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-IPS Economist
Aid management in Sri Lanka is vital if the country needs to take advantage of donor commitments in the future, said the Institute of Policy Studies (IPS) Economist Dr. Dushni Weerakoon.

While pointing out that with a better political climate and further liberalisation planned for year 2003 and 2004, the climate for investment in Sri Lanka will improve, Dr. Weerakoon said that the country has a very law rate of aid utilisation of around 17 percent and which needs to be improved significantly if the country is to take advantage of donor commitments in the future.

At the launch of the annual publication based on the Economic Survey conducted by the Economic and Social Commission for Asia and the Pacific (ESCAP) she stressed that for Sri Lanka, on the plus side, if the numbers we hear being discussed in aid assistance materialises, will certainly provide a kick start to the economy.

“But there will need to be careful management to ensure that inflows of aid do not destabilise macroeconomic performance,” she said.

Dr. Weerakoon said that the government will have to ensure transparency and accountability of aid disbursement.

A significant inflow of aid will certainly help to stimulate the economy and create employment opportunities.

But it will not solve all Sri Lanka’s economic problems.

Political stability and policy consistency together with improved governance will be critical for the longer term development of the country.

Only then will investors, both local and foreign, have confidence in the Sri Lankan economy to play a complementary role, she said.

On the political economy side, there needs to be broadbased growth in all regions of the country. For the government, the difficult part of arriving at a negotiated settlement that is accepted by the country is still very much ahead of them.

That process will be more difficult if there are little visible signs of the so-called dividends from peace in terms of employment and improved incomes.

Economic growth has to be sustained, it has to be broadbased, with an equitable distribution across all segments of society for the people to fall behind the government in seeking an acceptable solution to the ethnic conflict.

-(CNK)

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