THIS FINAL BUDGET POSITION REPORT (ANNUAL REPORT) 2023, IS PUBLISHED
IN TERMS OF SECTION 13 OF
THE FISCAL MANAGEMENT (RESPONSIBILITY) ACT, NO. 3 of 2003
01
Fiscal Policy, Strategy, and Challenges in the Context of Managing the Macroeconomy
1.1
Overview The Sri Lankan economy made significant progress toward restoring macroeconomic stability in 2023, following the tumultuous economic crisis that peaked in 2022. The path to revival was reflected in the recovery of economic growth and single-digit level inflation since the second half of the year, along with a primary budget surplus, and a surplus in the current account of the balance of payments by end 2023. These achievements were a result of the steadfast implementation of a comprehensive macroeconomic reform programme by the government to decisively handle the deepest, most complex and unprecedented economic crisis in the post-independence history of the country. In this process, the resilience shown by the Sri Lankan people in stabilizing the economy, within a relatively short period of time, is highly commendable. Whilst progress has been made, it is not a time to be complacent. The road to recovery for Sri Lanka is long and the country must stay the course. Committed and concerted efforts are essential to put the country on a sustainable development path. The ongoing macroeconomic rebalancing should be carefully understood and considered in designing and implementing respective policy responses.
The severe economic crisis in 2022, which led to major shortages of essential supplies, subjected almost all citizens to unimaginable hardships—job losses, income depletion, business downturns, diminished living standards and increased multidimensional poverty —was most acutely felt by the poor and vulnerable people. A rapid policy response was warranted given the fact that remedial policy measures had been delayed for a prolonged period, as identified by judicial scrutiny of the causes of the economic crisis1 . After almost two years, whilst the continuous supply of essential goods and services has been re-established, the government is in the process of gradually restoring a sustainable and inclusive economic growth path through a range of reforms and policy initiatives. The government is determined to make a concerted effort to implement changes which are conducive for the advancement of the country and its people.
