“ISBs can keep govt. accountable, promote performance”
International Sovereign Bonds (ISBs) can keep the government accountable and promote performance said Verite Research non-resident fellow Prof. Shanta Devarajan at the ‘Practical Solutions for Inclusive Growth’ forum organized by Verite Research and Bandaranaike Academy for Leadership and Public Policy at BMICH recently.
ISB is a debt security issued by a national government to raise money for its operations, pay down old debt, pay interest on current debt, and for any other government spending needs and can control corruption of the government by imposing financial disciplines despite high interest costs.
Prof. Devarajan also emphasized the need of separating foreign policy from foreign investments. He also highlighted the necessity of pursuing structural reforms to achieve sustainable and inclusive growth for Sri Lanka. He highlighted the importance of maintaining the government’s accountability, which has been neglected for more than 70 years which was one key factor leading to the economic crisis.
“Accountability has been missing in Sri Lanka for the past 70 years. This has had a corrosive effect on the economy and society, contributing significantly to the current crisis. To resume growth, we need to reintroduce accountability,” Prof Devarajan affirmed.
“Some significant economic benefits such as reducing unemployment and boosting the apparel sector resulted with the liberalization. But the current protectionist policies have been able to reverse these achievements by blocking imports to protect several industries, which in turn cultivates corruption,” he said.
Verite Research Director Subashini Abeysinghe asserted it is vital to introduce labour market policies that facilitate skills transition and growth, helping the workforce adapt to changes and reducing resistance to liberalization. She urged the need of having effective trade facilitation, which is very important for both imports and exports to improve under a liberalized rule. Reforming the education system was another critical point, as the current system forces even the poor to rely heavily on private tutoring, indicating a failure in the public education system.
Verite Research Head of Governance Sankhitha Gunaratne addressed the regulatory environment and the widespread corruption within the revenue generating agencies like Customs Department.
“Corruption within institution like customs remains a huge problem for businesses in the export and import industry. It appears that the government has also been unable to address this issue,” Gunaratne said.
She also stated that it is important to introduce anti-corruption measures suggested by the IMF. “Corruption is a significant obstacle for businesses.Though Sri Lanka appears to be in a juncture, the country still struggles to address these challenges efficiently.”
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