World Bank Chief Economist for South Asia Hans Timmer says it is imperative for Sri Lanka to maximize debt service, with least resources possible.
Timmer said so at a webinar organised by the Central Bank of Sri Lanka recently under the theme, ‘Impact of the Pandemic on South Asian Economies and How Digitisation And Services Led Growth Can Help Sri Lanka to Rebound’.
“Sri Lanka at the moment is in a difficult situation due to accumulation of problems. Sri Lanka’s economy has been hard hit during the pandemic, as a result there are several problems that the government has to address; and that’s not easy. And probably the biggest problem is the high debt to GDP ratio. Hence the problem is to make sure that debt service is easily possible in the future,” he said.
“Moreover the government is taking immediate actions such as imposing import bans for price control and utilizing reserves for debt service.” When the government is facing an extraordinary situation Timmer said it is essential to adopt extraordinary policies to address those issues.”
“Nevertheless those policies are only for the short run and they won’t last.” Ultimately for a long- term sustainable growth strategy Timmer noted that Sri Lanka needs to increase GDP growth perhaps beyond the 4 % growth on the cards now.”
“This requires serious consideration of what growth potential Sri Lanka would be in the decade ahead. This is incredibly important because I think you can only overcome current problems created by debt when you unleash more growth potential,” Timmer said.