More female workers can help drive Sri Lanka growth not stimulus: Treasury Secretary
ECONOMYNEXT – Expanding the opportunities for more female workers to enter the workforce including by making them easier to get funding for their own businesses can help increase growth instead of relying on stimulus, Treasury Secretary Mahinda Siriwardana said.
“Economic growth going forward cannot be driven by unsustainable fiscal and monetary stimulus – it has to be driven by productivity enhancement.” Siriwardana told a forum in Colombo.
“Labour productivity is a key factor of production, and the Sri Lankan labour market has faced a long standing impediment of weak labour force participation, which is in turn driven by low female labour force participation.”
Sri Lanka suffered a series of currency collapses since the end of a civil war due to monetary stimulus to close an output gap, generally known as macroeconomic policy, critics have pointed out.
Each bout of inflation or money supply has been followed by trade and exchange controls – as well as price controls – as the balance of payments gave way under the stimulus.
The most aggressive macroeconomic policy was deployed in 2020 with tax cuts on top of monetary policy which ended in sovereign default.
Critics have pointed out that the dreaded words – monetary accommodation – is now being heard, even as a just two years monetary stability with the abandonment of both fiscal and monetary stimulus is helping growth to resume.
Meanwhile Siriwardana Sri Lanka labour force participation was now at 47.8 percent and female labour force participation was 30 percent.
Sirirwardene was speaking at an even organized with the Asian Development Bank on efforts to boost access of female entrepreneurs to credit.
One of the measures was the Women Entrepreneurs Finance Code, where regulators, lenders get together to end barriers for female get access to finance.
“By increasing female labour force participation, it would be possible to significantly add to productivity growth in the economy and support sustained economic growth over the medium to long term,” Siriwardnana said.
“Sustained economic growth in turn is important to ensure Sri Lanka’s economic, fiscal, and debt sustainability is secured over the medium to long term as well. Therefore, the WE Finance Code initiative has important macroeconomic implications, and similar measures to enhance female labour force participation need to be encouraged as well.”
Women in Sri Lanka have multiple barriers, including in lack of public transport and workplace safety, Prime Minister Harini Amarasuriya said.
In Sri Lanka scooters, widely used by women in Asia, costs as much as or more than a small used car in advanced nations due to high taxation. (Colombo/Mar19/2025)
Sri Lanka’s central bank was also supporting the measure including with collecting data which is disaggregated by gender.
The central bank has been working on several years on financial inclusion to all.
In Sri Lanka millions have left the country – especially women – to work in middle eastern nations where monetary stimulus is outlawed through currency-board-like regimes. After each monetary crisis in Sri Lanka the outmigration picks up pace.
The idea that inflation worsens unemployment and does not reduce its was only briefly accepted by macroeconomists after Great Inflation hit the world in the 1970s, but has gathered pace in the course of triggering of the housing bubble and after, where ‘quantity easing’ was legitimized.
Inflation or stimulus, was called Keynesianism in the last century, and has been characterized by housing or Missippi bubbles depending on the period.
“The chief root of our present monetary troubles is, of course, the sanction of scientific authority which Lord Keynes and his disciples have given to the age-old superstition that by increasing the aggregate of money expenditure we can lastingly ensure prosperity and full employment,” explained classical economist Friedrich Hayek in the 1970s.
“It is a superstition against which economists before Keynes had struggled with some success for at least two centuries.
“It had governed most of earlier history.
“This history, indeed, has been largely a history of inflation; significantly, it was only during the rise of the prosperous modern industrial systems and during the rule of the gold standard, that over a period of about two hundred years (in Britain from about 1714 to 1914, and in the United States from about 1749 to 1939) prices were at the end about where they had been at the beginning.” (Colombo/Mar19/2025)
