Sri Lanka: Building a more resilient economy

At the launch of the Sri Lanka Development Update (SLDU), our Twitter chat #SLDU2017: Environmental Benefits of Economic Management set out to explore how Sri Lanka could meet the twin challenges of increasing its physical and financial resilience.
 
The panel comprised experts from the World Bank - Country Director for Sri Lanka and the Maldives, Idah Pswarayi-Riddihough; Senior Economist Ralph van Doorn and senior environmental specialist Darshani De Silva – and Kanchana Wickramasinghe, a research economist in the Institute of Policy Studies. Together, they unpacked the SLDU, discussed its key findings and fielded questions from across the region around its main themes.
 
The bi-annual report, notes key economic developments over the preceding months, placing them in a longer term and global perspective; in the Special Focus section, it explores topics of particular policy significance to Sri Lanka. 
 
Ralph started with the idea that Sri Lanka faces a window of opportunity during which key reforms could transform the country and its economy. He noted that Sri Lanka’s position in the global economy improved its global growth prospects, as well as that of its key export partners. Low commodity prices and the restoration of the GSP+ preferential trade arrangement with the EU had also combined to improve the outlook for the Sri Lankan economy.

For Idah, the country’s mood and the government’s commitment to change were critical to success:   
 

#SriLanka has demonstrated potential for significant reforms. Crucial for the move to a higher middle income status #SLDU2017

— Idah Pswarayi-Riddih (@Idah_WB) August 21, 2017

The panel delved into how natural disasters and extreme weather events posed a threat to Sri Lanka’s growing economy. In the short-term the damage was clear and serious, with losses amounting to several billions a year, as Idah noted in her blog. During the chat, she emphasised how Sri Lanka needed to be prepared for future disasters or it would cost the country enormously.
 
Kanchana pointed out that in the long-term, disasters could set back poverty alleviation efforts, especially in agricultural and rural areas, adding:
 

it can induce #urban #rural #migration – has implications on #foodsecurity in #lka #SLDU2017 #climatechange

— Kanchana (@Kanchi_w) August 21, 2017

With the chat underway, questions poured in from an online audience who were interested in diverse issues – from managing Sri Lanka’s ongoing drought and its impact on the Northern Province to what insights the SLDU had to offer other countries in the region such as India.

Quoting from the report, Twitter user Nalaka Gunawardena pointed out that disasters in Sri Lanka were claiming fewer lives annually but that economic losses had increased. “What policy preparedness [is] needed?” he asked.
 
In his response, Ralph highlighted key issues, including boosting institutional coordination, preparedness and response; the need for mitigation programs; risk reduction and adaptation investments such as forecasting and early warning systems. On the fiscal front, Ralph emphasised the need to develop of a National Disaster Risk Financing Strategy and an efficient relief system linked with social protection, concluding his answer by noting there was a need to take into account post-disaster losses:

- Establish "National Disaster Reserve Fund" for fast disbursement mechanism post-disaster /end #SLDU2017

— Ralph van Doorn (@RalphvanDoorn) August 21, 2017

Posing a question to the panel, Twitter user Sahan Dissanayake ‏ asked them for their thoughts on what aspects of environment management to focus on both in terms of economic development and climate adaptation.
 
Kanchana’s response suggests that broadly, the priorities sustained natural capital stock and minimised the negative impacts on the environment. Darshani emphasised Environmental sustainability and resilience, adding:
 

Policies and institutions that takes environmental aspects as well as cc adaptation into development planning

— Darshani De Silva (@WildDarsh) August 21, 2017

As the lively session drew to a close, the panel looked to the next edition of the SLDU and what lessons could be carried forward.
 

Building resilience into the economy covering fiscal, disaster and social aspects #SLDU2017

— Idah Pswarayi-Riddih (@Idah_WB) August 21, 2017

 

Promoting #green #economy in #SriLanka to include both #environmental and #social dimensions #inclusive growth #SLDU2017

— Kanchana (@Kanchi_w) August 21, 2017

 

Making tax & fiscal policy work in SL: How progressive is fiscal policy? Does fiscal policy promote competitiveness? #SLDU2017

— Ralph van Doorn (@RalphvanDoorn) August 21, 2017

Each panellist highlighted a different area: Kanchana centred on building resilience into the economy to cover fiscal, disaster and social aspects. Ralph focused on how to make tax and fiscal policy work in Sri Lanka, in an effort to answer questions such as “How progressive is fiscal policy?” and “Does fiscal policy promote competitiveness?”

At the close, Idah sought to explore ways to promote a “green economy” in Sri Lanka which emphasised both the environmental and social dimensions of inclusive growth.