Masterclass | Total Factor Productivity | Ep 1 | Advocata Academy | Dr Sarath Rajapatirana

Welcome to the Advocata Academy! We are launching the Masterclass series, conducted by Dr. Sarath Rajapatirana, Academic Chair of Advocata Institute. 

The first episode is on “Total Factor Productivity”, which focuses on the role productivity plays in the economic growth of a country. This episode also highlights some of the reasons why Sri Lanka’s productivity levels are low and how this can be improved.

Dr. Rajapatirana has worked across the world with leading international organizations such as the World Bank, World Trade Organisation, ITC in Geneva, and the International Cooperative Alliance in Latin America. He is a former economic advisor to the President of Sri Lanka and has advised governments and policymakers around the world. 

The second episode is on “Introduction to International Trade”

The Third episode is on “Industrial Policy’

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Masterclass | Introduction to International Trade | Ep 2 | Advocata Academy | Dr Sarath Rajapatirana

Welcome to the Advocata Academy! We are launching the Masterclass series, conducted by Dr. Sarath Rajapatirana, Academic Chair of Advocata Institute. 

This is the second masterclass on “Introduction to International Trade” which highlights the important role that international trade has played in the development of many countries around the world. The masterclass also explains import substitution and describes Sri Lanka’s experience with import substitution and how it affects efficiency and productivity. 

Dr. Rajapatirana has worked across the world with leading international organizations such as the World Bank, World Trade Organisation, ITC in Geneva, and the International Cooperative Alliance in Latin America. He is a former economic advisor to the President of Sri Lanka and has advised governments and policymakers around the world. 

The first episode is on “Total Factor Productivity”

The third episode is on “Industrial Policy”

Masterclass | Industrial Policy | Ep 3 | Advocata Academy |Dr Sarath Rajapatirana

Welcome to the Advocata Academy! We are launching the Masterclass series, conducted by Dr. Sarath Rajapatirana, Academic Chair of Advocata Institute. 

This is the third masterclass discusses on “Industrial Policy” and the difference between industrial policy and policy toward industry within the context of Sri Lanka's policies over time and how this can affect economic growth. 

Dr. Rajapatirana has worked across the world with leading international organizations such as the World Bank, World Trade Organisation, ITC in Geneva, and the International Cooperative Alliance in Latin America. He is a former economic advisor to the President of Sri Lanka and has advised governments and policymakers around the world. 

The first episode is on “Total Factor Productivity”

The second episode is on “Industrial Policy”

Time to bring SOE privatisation to the policy table

Originally appeared on Daily FT, Ada derana Biz , Sunday Observer and The Sunday Island

Privatisation is the need of the hour.

• Sri Lanka is already in one of the worst economic crises in its history. Experts warn that deep economic reforms are essential. 

• Reforming SOE's can  curb further losses,  which add to the fiscal deficit. 

• The  Cumulative losses of the 55 SOEs from 2006-2020 is a staggering 1.2 trillion.  

• Disposing of State Owned Enterprises which are a burden on the public finances, is the crucial need of the hour. 

• Immediate privatisation of  large  State Owned Enterprises,  will  build international investor confidence. 

“Big, ponderous, Government enterprises are not responsive to our needs. And because they’re not responsive, you will go home today and you will have a blackout of one hour, because they’re load shedding during peak hours,” said Prof. Rohan Samarajiva, a veteran policy expert and an advisor of the Advocata Institute.

He made these comments at Advocata’s press briefing, organised to highlight the urgency of carrying out reforms to State Owned Enterprises (SOE). “The basic issue is that we, in this country, are suffering from a twin deficit. We need to get started on addressing the core problem,” further stressed Prof. Rohan Samarajiva.

According to Prof. Samarajiva, privatising a globally visible, yet loss-making SOE, such as SriLankan Airlines is the best solution to create confidence among investors that Sri Lanka is serious about reforms.

Sri Lanka’s SOEs are a serious burden on public finances. With the economic crisis reaching a tipping point, it is becoming increasingly impossible to keep these loss-making enterprises afloat. The continuation to do so, at the expense of the taxpayer, can have serious consequences to the economic trajectory of the nation.

Advocata Institute’s research team has identified that the cumulative losses of the 55 SOEs from 2006-2020 is a staggering Rs. 1.2 trillion. The combined loss per day of the Ceylon Petroleum Corporation, the Ceylon Electricity Board, SriLankan Airlines, Sathosa and the National Water Supply and Drainage Board is approximately Rs. 384,479,189, according to data for the year 2019.

