In September 2023, Sri Lanka became the only country to restructure local currency debt by exclusively targeting retirement savings funds, excluding all others. This was justified by claiming that retirement savings were receiving preferential tax treatment. This insight finds both empirical and analytical evidence to the contrary, and shows that retirement funds face adverse, not preferential tax treatment.
The government of Sri Lanka proposed introducing a new law to establish stronger rules on public finance management. The analysis shows that the core weakness in Sri Lanka is not the lack of rules but the lack of compliance. To be effective, any new law will need to contend with this problem of governance
Exposure to poor air quality is ranked among the top 10 leading global risk factors for disease. The lack of visibility of air pollution often results in delay in public policy and personal responses, till the problem is acute. Improving the collection and access of air quality data is the first step, to making it safe to breathe in Sri Lanka.
A key debate during Sri Lanka’s economic crisis is whether the current dollar shortage is a short-term liquidity problem or a more protracted and systemic issue that requires debt reduction. This insight responds to the view that the dollar shortage is a short-term liquidity problem primarily caused by reduced tourism revenue since the onset of COVID-19. As this insight describes, there are three reasons to be skeptical of this argument.
In 2019 the government introduced a policy where taxes and prices on cigarettes would be based on an indexation formula. Forgetting to implement the policy is costly: it has resulted in a foregone revenue of 85 billion from 2020-2022 and will cost a further 45 billion in 2023.
Sri Lanka introduced a ban on chemical fertiliser importation, and a shift to organic fertiliser starting April 2021. As existing stocks were beginning to deplete Verité Research conducted a survey in July to capture the views of the farmers on the policy and its impact on them. The farmers were broadly supportive of the policy; but expected a much reduced harvest due to the lack of knowledge and time to make the transition.