Sri Lanka’s complexed political environment could delay important reform implementation in competitiveness and governance, the World Bank (WB) in a report released on Sunday (8) warned.
Nonetheless, the island’s fiscal deficit is expected to fall by 0.2 percentage points to 5.2 per cent of GDP this year (2017), from 5.4 per cent of GDP experienced last year, supported by the implementation of revenue measures, the WB said.
And the economy is expected to marginally grow by 0.2 percentage points to 4.6 per cent of GDP this year, compared to a 4.4 per cent GDP growth rate experienced last year.
However, the island faces several challenges that increasingly put its future economic growth and stability at risk, the Bank warned. The increasing occurrence and impact of natural disasters could have an adverse impact on growth, the fiscal consolidation path, the trade balance and poverty reduction, it said.
They must be addressed through determined policy actions by staying on the fiscal consolidation path by broadening and simplifying the tax base and aligning spending with priorities such as a change to a private investment-tradeable sector-led growth model by improving trade, investment, innovation and business environment.
Improve governance and accountability by implementing the Right to Information Act for citizens, engage and improve State-owned enterprises (SOEs), reduce vulnerability and risks in the economy by dealing proactively with the maturity of US$ 2 billion worth of sovereign bonds in 2019 and similar such maturities thereafter and mitigating the impact of reforms on the poor and vulnerable, it said