Sri Lanka 1977 Open Economy reforms

Doctrine — stated goals and content

Sharp reversal of the 1956-1977 import-substitution / welfare-state period under the SLFP-led United Front. The 1977 November budget unified the dual exchange rate and devalued the rupee by ~45%, dismantled most quantitative import restrictions, replaced price controls on food with a targeted food-stamp scheme (replacing the universal rice ration), cut tariffs, and launched the Greater Colombo Economic Commission to run Sri Lanka's first export- processing zones (1978). Capital-account liberalisation followed (non-resident foreign-currency accounts 1978), as did privatisation starting in the mid-1980s under Premadasa (Peoplisation programme). The package was sequenced alongside the accelerated Mahaweli irrigation programme and heavy public investment funded by concessional lending. Growth accelerated from ~2.9% (1970-77) to ~5.5% (1977-83) before deteriorating during the 26-year civil war (from 1983), which absorbed fiscal capacity and interacted with external shocks. Sri Lanka is the canonical early South-Asian liberalisation — predating India's 1991 reforms by fourteen years.