Koshy Mathai, the highly-respected and much-sought-after IMF Resident Rep in Sri Lanka left the audience with seven points of his wisdom to ponder if Sri Lanka is to sustain its current euphoric growth experience...-Want to uplift the economy? Follow the 7 wisdoms of Koshy Mathai
The IMF and its staff have a remarkable skill in using a specially articulated polite language when it comes to addressing a host country’s general public. This is understandable because the IMF is a guest in a host country and should not overtly or covertly rouse popular sentiments or add to the fears of people by speaking the wrong language and be an embarrassment to its host...
Risk factors need urgent attention
Koshy did not say it explicitly, but he implied that the achievements so far are not adequate for sustaining the growth momentum in the medium to long run. He coated it nicely saying that there are “risk factors” facing the economy and they need be addressed urgently and permanently.
In my view, his implication was that the longer Sri Lanka would delay action, the worse would be the results it will have to reap. It is like a cancer patient refusing stubbornly to take medication in time and one fine day finding the cancer invading his vital systems.
To overcome these risk factors and place the economy in a sustainable growth path, he suggested a course of action that embodied the seven points of his wisdom...
One should not forget that the IMF benchmarks are too liberal and were revised upward when it found that it was the only way to save the stand-by arrangement.
Its budget deficit at seven per cent and debt level at 80 per cent, both of GDP, are unsustainable. Therefore, in the long run, there is no alternative but to discipline the budget, as now identified by Koshy too...
In this context, according to Koshy, the Government’s recognition of the need for developing five hubs in Sri Lanka is an important step taken toward the modernisation of the country’s economy.
While all hubs will help Sri Lanka to expand its services sector and sell services to the rest of the world, the knowledge hub will develop Sri Lanka’s human capital base. The early signing of CEPA with India will help Sri Lanka to develop its knowledge base by establishing higher academic institutions in the style of reputed Indian institutes of Technology with Indian partnership.