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From crisis to comeback? Sri Lanka’s new budget bets big on trade and investment
Analysts say the budget’s approach is surprising for the leftist ruling party, but an encouraging sign of its pragmatic stance
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The maiden budget from Sri Lanka’s recently elected leftist government highlights expanded trade pacts and foreign investment as vital pillars of recovery from the island’s debilitating economic crisis – an approach analysts have described as surprising but strategically pragmatic.
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Drafted in line with the conditions attached to the US$2.9 billion International Monetary Fund (IMF) package negotiated after the country’s 2022 sovereign debt default and subsequent economic crisis, the budget retains many policies carried over from previous administrations.
Unveiled last month, the budget is viewed as a key indicator of the National People’s Power (NPP) party’s strategy for achieving the sustainable economic recovery it pledged during its campaign, which led to a historic landslide victory in November.
It also comes after the party backtracked on its election promise to revisit the terms of the IMF package – a reversal that drew sharp criticism in the government’s early days.
Despite the backlash, the NPP insists that economic recovery is well under way. President Anura Kumara Dissanayake, in his budget speech on February 17, noted that while most countries endured a “lost decade” after a sovereign debt default, Sri Lanka had already achieved a measure of stability.
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