Sri Lanka, Sept. 15 -- Sri Lanka has made remarkable strides in stabilizing its economy, undertaking one of the largest fiscal adjustments in its history-equal to nearly 8 percent of GDP over three years. The adjustment was sharper and faster by international standards, when compared with more than 330 similar efforts in 123 countries worldwide since 1980, according to a new World Bank review of Sri Lanka's public finances released on Tuesday.
Yet, the country is not out of the woods. Bound by the IMF programme, Sri Lanka has little room outside a liberal economic framework.
The World Bank notes that fiscal measures have restored stability, but at a cost: households now face higher indirect taxes, real public-sector wages have fallen, a...