Expenditure reduction vital for Sri Lanka's economic growth– UN

[TamilNet, Tuesday, 01 April 2008, 12:11 GMT]
The economic growth of Sri Lanka is possible only by reducing expenditure and preventing waste, said Socio Economic Research report for South Asia released Monday morning by United Nations at the Law College, Colombo, sources said.

Mohan Samaranayake, information Officer of UN Head Office in Colombo, Dr.Mohammed Hussain Malik , UN Officer for Economic Affairs Dr. San Helgama Director of Centre for Policy learning, Agricultural Research Expert; Dr. Nimal Chandaratne Agricultural Research Expert were present at the event.

The excerpts from the report follow:

Sri Lanka can achieve economic growth only by curtailing expenditure and curbing the colossal waste in government organizations

In 2007, the Gross Domestic production (GDP) of Sri Lanka increased by 6.7 percent amidst ethnic war as well as the sharp rise in oil price .At the same time the inflation rose from 10 percent to 15percent.

The report on Socio Economic trends in Asia Pacific region released by UN for the 60th year also states:

The growth of the GDP of Sri Lanka is quite strong and in 2007 there was 6.7% increase in GDP.

The growth in employment and service sector showed a decrease and the growth in agriculture sector declined heavily due to unfavourable weather conditions.

On the other hand the rate of inflation in Sri Lanka continued to increase as reflected in the increase from 10% in 2006 to 15.8% in 2007.The resulting economic instability has led to an increase in the price of commodities as well as decrease in currency exchange.

The Government of Sri Lanka (GOSL) obtained a loan of 500 million U.S Dollars in October 2007 and again it received another 300 Million Dollars as loan from foreign countries. If the country is to escape the burden of this loan it is necessary to increase National Productivity for the next five years as well keep unnecessary expenditure under control by proper budgeting and planning.

Meanwhile, the huge looses faced by government organizations has made a great impact on the economy. Last year Sri Lanka Petroleum Corporation (SLPC) incurred a loss of 3 Billion Rupees while Ceylon Electricity Board (CEB) lost 15 Billion Rupees .In addition Sri Lanka Transport Board (SLTB) lost 4 Billion Rupees while the losses in Postal department amounted to 2.5 Billion Rupees.

Massive scale developmental activities such as infrastructure development, Highways construction, Export of Garments, Tea Export, and Commerce have all contributed to the GDP growth.

70 percent of the GDP of Sri Lanka is related to international trade. Therefore the economic growth of the world has contributed to the GDP of Sri Lanka.

Therefore in order to make it possible to reach economic growth it is vital for the government to keep expenditures under control and take effective measures to prevent wastage in government departments.