This is at the backdrop where the country is wading through a serious debt crisis with questions surrounding the ability to meet forthcoming debt obligations. The briefing brought together a panel of industry experts who raised alarm bells on why Sri Lanka cannot afford to be complacent about SOE reforms anymore.

Prof. Rohan Samarajiva further explained the seriousness of this issue along with how privatisation can achieve positive outcomes for the country. “In 1997, Sri Lanka Telecom was making losses and providing bad services. Today, after privatisation, it is providing us with good services and employment and double of what they were earning. It is also providing the Government with a dividend which generated billions to the Government.” He highlighted that the country has no other alternative to prevent the haemorrhaging losses of SOE apart from privatisation.

“Privatisation is not a one-size-fits-all model. It is different in different countries and sectors, as seen in the telecommunication industry in Sri Lanka. With a good regulator we can have competition, leading to greater efficiency and making technology accessible to the common public,” commented Advisor to the Advocata Institute Anarkali Moonesinghe.

She further elaborated that possible avenues for privatisation that can be considered include the listing of SOEs in the stock exchange. According to Moonesinghe: “Our stock market could use large capital companies that are owned by the Government today.

“It not only gives people ownership but also broadens ownership by giving the average person an opportunity to become a direct stakeholder to these enterprises. This can be a better option than attaching the person through taxpayer money or having your EPF/ETF being taken into these enterprises,” thereby describing the merits of listing.

Advocata Academic Chair Dr. Sarath Rajaptirana said that the present crisis makes two choices available to the country, which is “reform or perish”. He highlighted the urgency of implementing structural reforms.

He further commented that the key issue with SOEs lies in productivity. “For over 30 years, Sri Lanka’s total factor productivity was less than 1%. This is in severe contrast to countries such as South Korea and Vietnam, where a jump in productivity is experienced today which we were never able to maintain. If you want permanent change in the GDP rate, you need to have productivity increase,” said Dr. Rajaptirana.

The recording of the media event can be found at advocata.org.

"Urgency of State Owned Enterprise Reforms"

The Advocata Institute hosted a press brief on the '"Urgency of State Owned Enterprise Reforms" with Advocata’s Academic Chair Dr. Sarath Rajapatirana, Advocata’s Advisors Professor Rohan Samarajiva and Ms. Anarkali Moonesinghe on December 09th at 2.00PM.

The event commenced with a 10-min presentation, analysing the performance of key State Owned Enterprises. Followed by statements made by Dr. Sarath Rajapatirana, Professor Rohan Samarajiva and Anarkali Moonesinghe on the need for SOE reforms, before opening the floor for a question and answer session with journalists and media.

The event was moderated by K D Vimanga and Sathya Karunarathne.

The presentation by KD Vimanga on "Urgency of State Owned Enterprise Reforms" can be accessed below.

Urgency of State Owned Enterprise Reforms Presentation

Watch the discussion on Advocata Institutes YouTube channel. 

It’s time for urgent economic reforms

Originally appeared on Daily FT, The Morning, Ada derana Biz , Lanka News Web

It’s time for urgent economic reforms 

• Sri Lanka faces one of the worst economic crises in its history.

• COVID-19 pandemic only exacerbated the existing weaknesses in the economy, the roots lie in unsustainable debt, fiscal indiscipline and low rates of growth. 

• To get out of the crisis comprehensive and deep economics reforms that are structured to a clear timeline is needed, says top Economists. 

Sri Lanka should carry out urgent and credible economic reforms to create a stable environment to emerge from one of the worst economic crises in its history triggered by unsustainable spending, debt and stifling controls, a panel of economists said.

“There is no doubt that Sri Lanka is facing a severe economic crisis. Macroeconomic stabilization is the need of the hour ” said Dr. Roshan Perera,  Senior Research Fellow at Advocata Institute, Colombo-based think tank .  She made these comments  at an online event to launch Advocate's latest publication, ‘A Framework for Economic Recovery’.  She provided a breakdown of the economic challenges before the economy. In her presentation, Dr. Perera stressed the need for immediate reforms to tackle unsustainable public debt. 

