Prof. Razeen Sally delivered a public lecture at the Advocata Institute, last week on Sri Lanka's future. This is the third edition on Advocata's series of public lectures. The full lecture is now online. The event was done in partnership with the Echelon Magazine.
Sri Lanka had windows of opportunity to change direction in the past, but had 'missed the bus' several times in its post-independence history according to many commentators.
Sally recalled something that is said often about Brazil: "Brazil is the country of the future, it always was and it always will be.
"There is that golden potential out there, but it is never achieved," Sally said.
"Of course Sri Lanka never misses an opportunity to miss an opportunity. I hope that opportunity has not been squandered. It is late in the day, but it is still there."
Sri Lanka's economy did not have enough competition with 'commanding heights' of the economy controlled by oligarchs.
The country was in the grip entrenched political and economic interests without any new blood to bring change and competition.
"Sri Lankan economy has a competitiveness problem," Sally said. "It has a productivity problem," The way to raise productivity and to raise competitiveness is to have a stronger private sector.
"And also to have much more globalization of the Sri Lankan economy. More trade, more exports import as well as more foreign investments.
Doing business policies had to change. A combination of domestic and private sector investment was needed to transform the economy to have 6-8 percent growth.
Reforms were needed to bring 3 to 5 billion US dollars of foreign investment.
Sri Lanka needed simple and predictable tax policies.
"No more price controls, no more announcements of exchange controls."
A stable macro-economic policy that went beyond the IMF program, including tax reforms that were genuinely simpler and relatively low without sudden changes was needed. Institutional checks were needed including a genuinely independent central bank with better policies.