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Sri Lanka: an awakening? The country is facing an unprecedented crisis, but also an unprecedented opportunity – By Sanjayan Rajasingham Source : Confluence – South Asian Perspectives – May – August 2022 issue First, the crisis. At its simplest, Sri Lanka lacks the money it needs to buy the things it needs. A few big reasons: structurally, Sri Lanka has had a debt-driven growth strategy, but a lot of its expenditure of that debt was on low-return investments. This worked when Sri Lanka could access loans at concessionary rates, but became a problem when it reached middle income status and had to borrow at commercial rates. Second, Sri Lanka has a problem of low government revenue, exacerbated by President Gotabaya Rajapaksa’s decision, in 2019, to introduce a tax cut in anticipation of a Parliamentary election – a tax cut that reduced government revenue by as much as 25%. Low revenue and ...