Page 52 - Management Digest Udyama Vol 1 Isuue 2

Mid-Year Outlook 2021

Fiscal weakness

threatens Bumpy

Recovery; Hints IMF

Sri Lanka has been struck OUTLOOK FOR 2021 Provincial Council Elections:
by multiple Covid-19 waves
disrupting the recovery efforts in In analyzing the outlook for the Govt seems to be quite
place. But Sri Lanka’s economic economy over the next 12 months, comfortable running the
woes are not a result of the recent it is an important first look at the Provincial Councils via the
disruptions but have resulted from primary criteria that may affect Governors. Therefore, in the
a long-term structural issue. the economy and understand current environment, elections are
the expectations or forecasts for unlikely to be held in 2021 while
We expected Sri Lanka to go the relevant criteria and form an it seems unlikely whether there is
through a W-shaped recovery opinion on the economic outlook any hurry or plans to hold in 2023
(Sep-20) amidst the continuous based on a set of criteria. There either.
waves and possible shocks while are a large number of criteria
a Bumpy Road to Recovery (Jan- that could affect an economy, but Local Government Elections:
21) was explained subsequently. broadly it can be categorized into
On a continuation note, with 3 different segments Political, The biggest challenge for the
potentially 2 double-digit budget Economic, and External. Govt can therefore be identified
deficit years (2019 & 2020) as the Local Govt Elections.
supported by the difficulty POLITICALLY STABLE; Though period of local govt
in raising foreign currency BUT POLICIES expire in Feb 2022, the relevant
borrowings, Sri Lanka is likely VOLATILE: Cabinet Minister has the power
to face a major shock over the MEDIUM-LOW to bring in relevant amendments
next 12 months, which threatens to extend the period by 1 Year up
SL’s recovery prospects with to Feb 2023, which is likely to be
potentially requiring to move into No elections are likely to be held the most probable scenario in the
an IMF program. until 2023 current environment.

50 September 2021