Spotlight: Econ Op-eds in Summary (Week ended 30th October '19)

Snapshots

1. Will presidential poll ensure political stability and economic growth?

By: Nimal Sanderatne

· The prospect of an economic revival after the presidential election can be dampened by political instability. Despite the vast majority thinking otherwise, the powers of the new president will be limited. The country will be governed by the prime mister and the cabinet. A constitutional crisis between the new president and the prime minister will cripple the economy.

· Continued populist policies targeting the parliamentary elections in 2020 on top of the current election promises will worsen the economic problems. Fiscal slippage due to such political compulsions will erode the macro-economic fundamentals. Stringent fiscal policies and limiting public expenditure is vital. Sooner the parliamentary election is held, better the prospects for an economic recovery.

· Heavy public debt caused by the fiscal slippage will be a severe economic burden. Government revenue is inadequate to meet the debt servicing costs. The current and capital expenses have to be met from further borrowing, limiting funds available for essential expenditures. In such a context restoring economic stability is a massive challenge for the next government.

For the full article – Refer The Sunday Times

2. Policy certainty and political stability are essential for achieving socio-economic goals

By: Prof. Lalith Samarakoon

· The Sri Lankan economy faces many challenges due to policy and political uncertainty and negative global economic conditions. The deteriorating economic growth needs to be corrected by analyzing the Sri Lankan economy in comparison to Lower Middle Income and Upper Middle Income peer economies.

· Such analysis shows that Sri Lanka could sustain high economic growth by, modernizing the agricultural sector, developing export-oriented industries, developing new and competitive services sector enterprises and increasing the contribution of trade to growth.

· To facilitate these the government will have to take measures to increase FDIs, increase labour force participation, achieve fiscal consolidation, control debt, leverage private sector investments, develop domestic capital markets and most importantly take advantage of the unique geographical placement of the country.

For the full article - Refer Daily FT

(Compiled by: Chayu Damsinghe, Promodhya Abeysekara & Asel Hettiarachchi)