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Sri Lanka’s recovery framework to be launched by the Advocata Institute at 3:30 p.m.

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ECONOMYNEXT – A stimulus framework for Sri Lanka will be launched by the Advocata Institute, a Colombo-based think tank, supported by a panel of economists.

“There is no doubt that Sri Lanka is facing a serious economic crisis,” Advocata said. “The magnitude of which, according to our analysis, is far more serious than any economic crisis experienced by Sri Lanka in its post-independent history.”

Sri Lanka now has interest rates incompatible with a budget deficit widened by tax cuts in December 2019 and an ongoing recovery in private credit.

Sri Lanka is now facing a currency and debt crisis where a banknote issuing bank (the central bank) injects liquidity and stimulates unsustainable credit that hits the balance of payments as soon as private credit recovers, according to analysts.

When monetary policy became heavily activist in 2015, analysts warned that a peacetime currency crisis would occur, which would turn into a public debt crisis.

Cash injections and currency shortages are preventing the government from raising dollars to repay debt, a situation that also occurred in 2015, 2016, 2018, as well as 2020 and 2021, causing the debt to escalate rapidly. external debt above annual external financing. deficit, a decrease in foreign exchange reserves, or both.

The central bank in 2021 was running out of reserves and its reserve commitments are increasing, losing its traditional function of “sinking fund” for foreign sovereign debt.

The report “A Framework for Sri Lanka’s Economic Recovery” is written by Roshan Perera, Senior Researcher at Advocata, and the Advocata Research Team.

Members of the public can join on the following social media channels.

Advocata Institute Facebook
Advocata Institute YouTube
Advocata Institute LinkedIn
Advocata Institute Twitter
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Keynote speakers include: Advocata Academic Chair, Sarath Rajapatirana, Advocata Chairman, Murtaza Jafferjee ,. Moonesinghe (Lankan Angel Network Board Member), Sujata Gamage, (Principal Investigator, LIRNEasia) and Prema-Chandra Athokorala (Emeritus Professor of Economics, ANU).

The virtual press event which is also open to the public via social media will take place on September 14, 2021 at 3:30 p.m.


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