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Browsing IPS Publications by Author "Fernando, Lakmini"

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    Debt for climate and nature swaps in Sri Lanka
    (Institute of Policy Studies of Sri Lanka, 2025-07) Fernando, Lakmini; Madurawala, Sunimalee; Wimalarathne, Menaka
    In addressing the triple challenges of high indebtedness, climate change and loss of nature, debt-for-climate and nature (DfCN) swaps are recognised as an effective fiscal instrument for developing economies. These are agreements between the debtor and creditor where debt repayments are restructured to reduce the debt burden, with the funds allocated to climate-positive investments that support environmental commitments. Debt swaps, therefore, can be used to reduce foreign debt obligations and unlock fiscal space for environment-related investments. With the conclusion of debt restructuring, Sri Lanka is in a more favourable position to implement a DfCN swap. An early start to the preparatory work would enhance the government’s readiness for successful implementation. Externally, implementing DfCN swaps requires a transformed global financial architecture where developing countries are better supported to maintain sustainable debt levels and higher climate investments. Multilateral financial institutions have a bigger role to play in this regard. Internally, long-term planning, stringent commitments across all sectors and capacity building are critical in implementing DfCN swaps. DfCN swaps have the potential to re-establish financial and governance credibility and accomplish the financing needs of debtor countries. However, whether the benefits of DfCN swaps can be fully capitalised depends significantly on the government’s willingness to implement broader policy reforms and its ability to negotiate more favourable debt agreements.
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    Public Investment For Closing The SDG Finance Gap: Sri Lankan Perspective
    (Institute Of Policy Studies Of Sri Lanka, 2023) Fernando, Lakmini
    Realising 'United Nations 2030 Agenda for Sustainable Development' requires massive investment allocation as limited financial resource availability decelerated the achievement of sustainable development goals (SDGs). Economic crisis loomed with the COVID-19 pandemic, has further hindered SDG progress. Therefore, theachievement of 2030 Agenda relies on the effectiveness of recovery strategies and financial capabilities. Public investment plays a significant role in 2030 Agenda, however, systemic research on the nexus between public investment and SDGs is limited. Hence, assessing SDGs investment gap is significant and supports sufficient flow of funds to 2030 Agenda. The additional investment requirement in 2030 to reach key SDGs is 4% of the gross domestic product (GDP) for emerging market economies (EMEs) and 15% for low-income countries(LICs). Using an input-outcome based innovative costing methodology, Sri Lanka's additional investment requirement for SDGs by 2030 is estimated to be around United States Dollars (USD) 1.4 trillion (Tn) or 12.5 percentage pointsof GDP. On average, public investment has been around 5-7% of GDP over the last decade, hence, allocation ofadditional funds for SDGs is challenging.The 2030 Agenda requires placing equal importance on economic, social and environmental objectives. However,Sri Lanka's public investment ratio in these three dimensions is 80:19:1 and it is long been skewed towardsinfrastructure development. The SDG framework can be used as a foresight planning tool to minimise these disparities. Further, strengthened domestic resource mobilisation, use of innovative financing options and enhanced institutional quality are vital to achieve the 2030 Agenda for Sri Lanka.