Sri Lanka: Liberalised Economic Policy Regime: An Evaluation of the First Ten Years

The object of this paper is to evaluate the liberalisation of the economy in Sri Lanka in 1977 by closely examining macroeconomic performance during the period 1978-1987. The paper first traces the historical evolution of the Sri Lankan macroeconomy up to 1977 followed by a discussion of the liberalisation measures undertaken in 1977. Thereafter a detailed evaluation of the developments in the Sri Lankan economy during 1978-1987 is undertaken with special attention being paid to its internal and external balance. The paper concludes that contrary to expectations, the liberalisation did not bring about the desired results due to adverse exogenous developments and inconsistencies in macroeconomic policy formulation and implementation.