Sri Lanka was once a star performer in the region but is now struggling to repay debt and boost exports. Its economic fate is in the hands of divisive new leader Gotabaya Rajapaksa.
As Sri Lanka makes another crucial political transition, it faces a big risk of macroeconomic instability. Minimising that risk will depend, above all, on whether the country’s newly elected president, Gotabaya Rajapaksa, can defy his reputation and embrace inclusive politics.
This idyllic island in the Indian Ocean was once a star performer. In the years following independence in 1948, progress on leading social indicators such as poverty, infant mortality, and primary education put Sri Lanka well ahead of its neighbours – India, Pakistan, and Bangladesh – and was the envy of much of the developing world. But, for several decades now, divisiveness and conflict have been the serpent in this paradise.
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Arvind Subramanian, a former chief economic adviser to the government of India, is a senior fellow at Brown University and a distinguished non-resident fellow at the Center for Global Development.