The report identifies that the macro-economic instability lies in the failure of the state to implement deep structural reforms to the economy for nearly twenty years. The COVID-19 pandemic has exposed Sri Lanka’s fundamental weaknesses that have plagued the economy for a long period of time. The event included comments from experts on Advocata Institute’s board of advisors. 

“None of these policy prescriptions are new. We have talked about them for years. But it's a matter of political will to do them. We have hit a brick wall and we need to come together as a whole and take responsibility,” Advocata’s Academic Chair Dr. Sarath Rajapatirana said.

“We need to think of the external balance not only for today but for tomorrow. We have to grow our way out of debt as opposed to starving ourselves out of debt” said Dr. Nishan de Mel, Executive Director of Verite Research and an advisor to Advocata.  Highlighting the importance of getting the balance right on growth and austerity in dealing with the crisis. 

Prof. Rohan Samarajiva, Chairperson, LIRNEASIA and an advisor of the Advocata, explained the urgency of deep structural reforms by describing the present economic challenge. “We are in a war-like situation”. He said, stressing that what we need is a common minimum program of reform agreed by many.  “Identify the key sectors - utilities and trade which would play a huge role in the economy to build confidence. We would have to bring back parts of the 19th amendment”. He said, highlighting the importance of political reform facilitating better economic outcomes. 

Research shows that Sri Lanka needs structural readjustment. “ Sri Lanka needs some bitter policy doses at this level to get the economy back on track. We haven’t touched policy reforms for over 20 years, for which we are paying now. And we are looking for short term solutions for a long term problem”, said Professor Sirimal Abeyrathne, Senior Professor of Economics, University of Colombo.

Advocata’s report,  A Framework for Economic Recovery, consists of a series of urgent macroeconomic reforms to address the present crisis. This includes the implementation of a macroeconomic stabilization program, prioritising fiscal consolidation and debt restructuring,  public finance management and public sector reforms.  Other reforms include state-owned enterprise reform, enhancing monetary policy effectiveness and maintaining a flexible exchange rate. 

Trade reform to strengthen exchange rate sustainability.  Other structural reforms such as land reform, improving ease of doing business and bridging infrastructure gaps to boost productivity and achieve growth. Advocata Chairs, Mr. Murtaza Jafferjee, Dr Sarath Rajapatirana, Mr. Dhananath Fernando, COO Advocata Institute and key advisors, Prof. Suri Ratnapala,  Professor of Law, University of Queensland, Anarkali Moonesinghe, Board Member Lankan Angel Network, Dr. Sujata Gamage,  Senior Research Fellow, LIRNEASIA, Dr. Nishan De Mel, Executive Director at Verité Research, Prof.Prema-Chandra Athokorala, Emeritus Professor of Economics, ANU, spoke extensively on each of these areas of reform, while expressing concern over the present economic crisis.  

Media coverage on " A Framework for Economic Recovery"

Sri Lanka’s Possibility of Debt Default is Real

Sri Lanka’s possibility of debt default is real, the Colombo-based public policy think tank Advocata Institute said, yesterday. Launching its latest publication, “A framework for Economic Recovery”, Advocata’s Senior Research fellow Dr. Roshan Perera said that the country is facing one of the worst macroeconomic crises in its history and with rapidly depleting foreign reserves position and the Government’s limited options to finance its foreign debt service obligations will adversely affect the nation’s debt sustainability. Therefore, they urged the policy makers to identify, prevent and address macroeconomic imbalances that could adversely affect the economic stability of the country. 

Sri Lanka’s economy has been characterised by twin deficits, i.e., it has run both a fiscal deficit and a deficit in the external current account. This implies that the country has been spending and consuming more than it earns and produces. 

“Priority should be given to correcting the twin deficits, stimulating economic growth and improving competitiveness while building buffers to strengthen the resilience of the economy to shocks”, it stated. According to their observations, fiscal dominance has been the root cause for macroeconomic instability adversely affecting growth, inflation, interest rates and the exchange rate. Fiscal indiscipline has also significantly narrowed the space for monetary policy.

 “Weak public finance management arising from inadequate revenue collection and uncontrolled expenditure has meant the Government has continued to run budget deficits, relying on borrowings to finance the shortfall. This has led to high and unsustainable debt levels,” the report stated. According to the Advocata, completing the Extended Fund Facility (EFF) programme entered into with the International Monetary Fund (IMF) in 2016 would be imperative to restoring macroeconomic stability.

