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‘Economic crisis unique opportunity to implement permanent structural reforms in SL’

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The economic crisis provides a unique opportunity to the Sri Lanka government to implement deep and permanent structural reforms that may be difficult in normal circumstances, said World Bank Country Director for Maldives, Nepal and Sri Lanka Faris Hadad-Zervos, at an event hosted by the Press Club and Colombo Hilton.

For Sri Lanka, what’s really needed is to follow through reforms with actual implementation. “But we are now in a race against time. Sri Lanka cannot face another crisis of this nature and must make the best of this opportunity to build a strong economy that can withstand future shocks!”

“I encourage you as journalists, media, and experts – but most importantly, as citizens, to support these critical reforms and to hold decision makers accountable to deliver on these reforms so that Sri Lanka comes out of this crisis faster and stronger.”

In the past, Sri Lanka has experienced significant reform reversals, and I urge us all, including development partners, to work together to ensure that the government stays the course on difficult reforms.

“It is urgent, and it is possible. We must all come together at this vital moment to help Sri Lanka build back better.“Moving forward, Sri Lanka must ensure the social protection system is dynamic, effective, transparent and resilient.”

Addressing the dramatic increase in learning losses in the early years and in basic and secondary education, as well as promoting access to quality essential health care services will be critical to ensure those who are already most disadvantaged, are not left behind and are able to achieve their full potential.”

“ Sri Lanka must also continue to strengthen the country’s social protection system to improve coverage and enhanced protection of the poor and vulnerable, including from future shocks. “We welcome the passing of the Welfare Benefit Payments Scheme (WBPS) and the implementation of the social registry.”

He also said that strengthening access and quality of Tertiary and Vocational Education and Training (TVET) for skills development and up skilling youth and adults, including for the green transition, will be critical. There are strong concerns about the scarring effects of the crisis on growth, income, and jobs going forward. “More people, especially the high-skilled, may be keen on leaving the country and 50 staff of the World bank office in Sri Lanka too left for better jobs!”

 

Misallocation of resources in favor of SOEs, result in financial losses

World Bank Country Director -Zervos said that State Owned Enterprises (SOEs) can play an important role in a country’s economy.

“However, misallocation of resources in favor of SOEs, along with weak governance of public assets, result in financial losses, undermines competitiveness and investment, as well as the quality of goods and services provided to the people.”

This has unfortunately been the case across much of the SOE landscape, including poorly managed access to finance that has also undermined the financial standing of State-Owned Banks (SOBs).

The recent SOE Reform Policy approved by the cabinet, maps out a comprehensive approach to restructure and divest commercial SOEs and SOBs to improve competitiveness, investment, service delivery and governance and address associated social and environmental considerations.

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