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Conservation efforts across the globe are in urgent need of sustainable financing. The challenge to meet this need is difficult but surmountable. The growing recognition of natural capital, the increasing availability of innovative financing instruments, and the expansion of climate-oriented funds means that there are now a greater number of financing alternatives for countries like Sri Lanka that do not have the fiscal capacity to sustain conservation efforts through traditional budgetary sources. At the Centre for a Smart Future, we are looking at some of these instruments and mechanisms specifically to identify their applicability to Sri Lanka, and learning lessons on how they can be deployed sensibly and sustainably. It’s vital that domestic economic and governance considerations are borne in mind when choosing these instruments and mechanisms for use in Sri Lanka, and government, development partners, policy think tanks, and environmental specialists should be engaged inclusively to get the best outcome for the country.

There is increasing global pressure for economies to extend their investments in climate action due to the added and ever-increasing pressure on the environment. Various sovereign financing instruments linked to nature, like Debt for nature swaps (DFNS), provides developing economies under severe macroeconomic and public financial strain the opportunity to increase climate action and environmental outcomes, while taking new steps to tackle sovereign debt issues. There has been rising interest in debt for nature swaps in the recent years, especially in the post-pandemic era with increase in instances of sovereign debt crises in developing countries and emerging markets. With the help of various multilateral institutions, there has been an increase in traction and reports of debt for nature swap negotiations in process and of such deals that have already taken place. DFNS provide countries a means of tackling sovereign debt issues, and strengthen public finances, while simultaneously making investments in conservation and improving environment outcomes. As this paper notes, governments and country stakeholders must prepare their technical knowledge, and institutional and legal frameworks when embarking on instruments such as these for the first time. In Sri Lanka, some of these have already begun and are ongoing. Our paper argues that stakeholder collaboration in both the economics, finance, and public financial management fraternity as well as the environmental science, conservation and sustainability fraternity is key to ensuring that the right pathways are chosen, and good governance is embedded.

A recent study of gig economy activity in Sri Lanka has emerged, suggesting that although gig work is generally perceived as being part-time work, in reality, gig workers actually work full-time. Despite the reputation gig work as attracted as being largely part-time work used to supplement existing income, the survey of drivers and riders in ride-hailing/ride-sharing and delivery platforms in Sri Lanka, has revealed that many workers actually work on the platform full-time. Yet, platform companies typically do not recognise such workers as ‘employees’ of the platform company and resulting low worker protection. The pandemic and economic crisis has affected these full-time workers to the extent that many were often left idle, with little to no hires and orders during the height of the pandemic and the crisis, despite engaging with the platform full-time.

The need of the hour is not generic SME development/support initiatives, but rather to quickly foster more export-ready or near export-ready firms, from among the SMEs in the country. Amidst the current forex crisis, boosting the cohort of exporting firms and expanding export-earning potential is a top priority. For this, there needs to be a closer link between GoSL institutions/programmes supporting export development and those supporting SME development. For a start, the Government should advise the consolidation of NEDA, IDB and EDB’s Regional Development Division. These entities should become a single agency, that is smaller, sharper, and with a clear and unambiguous mandate. That mandate must be to improve SME competitiveness towards creating more export-ready and near export-ready firms.

A few weeks ago, I saw Greta Thunberg live at the launch of the The Climate Book and something that stuck with me, amongst others, was when she said “we are never going back to normal again because 'normal' was already a crisis.” The idea of GDP as a sole measure of how ‘successful’ a nation is, is one such example of a deep-rooted idea that is considered ‘normal’ which has led to growth at the expense of natural resources and human well-being. Moving beyond GDP and focusing on the idea of ‘green growth’ could unlock a host of new opportunities such as job creation, restoration of natural capital, and increased climate adaptation. Policymakers and politicians should explore alternatives of GDP as Sri Lanka forges forward from the biggest economic crisis in its independent history by placing value in what society really envisions as a good life

CSF Co-founder Anushka Wijesinha was recently invited by the London School of Economics South Asia Centre to speak at a forum on 'Looking Ahead in Sri Lanka', alongside four eminent panelists. This article recaps the key points made in the opening intervention at this event. Wijesinha pointed to four key priorities for the near-term: 1) Looking beyond the macro, to real lives; 2) Looking beyond taxation in fixing the fiscal mess; 3) Looking to build public confidence and trust; 4) Looking at quick wins in trade and exports

In May 2022, the Sri Lanka – Singapore Free Trade Agreement (SLSFTA) marked four years since coming into force - an FTA that was a landmark one for Sri Lanka in many respects. It was the country’s first bilateral free trade agreement (FTA) in over a decade, the first FTA with an ASEAN country, and the first ‘comprehensive FTA’ in the country’s history, which meant that it went beyond goods, to include services, investment, and economic and technology cooperation. This Working Paper reviews bilateral trade performance, explains some of the key domestic economic policy contexts during and after the FTA was signed, discusses some of the key issues that emerged, and takes an initial look at prospects. Research for the paper was drawn not only from published grey material but also from extensive primary interviews with key informants. Insights shared in this paper would be of particular relevance now, following the bilateral meeting between the Sri Lankan President and the Singaporean Prime Minister (on the sidelines of the former's visit to Japan), during which the two leaders recommitted to benefiting from the SLSFTA and advancing its implementation. This Working Paper is produced under the 'Trade and Economic Competitiveness' thematic pillar of CSF, and is co-authored by Anushka Wijesinha (Co-founder, CSF) and Janaka Wijayasiri (Visiting Fellow, CSF).

Earlier this year, Sri Lanka’s census and statistics department released a new version of the country’s Gross Domestic Product (GDP) calculation. The existing National Accounts had been ‘rebased’ from the year 2010 to the year 2015. In explaining the re-basing, the department noted that “a number of improvements” to GDP compilation was done, the first item on the list was ‘Inclusion of generated value addition from the reclaimed land of Colombo Port city project’. The fact that the creation of an 269 hectare artificial land parcel attached to the capital, with sand extracted from nature, materially changed the country’s GDP base was startling. It triggered within us, again, a growing discontent we have felt for a while on how we think about economic growth and an unease with how we assess progress. For some years now, stemming from a love for the natural world, interest in biodiversity, and enthusiasm for photography, we had begun to think about critical issues with our current approach to economic growth. Particularly, there was little appreciation for the value of nature - for instance the emerging agenda of the valuation of natural capital.

While steady growth in exports was recorded in the year 2021, Sri Lanka’s deepening economic crisis runs the serious risk of impacting the export recovery achieved to date. In March 2022, merchandise exports, consisting largely of industrial and agricultural exports, recorded a decline of 3.4% in earnings, compared to the previous year, due to a reduction in both volume and prices of exports. In addition to this, industry representatives predict a decline of about 20% - 30% in total exports as a result of the current crisis, with tea exports being among the lowest it has been in 23 years, and the apparel sector expecting a 20% - 25% drop in output by August 2022. Latest figures for June indicate that apparel sector has exceeded expectations and pre-Covid export numbers. In the context of the economic crisis, escalating now to a de facto lockdown across the country, understanding the challenges posed to the country’s external sector performance, one of Sri Lanka’s main sources of foreign exchange, is crucial. At present, exports of goods and services, which account for 17.7% of GDP as of 2021, have been adversely affected by several factors including most significantly, the worsening fuel and energy crisis.