Read the full article here

Top panel sounds alarm, insists it’s time for urgent economic reforms

Sri Lanka should carry out urgent and credible economic reforms to create a stable environment to emerge from one of the worst economic crises in its history triggered by unsustainable spending, debt and stifling controls, a panel of economists said.

“There is no doubt that Sri Lanka is facing a severe economic crisis. Macroeconomic stabilisation is the need of the hour,” said Advocata Institute Senior Research Fellow Dr. Roshan Perera, addressing the online event to launch Advocata’s latest publication, ‘A Framework for Economic Recovery’. Advocata is a Colombo-based think tank.

Providing a breakdown of the economic challenges before the economy, in her presentation Dr. Perera stressed on the need for immediate reforms to tackle unsustainable public debt.

The report identifies that the macro-economic instability lies in the failure of the State to implement deep structural economic reforms for nearly 20 years. The COVID-19 pandemic has exposed fundamental weaknesses that have plagued Sri Lanka’s economy for a long period of time.

The event included comments from experts on Advocata Institute’s Board of Advisors.

“None of these policy prescriptions are new. We have talked about them for years, but it's a matter of political will to implement them. We have hit a brick wall and we need to come together as a whole and take responsibility,” Advocata’s Academic Chair Dr. Sarath Rajapatirana said.

Read the full article here

Economists call for an extensive review of the tax system to improve revenue mobilisation

An improvement in Sri Lanka’s revenue mobilisation effort requires an urgent and extensive review of the tax system, to ensure the government can meet its expenditure commitments, while the country is in the midst of one of the worst macroeconomic crises in its history, economists said.

Pointing out that the national economy is heading towards a “precipice”, Colombo-based economic think-tank Advocata Institute asserted in its latest publication titled ‘A Framework for National Recovery,’ that the “serious erosion” in government revenue and its implications for macroeconomic stability call for a comprehensive review of the tax system.

According to the report, some of the areas that require attention include; reducing the tax threshold and widening the tax base, reintroducing the PAYE and WHT, reducing the excessive reliance on indirect tax as it is currently at about 80 percent, rationalising tax incentives, introducing new taxes, and strengthening the tax administration.

Currently, the income tax threshold in Sri Lanka is four times its per capita GDP, and also higher than the tax threshold in countries with per capita incomes that are several times that are of the island nation. The report recommends bringing down the threshold while also adopting measures to bring in employees into the formal sector so the tax base is widened.

Read the full article here

Key Ways to Boost Revenue

Making tax administration technology driven, instituting land tax and removing tax exemptions are among three ways that Sri Lanka can boost revenue, Advocata Institute, a think tank, in a recent report, said. The think tank in a report titled ‘A Framework for Economic recovery’ dated July said that Government of Sri Lanka (GoSL) revenue which was 21 per cent of GDP in 1990 was averaging 15 per cent during the period 2005-2009. ‘This has plummeted even further to around eight per cent by 2020,’ it added. The key revenue earner for GoSL is taxation. ‘Further, around 80 per cent of tax revenue collected in 2020 was from indirect taxes, increasing the regressivity of the tax system, with lower income earners bearing a higher burden of taxation,’ the report warned. 

There is also a significant concentration of taxes collected from a few commodities such as tobacco, liquor, motor vehicles, and food and beverages, said Advocata. This also increases the regressivity of the tax system as some of these are considered essential items and form a higher proportion of the consumption basket of low income earners, the think tank further warned. In order to broaden the tax base, new taxes such as land taxes should be introduced, the think tank advocated. Meanwhile, despite commissions set up to review the tax system, as well as donor funded programmes initiated to address the weaknesses in tax administration there, has been very little progress on this front, said Advocata.

Read the full article

Look at options to meet debt obligations - Advocata Report

An independent policy think tank launching its latest publication; “A Framework for Economic Recovery” in Colombo last week called on policymakers to pay serious attention to consider all  options available to meet the country’s debt obligations which is in the tune of around US $25 billion in foreign debt between now and 2026.  The report by the Advocata Institute presents a framework for macroeconomic stabilisation and emphasises the need for urgent economic reforms. The panel comprising well-known economists and heads of think tanks urged policymakers to look at all options to meet the obligations as there could be a possibility of defaulting on debt obligations which would reflect badly on the country.

