New Economy; Where To Start?
By Hema Senanayake –August 21, 2015
Hema Senanayake
UNFGG became victorious from the general election. Perhaps, UNFGG might be thinking now in honoring whatever the economic promises they made in their election manifesto as they did with previous 100 day program. Honoring promises is a good thing. But during the 100 day program of the previous interim government they did a lot of economic mistakes. Hence, what I suggest is that UNFGG must be a little more cautious in honoring economic promises. This does not mean that UNFGG must ignore or dishonor their promises now because they have got elected, instead I would suggest that UNFGG should honor the economic promises within a more long term prudent strategic approach. How UNFGG could do it?
In regard to the strategic approach mentioned above, I would suggest them to begin with the country’s current account and balance of payment. Then simultaneously they can move into the fiscal and monetary policy. All these areas constitute the essentials of macroeconomic regime. The ultimate objective of maneuvering these fundamentals is to achieve the optimum efficiency in production and distribution of distributable output. In fact production and distribution of distributable output are what matters for the wellbeing of the people. Let us try to understand this point with an example.
For example, UNFGG promises that the country would be made debt free by 2023 on which year we celebrate 75 years of independence. This idea is not clear and hence needs to be clarified by them. For example, does this mean that the country would be free from foreign debt by 2023 while the government begins in balancing its budget by the same year? If this is the case then the country will be free from foreign debt and the government will be free from public debt too. Or does this mean that the country would be free from foreign debt by 2023 and the government deficit is fully financed through domestic borrowing? This fine difference is important in economic governance because the first option is not economically possible while the second option becomes possible. But both options are not that prudent. Hence we will not achieve either of the options mentioned here and more over it is not economically necessary to be debt free completely.Read More