Latest Edition of Talking Economics Digest Now Online! – Transitioning to a High Middle Income Economy
As Sri Lanka moves towards achieving high middle-income status, the country is faced with both challenges and opportunities. To leverage the maximum advantage presented by these favourable circumstances and overcome the obstacles, reforms are needed in almost all aspects of the economy. In this context, the 17th Edition of the Talking Economics Digest centers on the theme of ‘Transitioning to a High Middle Income Economy.’
As Sri Lanka, like many other developing countries, escalates its engagement with China’s ambitious Belt and Road Initiative (BRI), the question of debt entrapment requires a more rigorous review. Criticism of Chinese loan disbursements have focused not only on the volume of funds, but also on the terms. However, the author argues that, Chinese loans are not the primary cause of Sri Lanka’s debt imbroglio; but, they have contributed to, and possibly aggravated, the problem.
The Sri Lankan rupee (LKR) has depreciated by 10% in nominal terms by end September 2018, posing significant economy-wide risks in view of a hefty total external debt stock at 60% of GDP at end 2017. In this context, the author argues that the Sri Lankan economy is set to face testing times; dollar revenues need to be generated to match dollar-denominated debt service as never before.