The urgency to seek ways and means to meet the obligations or restructure debt was underpinned due to the fast depleting  foreign reserves estimated at US $ 2.8 billion as at the end  July this year, foreign inflows affected by the pandemic and negative investor sentiments. 

The author of the report and Senior Research fellow of Advocata, Dr. Roshan Perera said debt restructuring is not an easy task and added that the possibility of resuming a program with the International Monetary Fund should be looked into.

Read the full article

Defaulting debt repayment can have severe repercussions

Sri Lanka has been running deficits over the decades following the post- independence period when the fiscal deficit was over 10 percent of the GDP.

In 2020 it exceeded 10 percent of the GDP and is likely to deteriorate in 2021. “If the government continues to consume more than it earns or when the domestic private savings are not sufficient to finance the economy it can reflect in our current account deficit. In the absence of domestic saving, the country has to depend on foreign savings to bridge the current deficit,” said Dr. Roshan Perera, Senior Research Fellow of the Advocata Institute at the launch of a publication on “Framework of Sri Lanka’s Economic Recovery at a webinar held this week.

She said in the absence of FDIs coming into the country Sri Lanka had to borrow from abroad. In the 2000 period funds came mostly from bilateral and multilateral sources and concessional financing. But these funds ceased when the country’s rating was elevated to a middle- income country status. When Sri Lanka embarked on infrastructure projects in later years, it had to borrow from private lending agencies and international sovereign bonds with shorter grace periods with higher interest rates. This had an impact on debt service payment which has ballooned over the years. With low foreign inflows coupled with the COVID-19 pandemic, debt servicing has been a challenge, she added.

Read full article

Poor economic performance linked to poor economic governance: Experts

Sri Lanka’s poor performance across multiple areas in the economy is linked to the economic governance of the country weakening over the years, despite an ever expanding public sector, according to some leading economists and practitioners of law in the country.

As having the right institutional strength is essential and imperative for an economy to prosper in the medium to long term, top economists and legal practitioners this week attributed the repeated issues faced by the country to the grim economic governance, which remains unaddressed and unacknowledged.

According to Emeritus Professor of Public Law Suri Ratnapala, a starting point for Sri Lanka in this regard would be to initiate the process of rebuilding institutions of the state, judiciary, enforcement agencies and auxiliary organisations that support the legal system.

Read full article

Addressing Sri Lanka’s macroeconomic imbalances 

We are 18 months into the pandemic but the policymakers are yet to announce a proper programme to save Sri Lanka from the economic crisis it is currently facing now. Although many policymakers blame the Covid-19 pandemic for the current economic situation, by now many have realised the pandemic just unveiled the curtain behind which all the troubles of Sri Lanka’s economic system were kept hidden. 

Colombo-based think tank Advocata Institute, on 14 September unveiled a Framework it has prepared for Sri Lanka’s Economic Recovery. The report was prepared by Advocata Institute Senior Research Fellow and Central Bank of Sri Lanka (CBSL) former employee Dr. Roshan Perera. 

Presenting the report, she said that for consumers and producers to be able to make long-term decisions there needs to be stability in the economy and highlighted what is really meant by stability. 

Read full article

Resolving the economic crisis and facing challenges with reforms

Dr. Rajapatirana pointed out that Sri Lanka’s trade as a percentage of GDP has been low compared to Thailand and Vietnam because we have not exploited our opportunity to trade as we have high tariff rates compared to other developing countries.

Furthermore, although tariffs play a role in protecting domestic infant industries, if tariffs are too high, they can become anti-competitive. Dr. Rajapatirana observed that recent import restrictions, such as banning a wide range of consumer goods from April 2020, have further worsened Sri Lanka’s growth potential and put Sri Lanka at odds with WTO rules.

Read full article

Sri Lanka cronies profiting from import controls, SMEs battered: Samarajiva

Sri Lanka’s so-called cronies who benefit from customers trapped under state controls are raking even more profits from current import controls, while smaller firms are getting wiped out, a policy specialist and liberator of poorer consumers said.

Many domestic businesses also needed inputs.

“Import controls are creating a lot of opportunities for permit holders and cronies to make money,” Rohan Samarajiva, founder of LirneAsia, a regional policy advisory group told a forum organized by Advocata Institute, a Colombo-based think tank.

Read full article

Is economic recovery possible?

