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arliament was informed last week that the Mattala Mahinda Rajapaksa International Airport has generated only Rs.16,185 as revenue in May.
It is understandable that a new airport, or any new infrastructure development project for that matter, requires reasonable time to generate a decent income on a continuous basis, so that it could cover up the money which was pumped into constructing it. However little more than Rs.16,000 is not at all a justifiable amount for an airport which had been opened more than a year ago and hyped to be an airport similar to Gatwick in Britain.
For the US$100 billion economy which Sri Lanka has targeted; proper infrastructure development is imperative. It is not wrong to identify infrastructure as the life blood of an economy. Therefore, development of airports, ports, highways, power stations, telecommunication and transport infrastructure, etc. are vital to achieve the economic targets the country has set for itself.
Against such a backdrop, the present infrastructure development wave of the government should be commendable. However, when one sees the statistics as mentioned above, he or she cannot help but wonder how economically prudent has been some of the infrastructure development the country has invested in. The means of financing the economic infrastructure in a country is equally or even more important as building the required infrastructure for rapid economic development.
This is because the wrong means of financing would have lasting repercussions on a country’s economy. Unjustifiable investments on infrastructure, channelled through commercial borrowing, would be a deadly combination for any country. This could widen a country’s fiscal and trade deficits and increase its debt burden which would ultimately lead to higher inflation.
As we earlier said, the importance of proper infrastructure for economic development is undeniable. But if the infrastructure development is driven by ego rather than economic prudence it could ultimately spell disaster for an economy. In that sense, prioritization of infrastructure projects on their return is a must. Investments should be first made on the highways, ports or airports that could contribute more to the economy on a relative basis and pet projects of the rulers should only undertaken secondary.
At the same time, proper strategies should be drawn prior to deciding upon a mega infrastructure development, so that support services to complement the infrastructure project can also be developed simultaneously. For example, due to poor vision and lack of strategies, a fully-equipped hospital and a few transit hotels have not yet been developed surrounding the Mattala airport, which are musts for any international airport.
The other negative result that stem from bad investments on unproductive infrastructure development is the crowding out of funds that are much required for areas such as education, healthcare and social welfare. Therefore development of the infrastructure could be both boon and bane for a country, depending on those who formulate the country’s economic policies.
