Treasury Secretary Dr. P. B. Jayasundera says the message of increasing productivity is not limited to the public sector alone and that the private sector too needs to raise productivity if inflation and the rising cost of living are to be contained.
He said exporters and importers should plan for an appreciation of the rupee as well and exporters could cope only through productivity improvements.
Low productivity of the public sector has been a concern for several years while the private sector was seen as the engine of growth with high productivity standards.
The Central Bank said last year that increasing public sector wages without a corresponding improvement in productivity would put government finances in a stressful position.
But Dr. Jayasundera believes the private sector is not up to the mark either.
Speaking at the launch of the Central Bank Annual Report 2009 last Monday, Dr. Jayasundera said the need to improve productivity was no longer a sole concern of the public sector.
"The message that productivity must be increased must be taken to the private sector as well. This is the only way forward and the only answer to inflation and the high cost of living," he said.
He said Sri Lanka had only two export industries that brought in more than a billion US dollars a year and this has to be increased to ten industries if the country was to reach a per capita income of US$ 4,000 within the next five years.
"The Central Bank, the private sector and the entire country should focus on achieving this gaol," Dr. Jayasundera said.
Plan for rupee appreciation
Dr. Jayasundera said once exports begin to improve, coupled with worker remittances and foreign investments, the country’s balance of payments would record a surplus.
"Exporters and importers need to plan with a strong appreciation of the rupee in mind and this is the challenge. The exchange rate could begin to get stronger this year.
"The rupee is around Rs. 113 against the dollar and it could strengthen to Rs. 100 and exporters need to improve their productivity if they are to cope," he said.
Dr. Jayasundera said the exchange rate could even strengthen to Rs. 50 against the dollar when Sri Lanka becomes a US$ 4,000 per capita income earning county.