“The economy should grow steadily and sustainably. It should have a sound financial system, be resilient to shocks with inflation under control,” said Dr. Roshan Perera, Senior Research Fellow of the Advocata Institute during a recent webinar on building a framework for economic recovery in Sri Lanka. Explaining that in the economical environment, there are internal and external imbalances to be found, she said internal imbalance consists of issues such as the government spending limitlessly, too much money in the economy and uncertainty. Whereas external balance means a combination of inflation and exchange rates that makes imports more attractive and exports uncompetitive. This includes abrupt changes in the exchange rates that call for financial assistance and in the extreme defaulting on payments to the rest of the world, she explained.

Read the full article

A Framework for Economic Recovery

The Advocata Institute launched its latest publication on "A Framework for Economic Recovery" on September 14 at 3.30 PM.

This report can be accessed below.

”A Framework for Economic Recovery” Report

The report authored by Advocata’s Senior Research fellow Dr. Roshan Perera and Advocata’s research team proposes key policy recommendations to overcome these challenges. The report presents a  framework for macroeconomic stabilization and emphasizes the need for urgent economic reforms.

The presentation by Dr. Roshan Perera on "A Framework for Economic Recovery" can be accessed below.

"A Framework for Economic Recovery" Presentation

The launch was virtually held with the attendance of the press and was live-streamed on Advocata Institutes social media channels.

Watch the live discussion on Advocata Institutes YouTube channel. 

Key speakers included; Advocata Academic Chair, Dr. Sarath Rajapatirana, Advocata Chair, Murtaza Jafferjee, Dhananath Fernando (COO Advocata Institute) and key advisors, Prof. Rohan Samarajiva ( Chairperson, LIRNEASIA), Prof. Suri Ratnapala ( Professor of Law, University of Queensland), Anarkali Moonesinghe ( Board Member Lankan Angel Network), Dr. Sujata Gamage, ( Senior Research Fellow, LIRNEASIA) and Prof.Prema-Chandra Athokorala (Emeritus Professor of Economics, ANU).

Media coverage on The Role of Trade in Economic Recovery in Sri Lanka

GSP Plus vital for SL to fight competition – EU Ambassador

After 2010 Sri Lanka’s exports to the European Union (EU) have increased by 60% but half of it is through the Generalised Scheme of Preferences (GSP) plus, stated EU Ambassador to Sri Lanka Denis Chaibi, speaking at a virtual conference organised by Colombo-based think-tank Advocata Institute.

Vietnam increased by 400% and Bangladesh by 150% during the period from 2010 to 2019, thus to stay ahead of competition, GSP plus is significant for Sri Lanka, stated Chaibi. Ambassador further noted that retaining GSP Plus would give a positive image for Sri Lanka that it is committed to human rights obligations. “The EU market is competitive as it is a superpower in terms of product quality standards.

For a Sri Lankan exporter to export to the EU would give the exporter recognition in any other market as the EU only accepts products with certain standards. Sri Lanka is already in a forex crisis. Increasing exports is a way out of the current crises. COVID-19 has created a resilient supply chain but without preferential access it is difficult for Sri Lanka to increase its exports to EU markets.

Read the full article here

SL’s economic recovery led by trade

The Covid-19 pandemic has revealed the real weaknesses Sri Lanka had in terms of its economy for the past four decades.

With the foreign exchange shortage worsening day by day, many fear that the country will go back to the pre-1977 era of ration cards to purchase essential food items, as the importation of such goods will be impossible in the near months.

Sri Lanka needs economic reforms that will decide the fate of the country in the next few decades to come, and many experts say that reforms should start with the country’s protectionism trade that has not really evolved over the years.

Productivity for growth

Speaking at a webinar organised by the Advocata institute, its Chair – Academic Programme Dr. Sarath Rajapathirana said that Sri Lanka has failed to make any substantial reform for the economy, particularly on trade-side reforms, for the last 20 years.

He said trade is very important as it exposes the country to competition and among other areas such as the fiscal side, the budget, and having a proper monetary policy that avoids inflation and contributes to a more stable exchange rate, trade too needs a lot of work.

“Our imports are three times the value of exports, so we have been continuing a trade deficit, which is also accompanied by a current account deficit. These have to be addressed when talking about trade reform; we have to have the macroeconomic support for it,” he said.

He said more than the aggregates of imports and exports, the encouragement to productivity from having open trade or non-restricted trade is more important.

