- Policy consistency across three Presidents have created stability
- National consensus the need of the hour
- Key determinants of success globally is policy consistency and predictability
Senior Economist and former Central Bank Governor Deshamanya Dr. Indrajith Coomaraswamy spoke about the Commonwealth and also on the current economic status in Sri Lanka that is affecting all sectors that contribute to economic growth including tourism, when he delivered the keynote address to mark Commonwealth Day at an event held by the Royal Commonwealth Society Sri Lanka, on March 10 2025.
“The new paradigm in macro-economic policy-making should facilitate a more stable platform in terms of interest rates, exchange rates which would support better planning and would promote the businesses in the Tourism sector” said Dr. Indrajith Coomarawswamy, answering a question posed at the forum.
“Tourism is a significant proportion of the economy. Several components of tourism occupy a significant position in the economy in terms of it contributing to the gross domestic product, its foreign exchange earnings and the creation of employment”, he added.
“In the past, policy instability associated with changes in Government have severely undermined the prospects of the Sri Lankan economy in such a context that it is encouraging that there has been policy consistency across three Presidents, Gotabaya Rajapaksa, Ranil Wickremesinghe and Anura Kumara Dissanayake and this has proved stability for the moment in all sectors including Tourism.” he said
“It’s very unusual for Sri Lanka under three presidencies to have continuity and consensus. To the credit of President Anura Kumara Dissanayake he has not deviated significantly despite their ideological differences. He kept the program going. The review has been completed successfully. The IMF tranche has been released and debt restructuring is all but complete”. “This continuity is unusual for Sri Lanka but if you look around the world one of the key determinants of success is policy consistency and predictability”, he said.
“In Sri Lanka each time the Government changes, often there is a complete 180 degree reversal. Quite a lot of things that are being done now were started in 2017. But there was a 100% reversal from December 2019.A very different set of policies, but this time for three terms we have got the policy framework together,” he said and added, “The head of the Central Bank and his team have the speed with which they particularly managed multi-policy in the last couple of years, is remarkable” he said. “The highest commendation has to be given to them.” he added.
“I personally have not come across quite such an impressive stabilisation in my professional career which now goes back well over 50 years. It’s been a remarkable achievement to bring inflation down from 70% and core inflation down to 3 %, the relatively low inflation is to a significant extent not due to any demand side pressure but due to the electricity price reduction”, he said.
“Repeating bouts of macro-economic stress has arguably been the key economic cause of Sri Lanka’s relative lack of progress, compared to successful countries in Asia. I also like to submit to you that there are now frameworks of macro-economic policy making embedded in laws which hopefully will prevent this repeating of macro-economic instability we have been seeing for so long”, he further said.
Two landmark legislations that will safeguard this must be protected. They are the Public Finance management Act and the Central Bank Act.
Concluding with valuable advice he said “What has been achieved has to be protected, have a laser-like focus on structural reform to get a 5% growth.”
“There has to be pressure on the political leadership regarding macro-economic stabilty. Everybody in the country must take an interest in the macro- economic stability – it comes and bites everybody in the country”, he added.
A national consensus is paramount
Coomaraswamy stressed the importance of a national consensus which was an effective message to Opposition parties. The case comparable to us is India from which we can learn. They went to the IMF in 1991, but after that they have never been to the IMF again. Because there has been a broad consensus between the Congress party and the BJP the overall policy framework.
“When India went to the IMF at that time, Manmohan Singh was Finance Minister and they negotiated a program which was very harsh. Because they too were in a deep crisis.
Narasima Rao was premier and Manmohan Singh had told him, “This is a really tough program, you are going to have difficulty in getting it through not only Parliament but also your own Cabinet”.
The Premier had then said to give him half an hour and he will let him know. Manmohan Singh was confused as to how he could sort it out in half an hour. The PM called Manmohan Singh as assured. The Finance Minister had asked how he found a solution in half an hour. I had to only speak to one person, and that’s the leader of the Opposition, Vajpayee and said that this has to be done for India”.
“That’s the kind of national consensus we need to develop.
If you don’t learn from history, you tend to repeat it. These landmark legislations must be protected”, Coomaraswamy said. Concluding with valuable advice he said “What has been achieved has to be protected, have a laser- like focus on the structural reform to get a 5% growth.”
