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Sri Lanka should immediately establish a Marine Science Research Station on Kachchativu


Last month there were reports in the press that a group of Indian citizens was planning to raise their national flag on the island of Kachchativu to coincide with India’s Republic Day celebrated on 26 January. That threat failed to materialize. February is an important month for another reason. Around that time of the year, both Sri Lankans and Indians from Tamil Nadu will jointly celebrate the St. Anthony’s festival there. Despite the bonhomie atmosphere during the festival season, the small island wedged between Rameshwaram and the Delft island will continue to be a bone of contention between the two countries until the fisheries dispute is amicably resolved.

Last Updated on Friday, 03 February 2017 09:04

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Time for next Generation Rejuvenation of State Owned Assets


The history of State-Owned-Enterprises (SOEs) goes back to British colonial rule. Even after the Independence, ownership and management of commercial enterprises by the state were, justified by the parties identified with socialist ideology. State involvement in businesses increased due to regimes which gained power on a populist agenda. This trend was reinforced by a wave of thinking which advocated insulating developing countries from the vagaries of an international economic system which was dominated by advanced countries and their MNCs. These statist economic policies steadily grew and gathered further momentum in the 1970s when government policy, in the name of socialist or progressive reforms, sought to gain control of the “commanding heights of the economy”. However, Sri Lanka’s production /distribution of goods and provision of certain services, including mass transportation, was rolled back after the election of the J R Jayawardena government in 1977. Successive governments, up until 2005, privatised a considerable number of SOEs. Since then, however, the process has come to a halt. As a result, SOEs still account for a significant share of the economy and their losses and inefficiencies substantially contribute to the retardation of growth and development of the country.

Last Updated on Thursday, 15 October 2015 10:42

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Economic Situation Analysis and need for Urgent Policy Actions

To: H.E. the President                  From: Pathfinder Foundation

      Hon. Prime Minister


The Pathfinder Foundation (PF) at the outset wishes to emphasise the need for the government (the President, the Prime Minister, his Cabinet as well as heads of institutions dealing with key economic sectors) to operate in a well-coordinated and consistent manner. The new government, which, has committed to operate in a consensual spirit (sammuthi vaadi), needs to speak with one voice on necessary and urgent economic reforms. There have been some discordant and inconsistent voices which are a cause for concern. From the beginning, the new leadership needs to send consistent messages to business, especially local and foreign investors.

The new government is expected to begin functioning with the swearing-in of the Cabinet on 4th September. It will have to hit the ground running as there are a number of major issues which require urgent attention. These include important issues, such as responding to the UNHRC Report and Constitutional Reform. However, it is arguable that the most difficult and pressing challenges relate to the economy. These include containing short-term dangers and measures to promote long-term inclusive growth and development.

Last Updated on Thursday, 03 September 2015 09:57

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EASE OF DOING BUSINESS: Low Hanging Fruit for the New Regime

At the conclusion of the parliamentary election a new government has been formed under the Premiership of Hon. Ranil Wickremesinghe. It is important to emphasise the need for introducing immediate policy reforms to accelerate economic growth and development. The new government’s manifesto sets out a major reform program. In this regard, the Pathfinder Foundation (PF) has frequently highlighted the need for macro-economic policy adjustments as a pre-condition for sustained growth. While such stabilization is necessary to create a conducive growth framework, priority should be attached to implementing programs which bring about an attractive investment climate as quickly as possible. This is particularly urgent as the current set of domestic and international circumstances make it difficult to stimulate the lagging growth rate through macroeconomic policy adjustments.

Last Updated on Monday, 24 August 2015 15:03

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Politics is Dominating Economics: A recipe for a hard-landing

Sri Lanka is once again allowing politics to suppress and postpone urgently needed economic policy reforms. Since independence, time and again political opportunism and short-term political expediency have undermined sound economic policy-making. Politicians have been able to get away with this partly due to the low level of economic awareness among the population. While Sri Lankans are knowledgeable and engaged on political issues, their interest in economic issues is governed by an entitlement culture, which has been fostered by politicians from all parties.

Last Updated on Thursday, 18 June 2015 10:57

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Don’t take your Eyes off the Ball and Endanger the Economy

The current government has attached high priority to the constitutional amendments, electoral reform and reconciliation. These are undoubtedly extremely important national issues which need to be addressed. However, it is important not to lose sight of the imperatives for urgent economic reform. The Pathfinder Foundation (PF) has constantly argued for the need to stabilize the economy through fiscal consolidation and to increase productivity/competitiveness through structural reforms.