“If you don’t have strong growth in productivity, we have to keep on increasing the factors of production. It is difficult because we need to have more savings and less consumption. So the best way to get it done is to really have a system in which our reforms are going to immediately affect the positive side of our productivity growth,” he noted.

Read the full article here

Increased int’l trade participation key to achieving economic recovery, says top economist

As the national economy continues to face new challenges from multiple angles and their implications are being very much felt by businesses and masses, Dr. Rajapatirana called for the government to start by having in place a more streamlined tariff structure.

“First get rid of para tariffs fast. And then look to introduce a single uniform tariff,” asserted Dr. Rajapatirana while addressing a webinar hosted by the Advocata Institute, this week.

For Sri Lanka to embark on any efforts that would assist in the recovery of the national economy, Dr. Rajapatirana stressed it is essential for the relevant authorities to acknowledge the importance of international trade when charting the path for progress. 

He pointed out that Sri Lanka needs to get away from its protectionist mindset and the way to get about it is to first look at lowering the existing tariff.

“The existing para tariff hurts our competitiveness. This is one of the fundamental things we need to do,” said Dr. Rajapatirana.

He added that the government must also explore the option of introducing a uniform tariff of about 15 percent, which can be reduced over a period of time.

Dr. Rajapatirana opined that by bringing about the suggested changes, Sri Lanka would be signalling to the world that it is serious in wanting to achieve economic progress. 

Dr. Rajapatirana also pointed out that the country has not made any substantial economic reforms, especially on the trade side, in the last 20 years or so.

As the country continues to grapple with the COVID-19 pandemic along with the rest of the world, Dr. Rajapatirana warned that neglecting the economy would only further delay the recovery process. 

“We cannot think of economic recovery without really starting trade reforms. We are in a good driving seat to undertake the reforms since the government has two-thirds majority. 

We need to have the macrocosmic reforms that come from the monetary policy and the fiscal policy. Without that you don’t have the sort of dynamic stability that is needed to put in place a good reform programme,” he said.

Read the full article

Sri Lanka international trade role in Advocata forum as monetary instability drive import controls

Colombo-based think tank Advocata Institute said it is hosting an online forum on ‘The Role of International Trade in Economic Recovery in Sri Lanka’, as the island is mired in the worst import controls since the 1970s after printing money.

Trade controls started during as money was printed to target an ‘output gap’ involving curbs on gold trading and vehicles and other items, escalated into full-scale import substitution, import bans and tightened from 2020.

Sri Lanka’s post-independent economic history is littered with administrations that tried to operate various economic plans without reforming a soft-pegged central bank with activist monetary policy.

Read the full article

Online Discussion: Deep Dive "The Role of Trade in Economic Recovery in Sri Lanka"

The second Advocata Deep Dive discussion on "The Role of Trade in Economic Recovery in Sri Lanka” in partnership with the European Union in Sri Lanka and the Maldives was held on Aug 30th.

Prof. Prema-Chandra Athukorala (Emeritus Professor of Economics, Arndt-Corden Department of Economics, ANU), Dr. Sarath Rajapatirana (Chair, Academic Programme, Advocata Institute), H.E. Denis Chaibi (Ambassador, Delegation of the European Union to Sri Lanka and the Maldives) and Dr. Dayaratna Silva discuss (International Trade Economist | Former Sri Lankan Ambassador to the World Trade Organization) discuss "The Role of Trade in Economic Recovery in Sri Lanka”

You can also watch the full discussion here

Deep Dive 2.0 kickstarted with the primer by Dr. Sarath Rajapatirana discussing International Trade: From Theory to Policy: Sri Lanka in Perspective.

A brief overview of Sri Lanka's trade, trading partners and trade policies in relation to economic growth. In this video, we discuss the contribution of trade to a country's growth, Sri Lankan trade during the pandemic, import restrictions, and GSP+ and its effect on Sri Lanka's trade.

Montek Singh Ahluwalia on Advocata Conversations | Ep.01 | Murtaza Jafferjee | Dr Sarath Rajapatirana

The Advocata Institute launches its episode on Advocata Conversations, the new series of discussions, where we converse with esteemed industry leaders on policy and economy! With Advocata Conversations we aim to capture insights of experienced policymakers on policy reforms and its impact.

Our first episode is between Advocata Chairperson, Murtaza Jafferjee, Advocata Academic Advisor, Dr. Sarath Rajapathirana, and Montek Singh Ahluwalia, Former Deputy Chairperson of the Planning Commission of India.

