Home Market Myopic populist policies and ad hoc policy experiments ruined Sri Lanka’s economy ̶ CB

Myopic populist policies and ad hoc policy experiments ruined Sri Lanka’s economy ̶ CB

  • 29 Apr 2023
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The socio-economic crisis in 2022 underlined many lessons that the country failed to grasp, despite the recurrence of such macroeconomic failures throughout its post-independence history.

This economic episode reiterated the essentiality of data-driven policymaking; devastating implications of ad hoc policy experiments; crippling welfare impacts of myopic populist policies; and the cost of policy delays, disregarding evidence-based policy analysis, well-established economic fundamentals and expert opinions.

The general public and businesses at large had to bear the cost of a one-time adjustment of delayed structural reforms. Against this backdrop, the Government, the Central Bank, and all other stakeholders need to extend their support towards the implementation of essential reforms at this juncture, to resolve the structural hindrances that have rooted in the economy over the last seven and a half decades.

Failing to execute such reforms would lead to perpetual bailouts, endless cycles of external borrowing and recurring debt restructuring alongside unsustainable and highly volatile business cycles, which would cause undue pressure on citizenry, preventing the country from achieving longstanding economic progress and prosperity.

Hence, in the country’s efforts to emerge from the current crisis, consistent and well-coordinated policies, including those outlined in the IMF-EFF supported programme, should be executed in a timely manner to avert another crisis in the period ahead.

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