2017年-世界发展银行全球_Sri_Lanka_Development_Update_November_2017___Creating_Opportunities_and_Managing_Risks_for_Sustained_Growth_46页_1mb

Sri Lanka Development Update Summary (November 2017)

Core Content

The Sri Lanka Development Update for November 2017 provides an analysis of the country's economic performance, outlook, and key policy challenges, with a focus on transitioning to a more sustainable and resilient growth model. The report emphasizes the need for structural reforms to shift from a public investment, non-tradable sector-driven economy to a private investment, tradeable sector-led model. It outlines the role of fiscal and monetary reforms, the impact of natural disasters, and the importance of managing risks effectively.

Main Points

1. Recent Developments

• Macroeconomic performance remained broadly satisfactory in the first half of 2017.
• Corrective policies in monetary and fiscal areas contributed to gradual stabilization.
• Construction sector rebounded strongly, partially offsetting the negative impact of floods and drought on the real sector.
• External buffers strengthened due to foreign exchange purchases and improved capital flows.
• Inflation increased from 4.2% in 2016 to 7.1% in September 2017, driven by adverse weather, VAT changes, and demand pressures.
• Fiscal consolidation continued, with the fiscal deficit reduced to 5.4% of GDP in 2016 from 7.6% in 2015.
• VAT reforms in 2016 led to a primary surplus in the first four months of 2017, but the budget targets for 2017 were likely to be missed due to delayed implementation and higher-than-anticipated interest expenditure.
• Reserves increased to a 32-month high due to syndicated loans, Eurobonds, and central bank purchases, although organic growth remains critical for long-term stability.

2. Outlook, Risks, and Policy Priorities

• Growth is projected at 4.6% in 2017, with a slight increase beyond that, driven by private consumption and investment.
• Inflation is expected to rise in 2017 due to VAT collection and commodity price increases, although low international prices will provide some downward pressure.
• External sector is expected to benefit from the reinstatement of GSP+ and tourism growth, but drought could negatively affect exports and increase petroleum imports.
• Domestic risks include delayed reform implementation, inefficiencies in tax administration, and increased natural disaster frequency.
• Fiscal risks persist due to high public debt (79.3% of GDP in 2016) and significant treasury guarantees (7.1% of GDP in 2016).
• Policy priorities include:
  • Continuing fiscal consolidation and creating fiscal space for public investments.
  • Enhancing economic competitiveness and promoting trade and FDI.
  • Advancing governance reforms such as Right to Information, National Audit Law, and Public Finance Law.
  • Improving debt management and disaster preparedness.

3. Special Focus: Creating Opportunities and Managing Risks for Sustained Growth

• The new growth model is expected to create more opportunities for development and resilience, but also expose the country to new risks.
• Integrated risk management is emphasized, using the framework from the World Development Report, 2014.
• Fiscal reforms such as the new Inland Revenue Act are expected to improve tax collection and revenue base, contributing to sustainable fiscal consolidation.
• Trade policy reforms are crucial for increasing exports and reducing import dependency, particularly in the context of Sri Lanka's Vision 2025.
• Public debt and contingent liabilities remain high, with SOE debt being a major source of fiscal risk.
• Natural disasters continue to impact growth, fiscal consolidation, and poverty reduction, requiring proactive measures to mitigate their effects.
• Active liability management could reduce debt costs and risks, especially with Eurobonds maturing from 2019.
• Targeted spending should replace untargeted subsidies to better support poor households.

Key Economic Indicators

• GDP per capita was USD 3,835 in 2016.
• Population was 21.2 million.
• National poverty headcount ratio declined from 15.3% in 2006/07 to 4.1% in 2016.
• Fiscal deficit for 2017 is projected at 5.1% of GDP.
• Public debt to GDP ratio was 79.3% in 2016.
• Treasury guarantees amounted to 7.1% of GDP in 2016.
• Gross Official Reserves reached a 32-month high in 2017.
• Inflation (CCPI) reached 7.1% in September 2017, up from 4.2% in 2016.
• Core inflation was 5.8% in September 2017, up from 3.9% in 2016.
• National Consumer Price Index (NCPI) reported 8.6% year-on-year inflation and 6.8% annual average inflation in September 2017.

Key Institutions and Partners

• The IMF supported the Extended Fund Facility (EFF) program, focusing on revenue increases, fiscal consolidation, and reforms in public financial management and trade competitiveness.
• The World Bank and Japan International Cooperation Agency (JICA) supported private sector competitiveness, transparency, and fiscal sustainability.
• The Asian Development Bank (ADB) contributed to strengthening capital markets.

Conclusion

Sri Lanka has the opportunity to implement Vision 2025 and achieve sustained growth and poverty reduction, provided it continues with reforms and manages risks effectively. A shift to a private investment and export-led model is necessary, but requires coordinated efforts to address institutional and political constraints. The report highlights the importance of fiscal discipline, competitiveness, and disaster resilience in ensuring long-term economic stability and inclusive growth.