“SL needs to increase GDP growth”
World Bank Chief Economist for South Asia Hans Timmer says it is imperative for Sri Lanka to maximize debt service, with least resources possible.
“Sri Lanka at the moment is in a difficult situation due to accumulation of problems. Sri Lanka’s economy has been hard hit during the pandemic, as a result there are several problems that the Government has to address; and that’s not easy. And probably the biggest problem is the high debt to GDP ratio. Hence the problem is to make sure that debt service is easily possible in the future.
Moreover the Government is taking immediate actions such as imposing import bans for price control and utilizing reserves for debt service.” Timmer told a webinar organized by the Central Bank of Sri Lanka under the theme, ‘Impact of the Pandemic on South Asian Economies and How Digitization And Services Led Growth Can Help Sri Lanka to Rebound’. When the Government is facing an extraordinary situation Timmer said it is essential to adopt extraordinary policies to address those issues.
“Nevertheless those policies are only for the short run and they won’t last.” Ultimately for a long- term sustainable growth strategy Timmer noted that Sri Lanka needs to increase GDP growth perhaps beyond the 4 % growth that is on the cards now.
“That’s mean serious consideration of what growth potential of Sri Lanka is in the decade ahead, is incredibly important because I think you can only overcome current problems created by debts when you unleash more growth potential,” Timmer said.