Renowned economist and Advisor to the Government of Sri Lanka, Dr. Shantha Devarajan, has outlined a comprehensive set of economic reforms that he believes are crucial for the country's recovery and progress. In an interview with the Sunday Times, Dr. Devarajan emphasized the importance of implementing these measures to address the economic challenges faced by Sri Lanka.
Dr. Devarajan, who serves as the Professor of the Practice of International Development at Georgetown University, Washington, brings a wealth of expertise to the table. Additionally, he lectures at the Walsh School of Foreign Service at the university, further enriching his insights into international economic matters.
The proposed economic measures include:
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Restructuring State-Owned Enterprises: Implementing reforms to improve the efficiency and financial sustainability of state-owned enterprises.
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Taxing Foreign Investment: Instead of granting tax holidays, advocating for a fair and balanced tax framework for foreign investments.
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Targeted Social Transfers: Reforming social transfer programs to ensure that they are directed towards those most in need, particularly the poor.
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Agricultural Policy Reforms: Revamping agricultural policies, such as the Paddy Lands Act, to enable farmers to cultivate more profitable crops.
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Targeted Cash Transfers: Replacing regressive subsidies with direct cash transfers to benefit the most vulnerable sections of society.
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Trade Liberalization: Reducing trade restrictions and enhancing trade logistics to empower Sri Lankan entrepreneurs to compete effectively in the global marketplace.
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Independent Central Bank: Establishing an independent central bank with the authority to resist fiscal demands from the finance ministry to finance deficits through money printing.
Dr. Devarajan emphasized that while these measures are not economically challenging and are based on standard economic reasoning, they face political hurdles. Certain vested interests, which have historically benefited from distortionary policies, might resist these reforms. However, he highlighted that the Aragalaya protest movement demonstrated the people's growing intolerance towards political capture, making it more likely for these reforms to be implemented.