It is unrealistic to expect major economic reforms just before the general elections. However, the authorities need to be vigilant about emerging macroeconomic pressures and the need to have a clear plan for structural reforms going forward. The following challenges require attention.

Last Updated on Thursday, 09 April 2015 11:05

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Enhancing the benefits from engagement with India CEPA: An opportunity to be grasped 2015

The Pathfinder Foundation (PF) since its inception in 2006 has been in the forefront in advocating closer and much more liberal trade and investment relations with an expanding Indian market. In this connection, the Foundation has commissioned several studies on opportunities arising from deepening of the existing FTA with India leading to a Comprehensive Economic Partnership Agreement (CEPA).

In order to realise the full benefits of the economic relations between any two countries the PF believes that barriers (tariff and non-tariff) must be removed in trade in goods and services. Since the beginning of the PF’s advocacy program the political landscapes of both India and Sri Lanka have changed considerably. Notwithstanding these changes it is heartening that the new Indian leader, Prime Minister Modi, has come forward emphasising the mutual benefits of signing of a CEPA between the two countries.

 

Prime Minister Modi made some important observations at the event for the business community organised by the Ceylon Chamber of Commerce (CCC). These comments provide important insights into how Sri Lanka can increase the economic benefits of increasing its engagement with India.

Last Updated on Thursday, 19 March 2015 13:40

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An Opportunity to Modi-fy the Visit

 

Mr. Modi’s visit to Sri Lanka, the first by an Indian Prime Minister in 28 years, presents an opportunity to examine the ways and means of strengthening Indo – Lanka economic relations to boost the prosperity of this country. The path of Indo – Lankan bilateral relations will have a significant influence on Sri Lanka’s ability to realise its full economic potential. Mr. Modi’s re-setting of India’s relations with its neighbours offers an opportunity which needs to be grasped. There are a number of areas where his visit can serve to advance the agenda.

Last Updated on Friday, 13 March 2015 09:36

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IMF, World Bank and other Donor Support: Should not be a pretext for avoiding economic reform

The IMF tends to be the refuge of countries that have mismanaged their economic affairs. In this context, it is important to recall that Sri Lanka has had to obtain balance of payments support from the IMF on a number of occasions. Each time, the causes have had more to do with domestic policy weakness rather than external shocks. On previous occasions, IMF support, combined with the assistance of the donor community, has enabled Sri Lanka to get over its problems without undertaking the necessary economic reforms, particularly in relation to the budget and to structural weaknesses related to low productivity and competitiveness. It is important that this should not happen yet again. It is the responsibility of both the Sri Lankan authorities and multilateral institutions to ensure that the country embarks upon a medium-term program of reforms which increases the growth potential of the economy and generates higher value employment. Some critics allege that the Fund and the Bank apply lenient conditionality when new governments of their liking are in power. Nevertheless as final outcomes of direct or indirect incentivising of the adoption of bad economic policies and neglecting fundamental economic reforms, countries have been trapped into vicious cycles of stop-go policies.

Last Updated on Tuesday, 03 March 2015 14:46

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Indo – Lanka Relations: Going forward by touching base with the past

President Sirisena’s meeting with Prime Minister Modi, in Delhi, this week offers an opportunity to reset bilateral relations to achieve the declared goal of ‘irreversible excellence’. This important visit affords an opportunity to look back at the Joint Statement which was issued after Prime Minister Ranil Wickramasinghe’s discussion with the then Prime Minister of India, Atal Bihari Vajpayee, in October 2003. Many of the elements of that Joint Statement are relevant even today. 

Last Updated on Tuesday, 17 February 2015 19:53

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Improving Doing Business Environment: A must for sustainable Good Governance-2015

Sri Lanka’s ranking in the World Bank’s Doing Business Index (DBI) 2015 has improved to 99 (out of 189 countries) from 105 last year. While this seems a positive development, there are certainly no grounds for complacency. The country’s ranking has been oscillating in recent years.  In addition, the improvement attained in the latest ranking is based on better performance on only two of the ten indicators contained in the DBI.

Last Updated on Tuesday, 17 February 2015 21:11

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