THE SRI LANKAN ECONOMY: Hope, Despair, and Prospects

Abstract

This chapter provides an interpretative survey of economic policy and performance of the Sri Lankan economy during the post-independence era, with a focus on the sources of the country's vulnerability to the unprecedented economic crisis in the wake of the Covid-19 pandemic and prospects beyond the crisis. The analysis infers that recovery from the crisis and placing the economy on a self-sustained growth path requires combining the standard IMF approach to macroeconomic stabilization with coherent structural adjustment reforms to redress the long-standing anti-tradable bias in the incentive structure that was the root cause of the vulnerability to the crisis.