The Sri Lankan Economy: Charting a New Course

This analysis of critical constraints on the Sri Lankan economy proposes a set of policy reforms that would lay the foundations for more rapid and inclusive development. This is a pivotal period in Sri Lanka's economic development. The end of conflict opens a door for accelerated economic growth and poverty reduction. Reform is needed to regain momentum because fiscal imbalances and rising public debt could jeopardize macroeconomic stability. The economy would benefit from significant trade and commercial policy reform. The labor market suffers from sluggish growth of formal sector employment and from skills mismatches, which can be addressed by changes in education policy and systems.