By: Staff Writer
April 24, Colombo (LNW): In the wake of Sri Lanka’s unprecedented economic crisis in 2022, the government launched a bold and far-reaching reform agenda aimed at stabilizing the economy, restoring public trust, and building long-term resilience. Under the leadership of Secretary to the Ministry of Finance, Mahinda Siriwardena—appointed during the peak of the crisis in April 2022—the government prioritized macroeconomic stability, debt sustainability, and inclusive social protection measures.
The 2022 crisis, rooted in structural weaknesses, policy missteps, and external shocks, saw Sri Lanka’s foreign reserves dwindle to just $24 million. The country’s credit rating was downgraded, inflation soared to 70%, and essential goods were in short supply. Widespread power outages and public unrest further underscored the urgency of comprehensive reform.
Recognizing the scale of the challenge, the government collaborated closely with the International Monetary Fund (IMF) to design and implement a wide-ranging economic reform programme. This programme emphasized debt restructuring, revenue-based fiscal consolidation, and institutional strengthening. Siriwardena noted that special attention was given to building a resilient social safety net, acknowledging the disproportionate impact of the crisis on vulnerable communities.
Since January 2021, Sri Lanka has benefited from over 200 IMF missions and training initiatives—around 80 of which focused on public financial management and fiscal governance. This technical support played a crucial role in embedding a culture of disciplined fiscal management and aligning Sri Lanka’s recovery strategy with the IMF’s Extended Fund Facility (EFF) arrangement, approved in March 2023.
Reforms targeted improvements in revenue administration, public finance management, and governance. These efforts not only addressed the immediate symptoms of the crisis but also tackled its root causes, creating a more sustainable economic foundation.
The results have been encouraging. After years of economic contraction, Sri Lanka recorded a 5% GDP growth in the past year. Inflation, once at 70%, has dropped to nearly zero, and foreign exchange reserves now exceed $6 billion. A consistent primary budget surplus reflects the government’s firm commitment to fiscal responsibility.
Despite these gains, Siriwardena cautioned that the recovery remains fragile. Sustaining progress requires continued fiscal discipline, strong macroeconomic management, and enduring collaboration with development partners. He emphasized the importance of context-sensitive reforms, political consensus, stakeholder engagement, and transparent communication as key to maintaining momentum.
Sri Lanka’s path to recovery, while challenging, offers a blueprint for overcoming crisis through timely, coordinated, and inclusive reform strategies.
