In an independent and incisive take on Sri Lanka’s current external stability position, IPS Deputy Director argues that the build-up of external payments stress is a cumulative process, where the lines between external public debt, public-guaranteed external debt, and private sector external debt become blurred, and virtually disappear at times of external payments crises. The most prudent strategy to insulate an economy from rising exposure to foreign debt is to ensure a healthy growth in earnings from exports of goods and services, and build-up a ‘war chest’ of non-borrowed official reserves.

Based on a new Working Paper by IPS researchers titled ‘Incentivizing Foreign Investment in Sri Lanka and the Role of Tax Incentives’, this article argues that a key medium-term challenge facing the country is to find a balance between providing a competitive tax incentives regime to attract FDI and keeping tax foregone to a minimum in order to preserve domestic revenue.

Sri Lanka banned the imports of Genetically Modified (GM) food in 2001, becoming the first country in the world to do so. However, in 2006, the government passed an Extra-Ordinary Gazette to the Food Act of 1980, allowing GM food importation and in 2011 the government passed a National Policy on Biosafety which covers the import of Genetically Modified Organisms (GMOs), i.e., GM food or GM crops. But do we really know what is and isn’t GM? Should we be worried? How important is the GMO issue for Sri Lanka? This article attempts to answer these questions by discussing the present scenario of GMOs in Sri Lanka in the global context. Author Dilani Hirimuthugodage argues that neither the full-scale adoption nor the full-scale rejection of GMOs is a viable option.

Fiscal consolidation efforts as set out in the Budget 2013 were not entirely unexpected.[1] With revenue collection falling short of the target, adjustments to ensure that the deficit for 2012 remains close to the forecast 6.2% of GDP is to be brought about by a sharp cut back in public investment. Indeed, fiscal consolidation efforts [...]

As Sri Lanka gears up for the third full budget since the end of the war, Anushka Wijesinha (Research Economist – IPS) looks at the formidable challenge for Sri Lanka’s development – finding the money to finance it. Taxation, he argues, must be a major policy priority in strengthening the capacity of the Sri Lankan state.