Macroeconomics and Policy Efficiency
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Sri Lanka’s Extended Fund Facility Arrangement with the IMF: It’s Mostly Fiscal

This article takes a look at Sri Lanka’s status and what the country needs to do with regard to its economy, in terms of the IMF Programme.

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Insights into Sri Lanka’s Re-based GDP Estimates

This article looks at the implications of over-due re-basing exercise on the size of the Sri Lankan economy, its sectoral composition and growth rates.

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Charting a Course for Sri Lanka’s Economy: Politics Triumph Economics for Now

In this article Dushni Weerakoon points out the need for Sri Lanka to confront difficult and delayed reforms to make the economy more efficient and competitive.

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The Credit Dilemma: Monetary and Financial System Stability in Sri Lanka

February 2014 marked five consecutive years of single-digit rates of inflation in Sri Lanka – supposedly the longest spell in the country’s post-independence history. Quite rightly, the Central Bank of Sri Lanka (CBSL) can take its share of credit for this success, especially in view of historic high and volatile inflation rates of the past. Indeed, the scale of monetary stability becomes clear when considering the fact that inflation rates hit a peak of 22.6 per cent in only 2008 before settling to single digit levels from February 2009. Despite five years of a moderate inflationary environment and higher average economic growth during that period, private investment trends have been modest. The monetary authorities are struggling to revive credit appetite in spite of signaling the end of a tight monetary policy stance way back in December 2012. Credit growth to the private sector was extremely sluggish at 7.5 per cent in 2013. It has continued in the same vein so far in 2014, recording a growth of only 4.4 per cent year-on-year in February.

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The Unseen Impact of US Tapering of Quantitative Easing on the Sri Lankan Economy

Sri Lankan authorities often point out that Sri Lanka has not been as badly affected by the Federal Reserve’s tapering of quantitative easing (QE) as other emerging/frontier economies. In a conventional sense, this may be correct. Yet, this article considers how QE tapering affecting world gold prices impacted Sri Lanka through the gold pawning channel. It argues that US tapering has in fact had a very significant impact on the Sri Lankan economy, in terms of monetary contraction, consumption, bank asset quality and also in terms of financial inclusion.