Crisis-struck SL need not wait for IMF agreement to get fiscal act straight

• Having a govt. in place is actually more critical in current juncture 
• Legislators and policymakers must understand seriousness of current economic situation 
• No macro stabilisation until SL gets fiscal policy in place 
• SL has been living beyond its means for too long, day of reckoning has come 

Crisis-struck Sri Lanka need not wait for support from the International Monetary Fund (IMF) to get its act straight, and must get about rolling out fiscal reforms at the earliest to help ease the ongoing pressures stemming from economic mismanagement, a former Central Bank official said.

Advocata Institute Senior Research Fellow and Former Central Bank Director Dr. Roshan Perera stressed that it is essential for the fiscal policy to kick in for which political stability is imperative to execute a successful implementation effort. 

“Fiscal policy reforms are absolutely essential. I think we don’t need to wait for an IMF programme to put in some of these fiscal reforms. The government being in place is actually more critical because they can immediately present an interim budget, which was on the cards, and have it passed in parliament and those measures can be implemented immediately,” said Dr. Perera in an interview with CNBC this week.

 
She asserted that it is essential for all legislators and policymakers to come together and understand the seriousness of the current economic situation and the repercussions that would follow if corrective measures are delayed further.   “Unless we get our fiscal policy in place, macro stabilisation is not going to take place,” reiterated Dr. Perera. 

She also stressed the country must understand that it has been living beyond its means for far too long and cannot continue to do so.  

 “The day of reckoning has come and we all need to be prepared. We all need to tighten our belts.  But of course, the burden of the cost of this adjustment programme needs to be borne by those who can afford to bear it, by bearing higher taxes,” said Dr. Perera.  “What we have got to realise is that after Covid-19, and now because of the economic crisis, there are many households that are falling below the poverty line. So, they need to be cushioned,” she stressed.   Earlier this week, CBSL Governor Dr. Nandalal Weerasinghe said that the situation for the people will remain tough until an agreement with the IMF is reached.   Sri Lanka is expected to resume its IMF talks following Ranil Wickremesinghe taking over as President.