📈 Structural Reforms Essential for Sri Lanka’s Next Growth Phase: Ahluwalia

Macroeconomic stability is just the starting point, not the end of economic recovery, stated Montek Singh Ahluwalia, architect of India’s 1990s reforms, at the 'India Calling' forum. To sustain growth, Sri Lanka must transition from stabilization to politically difficult structural reforms. • Key Economic Insights: • Macro vs. Growth: Stability creates conditions, but long-term growth requires internal structural changes. • FDI & Domestic Investment: Foreign investors track local confidence—a surge in domestic private investment is necessary to attract strong foreign direct investment (FDI). • Role of IMF/World Bank: Continuing IMF-backed programs preserves global market confidence for small economies. • Regional Benchmarking: SL must benchmark labor, land, and business regulations against competitors like Vietnam, Thailand, and Indian states (e.g., Tamil Nadu, Karnataka). • Priority Reform Areas: • Deregulating land access for businesses. • Flexible labor regulations to improve competitiveness against regional peers. • Addressing ease of doing business and reducing trade protectionism. • Leveraging public-private partnerships (PPPs) for infrastructure to conserve limited fiscal space. • Policy & Business Action: • Private sector must actively shape policies rather than wait on government action. • Maintaining policy continuity across election cycles is vital—cancelling previous projects deters private capital. • Avoid favoring foreign investors over domestic firms; removing core structural bottlenecks benefits both equally.