Spotlight: Econ Op-eds in Summary (Week ended 17th November '21)
1. Budget 2022: Daunting task of achieving financial stability
By Nimal Sanderatne
The budget for the year 2022 was presented to the parliament last week amidst deteriorating economic conditions coupled with social and political upheavals in the country. However, the possibilities of achieving financial stability through the budget seems to be narrow.
The present budget face multiple limitations, among them are not being able to provide relief to losses for farmers, increase expenditure, inadequate allocation for education and health.
Considering the possibility of the fiscal deficit being almost 15% of the GDP in 2021. government’s expectation of bring it down to 4.5-5% by the end of next year, would be a daunting task for the state taking the current condition of the economy.
2. The economy of Sri Lanka Is there a way out
By Arusha Cooray
Sri Lanka is facing a severe economic crisis. Foreign exchange reserves are just sufficient to cover two months of imports and current debt to GDP ratio stands at 101%. Sri Lanka has imposed capital controls and businesses relying on imports are struggling with payments. Essential food item prices have risen due to hoarding and black markets.
To get out of this situation, the government should look at measures such as fiscal consolidation, enhancing the monetary policy, reducing the burden on the banking sector, enhancing the external sector and economic growth, and skill development.
Apart from these measures, it is important that the government maintains policy consistency in order to improve the local and foreign investor confidence. Incentives can be introduced to stimulate domestic savings and promote greater participation in economic activity by the corporate sector.
(Compiled by: Promodhya Abeysekara, Malik Nazahim & Mariyan Perera)
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