A leading economist has urged the Sri Lankan government to implement urgent reforms in State-Owned Enterprises (SOEs), trade and investment policies, governance, and public expenditure to accelerate economic growth and position the country on a path similar to Singapore.
Advocata Institute CEO Dhananath Fernando, delivering the 23rd K. Sivagananathan Memorial Oration at the Bank of Ceylon auditorium, stressed the need for financial resilience and substantial GDP growth to achieve long-term economic transformation.
“If Sri Lanka grows at 3% annually, it will take 105 years to reach Singapore’s level of development. At 5%, it would take 64 years, and at 6%, 54 years. However, with 8% annual GDP growth, Sri Lanka could achieve this by 2064,” Fernando explained.
Key Economic Challenges and Reform Priorities
Fernando identified excessive short-term dollar-denominated debt as a primary factor behind Sri Lanka’s economic stagnation. Misallocated infrastructure investments have further strained fiscal stability, with nearly 50% of borrowed funds used for interest payments, raising concerns about a potential second debt restructuring.
To mitigate these risks, he proposed:
- SOE Reforms and Public-Private Partnerships (PPPs): Encouraging greater private sector participation to enhance efficiency, stability, and consumer confidence.
- Trade and Investment Modernisation: Reducing excessive shipping documentation to streamline processes and attract higher Foreign Direct Investment (FDI), which remains below the $1.5 billion benchmark.
- Pension System Overhaul: Addressing rising pension expenditures, which accounted for Rs. 372.3 billion ($1.15 billion) in 2023, by reallocating funds to education and healthcare.
The Path to Sustainable Growth
Fernando emphasized the need for ethical governance, political stability, and long-term economic planning to create a business-friendly environment. He advocated for fair resource distribution to reduce social inequalities and promote sustainable development.
“A transparent governance framework will eliminate corruption and bureaucratic inefficiencies, ensuring Sri Lanka moves towards a fair and prosperous future,” he concluded.