By Sanath Nanayakkare-May 19, 2014
‘You need to dig a bit deeper to see where the 7.3% growth rate for 2013 came from, and then you see it basically came from the construction sector, led by cost-inflated road projects, and other government projects, UNP Parliamentarian and economist Dr. Harsha de Silva told The Island Financial Review during an interview last week.
"The rate of economic growth is questionable as current methodology of calculating the GDP is outdated, and also the fact that there was a public disclosure that the director in charge of calculating GDP was asked to change the figure. On the other hand, Inflation calculation is not acceptable either. However, leaving a margin of error, I accept the growth figure and the inflation figure achieved are not bad."
"However, the crux of the matter is, the ordinary man in the street doesn’t feel the impact of these growth figures as these monies have been siphoned out to Swiss accounts held by white collar criminals, and not to the people of the country," he alleged.
Referring to GDP per capita income which stands at US$ 3,280, the UNP Parliamentarian said he was surprised that it wasn’t more than that, given all the fraud and corruption in the construction sector that is driving GDP growth.
"US$ 3,280 is approximately Rs.145,000 per month for a household of four persons, but the Household Income and Expenditure Survey shows that actual income is less than one third of that amount. Although the two figures need not necessarily match, it clearly reflects that owners of capital are making massive profits while owners of labour are underpaid," de Silva added.
Commenting on the improvement in the trade account, he said the fact of the matter was that Sri Lanka used to export 35% of its GDP a decade ago, and now it has fallen to 14%.
When asked if he a saw a gradual reduction of the fiscal deficit and debt to GDP ratio as per the Central Bank Annual Report, de Silva said cutting back public expenditure for the sake of cutting wasn’t meaningful.
"The government spends lavishly on unnecessary, extravagant projects while cutting back funds allocated to highly important fields such as education. For example, Sri Lanka’s capital expenditure for the Ports and Highways Ministry was Rs.131 billion last year while this amount allocated for the Education Ministry was only Rs.7.6 billion. Apart from that, there’s creative accounting by the government as it transfers some of its expenses, including debt repayment from the Central Bank, to various corporations and boards , removing it from budget calculations," he charged.
