Sri Lanka’s Macroeconomic Challenges from a Perspective of Twin Deficits
Abstract
The Sri Lankan economy demonstrates a high degree of macroeconomic volatility and instability as evident from its regular programmes with the International Monetary Fund (IMF). Despite their related conditionalities on structural reforms, fiscal and external sector consolidation, it is apparent that such reforms have failed to take root. In that context, the rest of the paper examines the underlying causes of the twin deficit phenomenon in Sri Lanka, the policy responses adopted, and the challenges yet to be
overcome if the country is to place its economy on a more sustainable growth path.
Description
Keywords
structural reforms; fiscal and external sector consolidation; challenges; sustainable growth