2007年-世界发展银行全球_Sri_Lanka_Development_Forum___The_Economy_Regional_Disparities_and_Global_Opportunities_38页_3mb

Summary of the Sri Lanka Development Forum Report (Report No. 38388-LK)

Core Content

This report, prepared by the World Bank, provides an analysis of Sri Lanka's economic performance, regional disparities, and global opportunities in the knowledge economy. It serves as a background document for the Sri Lanka Development Forum, held on January 29–30, 2007, to discuss the country's development strategies. The report highlights both the progress and challenges Sri Lanka faces in achieving sustainable and inclusive growth.

Main Points

I. The Economy: Overview and Strategic Directions

• Economic Growth: Sri Lanka experienced accelerated economic growth (6.5% in 2005–2006) despite adverse shocks like the tsunami, rising oil prices, and the end of the Multi-Fiber Arrangement (MFA). This growth was driven by increased external aid, domestic demand, and strong performance in the services and industrial sectors.

• Sectoral Performance:

  • The services sector (including telecommunications, BPOs, and IT) was the fastest-growing, contributing over 55% of GDP.
  • Industrial sector (especially garments) saw steady growth, though at a slower pace than before.
  • Agriculture lagged, with fisheries and tourism heavily impacted by the tsunami, though both sectors showed recovery in 2006.

• Macroeconomic Management:

  • The fiscal deficit remained high (around 8.7% of GDP in 2005 and 2006), driven by increased public spending and subsidies.
  • The Central Bank managed monetary policy, reducing reserve money growth in 2005 but allowing it to rise again in 2006 due to budget financing.
  • Inflation rose sharply in 2006 (peaking at 19.8% in November), partly due to higher oil prices and continued credit expansion.

• External Sector:

  • The balance of payments recorded a surplus of $500 million in 2005, supported by tsunami aid and remittances.
  • In 2006, the trade deficit widened to 13% of GDP, with oil imports rising by 30%.
  • Foreign reserves increased to 2.5 months of imports, but were still insufficient to hedge against external shocks.

• Policy Directions:

  • The government introduced the Mahinda Chintana framework, outlining a vision for a new Sri Lanka with growth targets over 8% by 2010.
  • The framework emphasizes poverty reduction, sustainable growth, and structural reforms.
  • A political consensus is essential to address the conflict and implement necessary reforms.

II. Understanding Regional Disparities

• Growth and Poverty Gaps:

  • Growth has been highly uneven, with the Western Province growing significantly faster than other regions.
  • Poverty remains stubbornly high in non-Western provinces, despite overall economic growth.

• Factors Behind Regional Disparities:

  • Differences in education levels and infrastructure access are not the main drivers of the gap.
  • Limited market reforms in key sectors like agriculture have contributed to the disparity.
  • Policy misperceptions about the impact of reforms on the poor have hindered progress.

• Education Reforms:

  • The Education Sector Development Framework and Program (ESDFP) and National Education Commission (NEC) have been key in improving education access and quality.
  • However, inequities in educational attainment across regions persist, affecting long-term development outcomes.

• Need for Reforms:

  • To reduce regional disparities, politically sensitive reforms are required, particularly in agriculture.
  • Public consultations are necessary to build support for these reforms and address concerns about the poor.

III. Global Opportunities in the Knowledge Economy

• Sri Lanka's Position:

  • Sri Lanka has high levels of educational attainment, making it a potential hub for information technology (IT) and knowledge-based industries.
  • The country has already made initial strides in developing a BPO industry, which holds significant growth potential.

• Global Trends:

  • Offshoring is a growing trend, with India leading in offshore services.
  • Sri Lanka has the potential to become a low-cost offshoring destination, particularly in IT and BPO.

• Policy Recommendations:

  • To capitalize on these opportunities, policy reforms are needed to remove obstacles to a knowledge economy.
  • Foreign direct investment (FDI) in telecommunications, IT, and BPO has increased, indicating growing international interest.
  • The government should continue to invest in infrastructure and education to enhance competitiveness in the global market.

Key Information

• Government Fiscal Year: January 1–December 31.
• Exchange Rate: US$1.00 = Rs. 108.09 (as of December 15, 2006).
• Tsunami Impact:
  • The tsunami caused significant damage to fisheries and tourism, but reconstruction efforts helped recovery.
  • The tsunami-related expenditures amounted to 1.4% of GDP in 2005 and 0.8% in 2006.
• Economic Indicators:
  • GDP growth averaged 6.5% in 2005–2006.
  • Inflation peaked at 19.8% in November 2006.
  • Public debt to GDP was 93.4% in 2005, but has since declined.
• Policy Instruments:
  • The Fiscal Management Responsibility Act (FMRA) and Medium Term Budget Framework (MTBF) are used to guide fiscal policy.
  • The Sri Lanka Development Bonds (SLDB) were issued to manage public debt.

Conclusion

Sri Lanka is at a critical juncture, with the potential to become a middle-income country due to its strong human development and integration into global markets. However, the uneven growth and persistent poverty in non-Western provinces, along with rising inflation and security challenges, pose significant risks. The Mahinda Chintana framework offers a strategic vision for growth and poverty reduction, but its success depends on political consensus, structural reforms, and effective macroeconomic management. Additionally, leveraging global opportunities in the knowledge economy through IT and BPO sectors can help accelerate growth and create more inclusive development.