Among key constraints to Sri Lanka’s growth are unequal economic development across provinces, land administration and an ageing population, the World Bank (WB) has said in its website, commenting on the government’s Vision 2025 programme, which sets out a course of reforms to make the country more competitive and lift all Sri Lankans’ standards of living.
Vision 2025 reforms range from the pressing need for labour law reform to restructuring social safety net programmes and boosting technology acquisition and digitisation.
The World Bank says that as Sri Lanka looks to the future, the country needs to address the needs of a rapidly ageing population.
Further, it says land administration in Sri Lanka is impeding economic development. As noted by the government, the island’s ‘archaic land policy’ is ‘inefficient’ and ‘underdeveloped’ and reform is urgently needed.
Among a slew of programs focused on underserved communities and regions is the World Bank-supported North East Local Services Improvement Project, which helped improve infrastructure and the delivery of public services in isolated communities in the North and East Provinces.
Other similar priorities comprise an expanding portfolio on infrastructure, including urban development, roads, flood protection and water supply.
In this context, the Government’s commitment to supporting private-public partnerships (PPPs) to reduce reliance of public funds for infrastructure will require greater private sector financing. This is central to the World Bank’s strategy to maximize finance for development through the participation of the private sector.
Sri Lanka’s old-age income protection is not adequate for its rapidly ageing population. Today, the Public Servants Pension Scheme (PSPS) covers about 10.3% of the labour force and provides a generous benefit at a high and growing cost of about 1.4% of GDP.
The growth in civil service headcount and payroll suggests that pensions costs will only grow, testing state coffers, the World Bank says in its website.
Reforms are also needed for pension systems like the Employees’ Provident Fund (EPF) and Employees’ Trust Fund (ETF), to ensure they are a reliable support for an aging and vulnerable population, while also proving sustainable and affordable for the government, the World Bank says.
The World Bank is committed to supporting the Government’s efforts to strengthen social safety nets.
The main welfare programme, Samurdhi, was established in 1996 and has a force of 26,000 civil servants but many of the beneficiaries have been in the program without review since its inception.
Reform is long overdue, the World Bank says.
Having identified many of the problems and possible solutions, the test of V2025 now lies in implementation, the Bank says.
Many critical steps have been taken toward realising the vision outlined in this document, but sustained commitment will be required to see it through, the World Bank says.
To see this become a reality, deep and system-wide reforms are needed toward reducing poverty and creating prosperity for all Sri Lankans.
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