Sri Lanka’s biggest lesson from economic crisis was fiscal discipline – Ali Sabry

Sri Lanka’s Minister of Foreign Affairs Ali Sabry has emphasised the need for Sri Lanka to make the ‘right calls’ concerning important investment decisions, one year after Sri Lanka saw its worst, most unprecedented crisis.

On the lessons learned during the economic crisis and political turmoil the nation faced over an year ago, the Minister noted that the ‘biggest lesson’ learned was that on fiscal discipline, and monetary policies that are not only consistent but also pragmatic.

“You can’t continue to maintan a welfare state without having a steady revenue stream. That means fiscal discipline”, he said, during an exclusive interview with Channel News Asia (CNA).

Meanwhile, speaking on China’s investments in Sri Lanka thus far, and their role and relationship with the country during its time of crisis, Minister Sabry reasserted that China’s investments in Sri Lanka remain integral.

“In 2009, when we defeated LTTE we were in need of massive investments and we didn’t only invite the Chinese, we made it open to the whole world, so some of the other countries wanted to wait and see, but China took the risk and invested and we are grateful for that”.

Speaking further in this regard, he explained that Sri Lanka’s next phase of development is growth-oriented, which calls for more investments.

“I think amongst the major players right now in the world, China has a hefty pocket, they are waiting for investments and we are a strategic part of their BRI initiative. So for us, Chinese investments are important and we look forward for that investment,” he said in this regard.

In response to a query on recent controversies surrounding China’s Belt and Road Initiative (BRI), and allegations that it is being used by China as a tool to create debt traps for its recipients, the Sri Lankan Foreign Minister refuted these claims, questioning the logic and practicality behind China intending to create such ‘debt traps’.

“What are they going to achieve out of the debt trap? If you put your money into a country as investments, obviously you want returns. So if you want returns, you want to see that that country succeeds”, he argued.

The Minister explained, however, that while it is his personal opinion that China does not intend to create such debt traps, the areas in which one should invest in and the priorities in this regard are sometimes overlooked.

Thus, he stated that while, in hindsight, certain choices and decisions made by Sri Lanka with regards to investments are regretful in the context that they could have invested elsewhere, where there would have been better returns in the long-run, it is important now for the country to make the right calls in this regard.

“I think Sri Lanka is very clear right now. We will no longer go and borrow money, what we are asking for is investment, partnership and opportunities to grow together”, he assured.

Further commenting on Sri Lanka’ past investments towards infrastructure, Sabry acknowledged that while infrastructure is important, industries, too, must be invested in so as to ‘manufacture’ the economy. “Industries should come up, so that these infrastructures could support this (manufacturing) process, but unfortunately that process did not take place in Sri Lanka”, he said. 

Concluding his interview, the Foreign Minister asserted that while Sri Lanka is content to be ‘in the middle’, continuing to refrain from choosing sides, they “will not allow anyone to use our backyard to threaten any other country or to build their military bases”.

He noted, however, despite the country’s strong stance in this regard, Sri Lanka will continue to have strategic and transparent relationships with all countries.

“All countries are important for us, and our relationship is very transparent, and we have always asked for a peaceful settlement of all disputes”, Minister Sabry concluded.