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!
