In July 2022, when Sri Lanka was experiencing its biggest economic and political crisis since independence in 1948, Ranil Wickremesinghe became president. Protests over 12-hour power outages and ongoing gasoline and food shortages led to the ouster of his predecessor, Gotabaya Rajapakse. It was a bankrupt country.
Wickremesinghe has prioritized achieving macroeconomic stability and pursuing harsh but necessary structural changes since bringing in the International Monetary Fund. Sri Lanka has a once-in-a-lifetime chance to reestablish stability and advance sustainable development as it begins its 17th IMF programme. President Wickremesinghe should begin by establishing an autonomous central bank, reorganizing state-owned businesses, broadening trade liberalization, and enhancing the business environment.
All the diverse races, faiths, and socioeconomic groups that joined together to protest last year have felt the effects of the economic crisis, and the time is right for a shift in attitude. However, if conditions improve in Sri Lanka, with inflation and interest rates falling, reform impetus may wane. Never let a good crisis go to waste, as Winston Churchill once remarked; Sri Lanka should take this to heart.
Opposition to the IMF and the need for change has been growing since the height of the economic crisis. The administration will confront difficulties in enacting change now that many formerly timid opponents feel more encouraged to speak out.
To begin, the general public has a poor grasp of economic concepts. Politicians who want to stir up opposition and put the administration on the defensive might use this to their advantage.
Second, changes may be jeopardized by political instability. It will be difficult for the president to define the agenda for change without a stable administration, and the next presidential election is scheduled for the following year. As the election approaches, Wickremesinghe will face increasing pressure from his party to abandon unpopular reforms in favor of more popular measures.
Third, Sri Lanka’s inadequate institutions might make it difficult to put changes into practice. It may be difficult and time-consuming to implement policy changes via the bureaucratic labyrinth, giving opponents enough opportunity to organize and acquire traction.
Fixing the economy’s underlying problems is necessary to foster sustainable development, lessen the burden of poverty, and build a secure nation. There is a lot at risk for the nation. Three-quarters of the population, or four million people, in Sri Lanka are now living in poverty as a result of the economic crisis that started last year.