The World Bank yesterday highlighted four economic policy priorities for Sri Lanka, that include – continuing of fiscal consolidation, pursuing export and investment led growth, improving governance and managing debt risks, in order to sustain future economic growth, create better and more jobs, and thereby reduce poverty.
“These must be addressed through macro economic and structural reforms,” Senior Country Economist for Sri Lanka and the Maldives, Ralph van Doorn said. Launching the Sri Lanka’s new Development Update in Colombo yesterday, he said, the key challenges are inter-linked and require a comprehensive and coordinated approach. “Although domestic political considerations and institutional constraints on policy implementation make it challenging, a strong political will and the support of the bureaucracy could help with advancing the reform agenda. Steps need to be taken to ensure the support of the private sector, civil society and other stakeholders through improved communications on costs and benefits of the reform agenda.”
In 2017, for the first time in decades, Sri Lanka’s fiscal revenue exceeded expenditures excluding interest payments, leading to a primary fiscal surplus. However, despite this and other improvements in macroeconomic performance, the island nation remains vulnerable, Ralph van Doorn said. The new report says, natural disasters continue to take their toll on the GDP, while the pace of urgent fiscal reforms has lagged in a challenging political environment.
The report adds; “The government is progressing on the reform agenda it announced in its Vision 2025, albeit at a slower pace than anticipated. These reforms aimed at improving competitiveness, governance and public financial management are expected to bring in long-term benefits. Continuation of the IMF program will add to investor confidence. Supported by a strengthening global growth outlook, including in some countries important to Sri Lanka, the outlook remains stable. However, this is conditional on successful reform implementation.
“Growth is expected to rebound in 2018 from a low base and continue to be around 4.3 percent in the medium term, driven by private consumption and investment. Although short to medium term growth will continue to be driven by non-tradable sectors, successful implementation of reforms should help the country to rely on productive tradable sectors in the long run. Inflation will stabilize around mid-single digit level, although the upward trend in oil prices may exert some upward pressure. In the medium term, the announced shift by the central bank to flexible inflation targeting will keep inflation in the single digits, while the exchange rate is left to adjust to market forces.
Future of jobs in the hands of youth – WB Country Director
Young people of many middle-income countries focus on jobs that allow them to innovate. They take risks and do not consider sticking to a single job throughout their career. Rather they see the opportunity to change jobs as a way to amass experiences that give them a variety of skills and pportunities. Many dream not only of working at the established big-name companies but at being self-starters who develop companies that could be bought by the big names in the industry.
“But, this buzz is yet to take root in Sri Lanka, despite its middle-income status. Most young people in Sri Lanka say they are conditioned by parental ambitions to become doctors or lawyers and then get a job in the public sector. Don’t get me wrong. We do need doctors and lawyers in the public sector but how many can be absorbed into the limited spaces that exist in government? The outcome has been more job seekers than job creators,” said Dr. Idah Z. Pswarayi-Riddihough, WB Country Director, Sri Lanka and Maldives Colombo, Sri Lanka
Hence in Sri Lanka there is a need to redefine the perception of a job. “It can no longer be split into a formal job vs an informal job; nor can the future youths afford to all aspire for a job that keeps them as a lifer. Youths should be at the forefront of creating jobs, some of which we don’t even know will exist in the near future. We need them to push policy makers, the private sector and the public sector to lift hurdles in their way so they can get on with being tomorrow’s employers and innovators,” she said at the launch of Sri Lanka’s new Development Update in Colombo yesterday.
Speaking further she said, but this will also challenge many other aspects of today’s job world. If the jobs of tomorrow will be vastly different; does the education system as it is today permit the innovation and skills development needed in the future? How should the vocational centers be upgraded to skill youths on an on-going basis– it can no longer be a once in a lifetime training. With jobs going into the virtual space, does it make sense to have people sitting in an office or will there be other models of working that will be focused on output and impact than presence in an office?
“You can’t upend a status quo on jobs and yet end up with the same model on how people work. There is little doubt that the trend to move in and out of jobs – formal to informal and back again has begun and it can only intensify. Mobility will be the key word for our future youths. Taking risks will be something that they will be more comfortable with than the earlier generation and they will push the system to adjust accordingly to this new trend.”
“There will be pain as some endeavors fail; and our role will be to help them back up to continue to create the jobs that they want to work in, in future. So, to all the youths who are thinking of pushing the boundaries and becoming the next entrepreneur – the world is ready for you. You must demand the attention of those who have the means to help you start-up – also don’t be afraid of failure. And to those who have the space for the new generation of jobs don’t wait for the youths to be skilled – reach out and skill them and give them a platform to innovate. There is little doubt that the benefits will accrue to all quarters,” Dr. Pswarayi-Riddihough said.
The Sri Lanka Development Update is the World Bank’s bi-annual macroeconomic publication. It is meant to provide insights into the current state of the economy, based on which it gives a weighted prediction of the medium to long term performance. It also focuses on opportunities and challenges that could manifest along the way.