Less than seven percent of Sri Lanka’s population now lives in poverty, but there is still a lot of work to be done for the country to eradicate it completely and secure long-term economic prosperity, said the World Bank.
According to new research carried out by the institution, the country must address “chronic revenue shortfalls” that are hindering its ability to adequately fund public initiatives essential for reducing poverty. The World Bank also said the nation must make its economy more inclusive and competitive in order to foster long-term economic growth.
Sri Lanka has one of the lowest tax-to-GDP rates in the world
“A priority for us is the creation of more jobs that will minimise poverty and provide for prosperity for all Sri Lankans”, said the Prime Minister of Sri Lanka, Ranil Wickremesinghe. “Towards this, we need to enhance our capacity to successfully compete in global markets while creating the necessary space for investments to come in.”
The Sri Lanka Poverty Assessment said the reduction in poverty was a result of increased pay in the country’s labour market. This was brought about by the nation transitioning away from an agriculture-based economy, and ramping up its industrial and service sectors.
In its research, the World Bank found that, because Sri Lanka has one of the lowest tax-to-GDP rates in the world, its government does not have the necessary revenue to invest in education, health and other public services. It also said economic growth is being hindered by low rates of foreign direct investment and an excessively large public sector. It warned job creation is limited by protectionist policies and a large deficit of skills among workers. By addressing these issues, Sri Lanka can ensure its long-term economic prosperity and help lift many more of its citizens out of poverty.
Françoise Clottes, Country Director, World Bank Sri Lanka and the Maldives, said: “This new research provides an important platform of evidence and analysis to strengthen our partnership with the government to help design policies aimed at improving job opportunities for the poor and other disadvantaged segments of the population, while promoting sustainable growth.
“The findings of the reports also reinforce the need [for] further measures aimed at improving the government’s effectiveness, transparency, accountability and establishing strong institutions so all Sri Lankans can take part in the country’s increasing prosperity.”