📉 Addressing the Trade Reforms Blind Spot in Sri Lanka

Sri Lanka’s trade liberalisation push faces major risks without strong adjustment mechanisms to support vulnerable local workers and firms as tariffs fall. • Policy Gap & Adjustment Support: Current reform efforts focus on tariff removal, export diversification, and trade deals, while neglecting protection for impacted industries. Past evidence-based support frameworks (2016–2018) collapsed due to political instability and lost institutional memory. • Fiscal Constraints & Precision: Unlike wealthier economies, Sri Lanka’s tight fiscal space cannot fund broad safety nets. Future support must rely on precise data (employment, regional impact, sector exposure) rather than political lobbying. • Revenue Balancing: Lead oversight by the Finance Ministry means adjustment programs must carefully balance revenue loss against targeted protection for vulnerable sectors like non-traditional manufacturing and domestic producers. • Strategic Value: Establishing a credible, permanent adjustment mechanism is crucial to build domestic backing for trade agreements and long-term economic reforms.