Blue Print: Out of the debt trap and onto sustainable development

A 10-Point Common Minimum Program for Sri Lanka’s Economic Recovery by Harsha de Silva, MP

Introducing his program, Dr. Harsha de Silva said: Sri Lanka is currently facing its worst economic crisis since independence. Decades of shortsighted policies and halfhearted reforms weakened our foundation, and a global crises pushed us to a brink.

While the President RW and the current cabinet have stated there needs to be some deep economic reform, no roadmap has been put forward thus far. On Friday I tabled in @ParliamentLK economic recovery blueprint for #SriLanka which has been endorsed by the other two members of the SJB Economic Committee, Kabir Hashim and Eran Wickramaratne

In this blueprint, I put out a 10-step plan to help navigate Sri Lanka out of our economic crisis using policies which have been decades in the making. I invite the government, opposition parties, international partners, as well as all other relevant stakeholders to use this blueprint to start the conversation on how best to bring Sri Lanka out of this socio-economic crisis. As always feedback is more than welcome, I’m eager to hear your thoughts.

EXECUTIVE SUMMARY

Sri Lanka’s economic crisis is not unexpected. Decades of shortsighted policies and halfhearted reforms weakened our foundation. Sudden global crises pushed us to a brink. Appalling mismanagement took us over the edge. Today, our state is bankrupt, inflation is rampant, the economy is at a standstill, and our socio-political order is in crisis.Yet we can still recover: we can reach out for the few lifelines left, regain our ground, reform our economy, and rebuild our country. This Blueprint tells us how.

We must manage our immediate debt crisis by obtaining bridging financing until the International Monetary Fund (IMF) disburses funds, and productively engage the IMF while restructuring our debt. We must maintain financial system stability as we do so. The exchange rate should be carefully floated to market levels and interest rates should rise to control inflation.

Monetary policy reform will ensure that we do not backslide into crisis. Fiscal reform is critical. Tax revenues must be increased, and expenditure rationalized. Reforming unproductive or corrupt state-owned enterprises will be a key part of this process. This is especially true for energy and utilities, for which consumers will now need to pay cost reflective tariffs.

Targeted, means-tested cash transfers will help the needy meet these unsubsidized market prices. The public sector must be transformed into a productive, efficient, high-quality, digitally enabled workforce that serves the needs of Sri Lanka’s citizens.

As we stabilize, we must also grow. It is essential that we promote trade, industry, agriculture, and services by unshackling markets, increasing competitiveness and productivity, promoting exports and investment, and integrating with global production networks.

Land and labour market reform will enable and amplify this growth. A strong, transparent, effective social safety net that safeguards those who need it must underpin these changes. Moreover, it is essential to execute and uphold anti-corruption and transparency laws for these changes to last.This will not be an easy path, but it is our only route out of debt and towards sustainable inclusive development.

(Harsha de Silva is a member of the main opposition Samagi Jana Balawegaya (SJB). This document has been ratified by the SJB Economic Policy Unit consisting of the author, Kabir Hashim, MP and Eran Wickremeratna, MP, and endorsed by SJB Leader Sajith Premadasa, MP. Valuable advice and comments from Professor Premachandra Athukorala on several previous drafts are acknowledged with gratitude. This document incorporates, in tables, the short-medium term action plan detailed in the ‘Common Minimum Program’ compiled by the National Movement for Social Justice (NMSJ) using the proposals of eight groups (Advocata Institute, BASL, Elle Gunawansa Thero, independent economists, NMSJ, NPP, SJB, 43 Brigade) and discussed with the SLFP and business leaders.)