Many legislative and institutional frameworks have been introduced to address structural weaknesses in economic management and governance that have plagued the country in the past, said secretary to the treasury and ministry of finance Mahinda Siriwardana.
He was delivering the keynote speech on “Shaping the Future: Policies for Dynamic Growth towards Improving Social Protection and Well-being of the People” at the launch of “National Social Protection Policy of Sri Lanka” at the Galle Face Hotel on 16 August.
He noted that Sri Lanka has had a long history of incomplete economic stabilisation programmes.
The country’s macroeconomic framework has historically been characterised by persistent budget deficits and deficits in the current account of the balance of payments.
This twin deficit leads to frequent balance of payments crises, reserve depletion, and bouts of inflation, said Siriwardena.
As the crisis sets in, Sri Lanka has often sought the support of the International Monetary Fund (IMF), following which macroeconomic stabilisation measures are introduced.
However, as soon as a degree of stabilisation sets in, Sri Lanka has a tendency to revert to past habits of fiscal excess, accommodated by monetary policy, he said.
The finance secretary called for caution and care in navigating the very delicate situation in the Sri Lankan economy at present.
In my view, the achievement of dynamic growth, which will ensure the social protection and well-being of the people in the generations to come, will depend on the measures to solidify the stability and the way we respond to the extremely challenging situation today, he added.
