Former CB Governor highlights urgency of structural reforms

‘Sri Lankans have shown remarkable resilience, but further austerity is untenable’

By Sanath Nanayakkare

Sri Lanka must sustain annual economic growth exceeding 5% to achieve debt sustainability and resume full debt repayments by 2028, ensuring the financing of essential imports and safeguarding social and political stability, asserted Dr. Indrajit Coomaraswamy, former Central Bank Governor. He said so while speaking at the Centre for Poverty Analysis (CEPA) symposium, ‘Crisis-Driven Poverty’, held on February 27, 2025, at the Colombo Hilton.

Highlighting the urgency of structural reforms, Dr. Coomaraswamy, the keynote speaker of the event stressed, “Steady growth beyond 2028 is critical for poverty reduction and inclusive development. Without reforms, debt sustainability could unravel, risking another restructuring that would test public patience and destabilize society.

Dr. Indrajit Coomaraswamy

Reflecting on stalled progress, he noted, “Reforms in factor markets, state-owned enterprises, trade policy, and skills development were proposed 45 years ago. Yet, political incentives and powerful vested interests, businesses, unions, or others—have persistently obstructed change.” He expressed cautious optimism about the current government’s pragmatism under President Anura Kumara Dissanayake, praising its adherence to a robust macroeconomic framework post-election—a rare commitment in Sri Lanka’s history, while mentioning the role of Former President Ranil Wickremesinghe in introducing and pursuing it.

The symposium featured findings from CEPA’s 2023 survey of 5,000 households, partially funded by the Asian Development Bank (ADB). The study expanded with independent financing to include an additional 2,500 households, analyzed poverty through both expenditure-based metrics and the Multidimensional Poverty Index (MPI). It assessed the socioeconomic impact of Sri Lanka’s crises and the efficacy of social protection programs.

The event brought together government officials, donors, civil society groups, and academics to strategize on poverty alleviation. Dr. Coomaraswamy warned, “Delayed reforms risk entrenching poverty and compounding debt challenges. Sri Lankans have shown remarkable resilience, but further austerity is untenable.”

His remarks underscored the delicate balance between economic discipline and social equity, urging swift action to secure long-term stability.

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