Sri Lanka warned against ‘subsidy culture’

Mar 27, 2012 (LBO) – A top Japanese economist has warned Sri Lanka of continuing a ‘subsidy culture’ that could retard growth and also of letting slip opportunities for closer trade ties with neighbouring India. Shinji Asanuma, a professor in the school of international and public policy, Hitotsubashi University said Sri Lanka’s economic growth provided a stark contrast with Malaysia although both had similarities when they gained independence from colonial rule.

“You have quite a strong subsidy culture in your fiscal management,” he told a forum to mark 60 years of diplomatic ties between Japan and Sri Lanka organised by the central bank.

“Fiscal policy is a very crucial nexus between macro- and micro-economic policy. When I see you continuing a subsidy culture, I get a bit worried.”

Asanuma said Sri Lanka should ask whether it has a political leadership committed to growth rather than redistribution and of providing direction and support to technocrats.

“Do they (political leaders) have a long-term strategy now peace has broken out? Or are they engaged in short-term populism?,” he asked referring to the end of the 30-year ethnic war in 2009.

Asanuma also asked whether