• Dr. Wijewardena says real sector performance has been poor
• Adds remittances, tourism should ideally drive real sector economic growth 

Remittances and Tourism will not be permanent solutions to Sri Lanka’s real sector economic growth, said Former Deputy Governor of the Central Bank of Sri Lanka (CBSL), Dr. W.A.A. Wijewardena.

Speaking at a webinar organised by the International Chamber of Commerce Sri Lanka (ICCSL) on Saturday (26), he said that Sri Lanka’s nominal sector in the economy is performing, however the real sector performance has been poor.

“It should be the real sector that should have to grow to get the benefit of economic development,” he said.

He said that remittances and tourism will have to be promoted by Sri Lanka in order to convert those two-dollar inflow streams into a real type of economic development.

Dr. Wijewardena said that because remittances are subjected to huge international external shocks, there is a negative shock in the countries where Sri Lankans are working, “therefore, it is subjected to wide economic fluctuations,” he added.

On tourism, the former central banker said that since the value addition in the tourism industry of Sri Lanka is about 20%, the country will have to have more imports if it wants more tourist numbers which will drain resources out of the country.

Sri Lanka plans to achieve 5 million tourist arrivals to the country by 2029 and Dr. Wijewardena said if Sri Lanka wants to achieve the mentioned tourist arrivals target in a country with an already 22 million population, it needs to have more vehicles, infrastructure, fuel and electricity.

“Therefore, both remittances and tourism will not be the permanent solution to get into this high economic growth in the real sector,” he added.

Further, he said that the new Economic Transformation Act has set some targets for Sri Lanka from 2025-27 where the Government will have to ensure that the real economic growth should be 5% till 2027 and beyond that.

However, he said that since Sri Lanka plans to become a rich country by 2048, this 5%+ growth should be at least 8%.

He added that Sri Lanka’s natural growth is about 4% and it will increase the current Rs. 12 trillion real economy to Rs. 32 trillion by 2048 while an 8% growth will increase it to Rs. 73 trillion or more than two times; this is the gap faced by the country.