In this episode, he discusses his experiences working with the Indian government, his expertise on the economy, his family, and his latest work as a writer.

Watch the full discussion here.

Read the transcript for the full discussion here.

Watch this video on Youtube 

NEWS RELEASE: Sri Lanka ranks 83 among 162 jurisdictions on the Economic Freedom of the World index

NEWS RELEASE

Originally appeared in the Daily FT, Daily Mirror, Ceylon Today, Economy Next, Colombo Telegraph , Lanka Business Online, Ada Derana, Sunday Observer and Daily News

Colombo, Sri Lanka— Sri Lanka ranks 83  out of 162 countries and territories included in the Economic Freedom of the World: 2020 Annual Report, released by Canada’s Fraser Institute in association with the Advocata Institute Sri Lanka. 

Hong Kong and Singapore top the index, continuing their streak as 1st and 2nd respectively. New Zealand, Switzerland, the United States, Australia, Mauritius, Georgia, Canada, and Ireland round out the top 10.  

Research shows that people living in countries with high levels of economic freedom enjoy greater prosperity, more political and civil liberties, and longer lives. For example, countries in the top quartile of economic freedom had an average per-capita GDP of $44,198 in 2018 compared to $5,754 for countries in the bottom quartile.

Moreover, in the top quartile, the average income of the poorest 10 percent was $12,293 compared to $1,558 in the bottom quartile. Interestingly, the average income of the poorest 10 percent in the most economically free countries is more than twice the average per-capita income in the least free countries.

Sri Lanka’s ranking for Economic Freedom

According to the Fraser Institute Report on Economic Freedom,  Sri Lanka gained 15 places to be ranked 83 compared to the previous year where the country was ranked 98. Sri Lanka’s scores in key components of economic freedom (from 1 to 10 where a higher value indicates a higher level of economic freedom):

“It is noteworthy that this 2020 annual report is based on the data for 2018. If it were based on the data for 2018, 2019, and 2020, for Sri Lanka, there could have been a different score, most likely a lower rank and a smaller score compared to 83 and 6.88 for 2018,” commented Dr Sarath Rajapatirana,  Chair of the Academic Programme at the Advocata Institute.  “This is based on the categories: 1. Size of Government, 2: Legal System and Property Rights, 3: Sound Money,  4: Freedom to Trade Internationally, 5: Regulation. During this period the size of Government increased, freedom to trade did not improve with para-tariffs still in place while regulations were not clearly defined.  With COVID 19 pandemic coming into Sri Lanka in March 2019, economic freedom had to be curtailed with a complete lockdown of activities. But this was a precautionary strategy. Without a lockdown, it could have been worse. Sri Lanka did better than most countries. The danger is that the measures adopted could be retained which would restrain economic freedom beyond what was necessary to restrain the virus. “  he went on to say.

Sri Lanka is particularly weak in the category related to “Legal System and Property rights” in the index with little improvement from last year’s report.   According to Professor Sirimal Abeyratne Professor in Economics at the University of Colombo and advisor to Advocata Institute,   "Economic freedom requires discipline and discipline is constituted by the rule of law. Proponents of economic freedom lose ground when they forget this. Opponents of economic freedom look smart when they ignore this. Economic freedom ensures the prosperity of a nation, only when it is founded on the rule of law."  

About the Economic Freedom Index

The Fraser Institute produces the annual Economic Freedom of the World report in cooperation with the Economic Freedom Network, a group of independent research and educational institutes in nearly 100 countries and territories. It’s the world’s premier measurement of economic freedom, measuring and ranking countries in five areas—size of government, legal structure and security of property rights, access to sound money, freedom to trade internationally and regulation of credit, labour and business.

This year’s publication ranks 162 countries and territories. The report also updates data in earlier reports where data has been revised.

For more information on the Economic Freedom Network, datasets and previous Economic Freedom of the World reports, visit www.fraserinstitute.org. And you can “Like” the Economic Freedom Network on Facebook at www.facebook.com/EconomicFreedomNetwork. See the full report at www.fraserinstitute.org/economic-freedom.

Advocata spokespersons are available for live and pre-recorded broadcast interviews via 077 621 6788

CONTACT:

Yasodara Kariyawasam,

Communications Manager, Advocata Institute

Email: yasodhara@advocata.org