The governor of the Central Bank of Sri Lanka, Ajith Nivard Cabraal, has challenged the International Monetary Fund's (IMF) recommendations for the country, saying "conventional wisdom" is not applicable to Sri Lanka's unique case.
In an article posted to the central bank's website, Cabraal said Sri Lanka had faced "daunting" challenges in 2009, as the economy was battered by the financial crisis just as it was attempting to recover from a civil war in the north of the country.
The IMF agreed a stand-by arrangement with the country, and offered the advice that Sri Lanka should devalue its currency to curb trade deficits, and hike taxes to tackle the government deficit. Cabraal argued this was a poor option, given that materials needed to be imported for rebuilding the north, and lower taxes would boost growth.
Ultimately, Sri Lankan authorities were able to convince the IMF of the merits of their approach. Cabraal said they have now been vindicated: "Subsequent economic outcomes have since confirmed the wisdom of both these moves."