Sri Lanka can avoid foreign pressure by putting economy right: think tank

Oct 09, 2009(LBO) – Sri Lankan can avoid foreign pressure tied to aid or trade concessions by putting its own economic house in order through better management, a think tank has said.

Such reforms will sustain higher growth over the longer term, the IPS said.

“The immediate task is to restore macroeconomic stability,” it said.

A reconstruction related economic boom with the end of the war can lift Sri Lanka’s economic growth in the medium term.

“But if it is not accompanied by efforts to improve overall efficiency in the economy – that retains the confidence of investors – the boom can be relatively short-lived, and leave behind macroeconomic instability in its wake,” the report said. “Sri Lanka has learnt first hand over the last few years that its traditional sources of donor assistance increasingly comes tied to conditions that go beyond the scope of economic assessments,” the Institute of Policy Studies said.

“The questionable attempts to delay the granting of the IMF facility, for instance, is a reminder that the country should resolve to manage its economy without falling into a financial trap of being forced to seek external assistance.”

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