
For sustainable economic development
the active participation of the workforce and its productivity
is critical. At present the workforce in the State sector
is 1 million. The majority of our workforce –
nearly 7 million, is in the private sector. As a matter
of policy we do not have any liking or expectation to
privatize state institutions. However, we see no purpose
in maintaining State institutions by using public funds
to subsidize them. Instead of that, we call upon everyone
to raise the levels of efficiency and productivity in
state institutions and thereby contribute to future
economic development.
In the past few years what was expected
by the large increase salaries in the State sector was
to raise the level of efficiency. We already notice
some good results from this with this Annual Report
of the Central Bank being presented one month ahead
of the legal schedule. In the same manner we hope the
private sector, which employs a greater portion of our
labor force, would contribute more to increase efficiency.
At the beginning of this year the
Government appointed a National Economic Council (NEC)
to find solutions to current and principal economic
issues facing the country. This step was taken due to
my strong interest and the desire to provide quick remedies
to the economic issues just as the Security Council
taking very essential decisions urgently regarding the
security of the country. This is not just a formal Council.
It meets fortnightly and had eight sessions so far.
During the past few months we have taken urgent measures
through the NEC to control inflation, which has been
a major challenge. Central Bank expertise has been very
helpful in the NEC. I believe the results of these measures
will be seen in the next two months.
It is not only in the NEC that the
role of the Central Bank as the Government’s official
economic adviser is conspicuous. The Central Bank actively
contributes tothe efforts to build the country’s
economic image and to obtain foreign investments. In
addition, we consider very valuable the economic advice
constantly provided by the Central Bank to the Cabinet
in taking decisions.
I have strong confidence in the
activities of the Central Bank, which has contributed
to the economic development of Sri Lanka for more than
50 years. This confidence is shown this moment by my
presence here as the Head of State when we review our
last year’s achievements as a country. I wish
the Governor of the Central Bank and all officials courage
to make their contribution to a more developed economy
in 2007.
Blessings of the Triple Gem to all!
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