{"id":197862,"date":"2022-07-29T18:43:53","date_gmt":"2022-07-29T13:13:53","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=197862"},"modified":"2022-07-29T18:43:53","modified_gmt":"2022-07-29T13:13:53","slug":"sri-lanka-is-a-warning-against-irrational-government-policy","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/sri-lanka-is-a-warning-against-irrational-government-policy\/","title":{"rendered":"Sri Lanka is a warning against irrational government policy\u00a0"},"content":{"rendered":"\n<p><strong>Source<\/strong>: The post is based on an article \u201cSri Lanka is a warning against irrational government policy\u201d published in the Live Mint on 29<sup>th<\/sup> July 2022.<\/p>\n<p><strong>Syllabus<\/strong>: GS 2 Indian Economy and issues relating to planning, Mobilization of Resources, Growth, Development, and\u202fEmployment.<\/p>\n<p><strong>Relevance<\/strong>: Government Policies for economic growth, and other measures<\/p>\n<p><strong>News<\/strong>: Sri Lanka is suffering the <strong>world\u2019s worst economic crisis<\/strong> since World War II.<\/p>\n<p>The citizens in Sri Lanka stand in queue for food and pharmaceuticals. There is a shortage of fuel for vehicles and\u00a0big <strong>power outages<\/strong>. The situation is so dire that millions of people have taken to the streets.<\/p>\n<p>The former president has fled the country and parliament has elected a new government.<\/p>\n<p><a href=\"https:\/\/forumias.com\/blog\/answered-what-led-to-the-economic-crisis-in-sri-lanka-highlight-the-lessons-that-can-be-taken-from-this-crisis\/\"><strong>Causes Behind Sri Lanka crisis<\/strong><\/a><\/p>\n<p>Now, Sri Lanka cannot obtain essential inputs to restart its economy until it has restructured its <strong>debt<\/strong> and installed a <strong>working government<\/strong>. The restructuring of debt will be complicated because a significant portion is owed to China, which does not participate in the <strong>multilateral Western-led restructuring exercises <\/strong>for overindebted<strong>\u00a0sovereign borrowers.<\/strong><\/p>\n<p><strong>Lessons for Sri Lanka and other debt-distressed nations<\/strong><\/p>\n<p>Policymakers in other economically struggling countries should take heed of the Sri Lanka crisis.<\/p>\n<p>Sri Lanka should have approached the <strong>IMF<\/strong> late in 2021 (or even earlier).\u00a0 The implemented reforms could have controlled <strong>inflation<\/strong> and reduced its <strong>current-account<\/strong> and <strong>fiscal deficits<\/strong>, and further, at least six months of suffering could have been avoided.<\/p>\n<p>The <strong>country\u2019s economic authorities<\/strong> should not pursue <strong>desperate<\/strong> and <strong>economically<\/strong> <strong>irrational<\/strong> measures. The authorities should implement serious reforms in the economic sector.<\/p>\n<p>The G-20 has rolled out a <strong>Debt Service Suspension Initiative <\/strong>that extended some $13 billion of relief to 48 countries in 2020-21. However, more such measures are needed for <strong>heavily indebted developing countries<\/strong>.<\/p>\n<p><strong>Lessons from Brazil:<\/strong> The country quickly adopted the <strong>necessary policy reforms<\/strong>, following its <strong>2002 debt crisis<\/strong>. Thereafter, it has enjoyed years of sustained growth<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Source: The post is based on an article \u201cSri Lanka is a warning against irrational government policy\u201d published in the Live Mint on 29th July 2022. Syllabus: GS 2 Indian Economy and issues relating to planning, Mobilization of Resources, Growth, Development, and\u202fEmployment. Relevance: Government Policies for economic growth, and other measures News: Sri Lanka is&hellip; <a class=\"more-link\" href=\"https:\/\/forumias.com\/blog\/sri-lanka-is-a-warning-against-irrational-government-policy\/\">Continue reading <span class=\"screen-reader-text\">Sri Lanka is a warning against irrational government policy\u00a0<\/span><\/a><\/p>\n","protected":false},"author":10308,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230,9],"tags":[212,10501],"class_list":["post-197862","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","category-public","tag-gs-paper-2","tag-live-mint","entry"],"jetpack_featured_media_url":"","views":{"total":0,"cached_at":"","cached_date":1704910444},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/197862","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10308"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=197862"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/197862\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=197862"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=197862"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=197862"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}