Against the background of a progressive improvement in the macroeconomic environment led by better fiscal policy outcomes, Sri Lanka needs to urgently address structural constraints through a process of reforms if the country is to raise its medium term growth prospects, says the Institute of Policy Studies (IPS).
In its annual flagship report, Sri Lanka: State of the Economy 2017, the nation’s inadequate human resource pool of professional and technical skills is identified as a primary constraint on growth. The report notes that Sri Lanka’s labour market efficiency has to be improved by tackling two of its biggest limitations – stringent employment protection laws and low female labour force participation.
The report, which will be launched on 10 October at the Dr. Saman Kelegama Auditorium, focuses on ‘Demographics, Labour Markets and Growth’ as its main theme.
Other areas of policy priority to revive Sri Lanka’s medium term growth from the current rate of 4.0-4.5 per cent highlighted in the report include education, health and human development, agriculture and land resource management, tourism, migration, and climate adaption and disaster resilience.
As the report aptly points out, the implementation of reforms will depend on persuading government coalition partners that economic reform initiatives are designed with sufficient reference to the concerns of ordinary voters. If political indecision makes a reform effort less achievable, the evidence will begin to confirm that the probability of a sustained upswing for the Sri Lankan economy is dim. In view of the daunting medium-term debt financing challenges that Sri Lanka must prepare to meet, the country cannot afford to lose this opportunity to put its economic house in order.