Policies·lk_imf_eff_2023

IMF Extended Fund Facility — Sri Lanka $2.9bn (2023)

LKA·2023 – 2027·enacted 2023-03-20·UNP + SLPP parliamentary backingcandidate

movesspending level↓tax progressivity↑central bank independence↑product market competition↑sectoral subsidy↓

What the policy did

IMF Executive Board approval on 20 March 2023 of a 48-month Extended Fund Facility of SDR 2.286bn (~$2.9bn) for Sri Lanka, conditional on the official-creditor committee's financing assurances secured via the Paris Club + China + India coordination of Jan-Mar 2023. Programme conditionality: primary-balance surplus target of 2.3% of GDP by 2025; VAT hike from 15% to 18% (effective Jan 2024); SOE restructuring (CEB electricity tariff cost-recovery reform, CPC pricing formula, SriLankan Airlines divestment track); Central Bank of Sri Lanka Act of Sep 2023 enshrining operational independence and prohibiting monetary financing; anti-corruption diagnostic and a new Anti-Corruption Act. Programme continued across the Wickremesinghe-Dissanayake transition with 3rd review completed under Dissanayake in Feb 2025.

Policy-content fingerprint — what this policy moved, on which axes

Per invariant 3, reforms are scored by what they did on each channel-separated axis, not by the party that enacted them. This fingerprint is how the policy-match engine finds historical analogues.

intended

↓

spending level

fiscal.spending_level

General government spending as share of GDP, excluding transfers already captured under fiscal.transfer_expansion to avoid double-counting.

decreased · strong

lower spending share

Primary-balance surplus target of 2.3% GDP by 2025 under EFF.

↑

tax progressivity

fiscal.tax_progressivity

Progressivity of the personal income tax schedule, including top marginal rates, bracket spread, and targeted credits (EITC-equivalents).

increased · moderate

more progressive (higher top rates, wider spread, larger targeted credits)

VAT broadening, PAYE restoration, threshold compression.

↑

central bank independence

monetary.central_bank_independence

De jure and de facto independence of the central bank from fiscal authority. Per D.1.5 scope, one of the framework's defensible monetary positions.

increased · strong

greater independence (legal, operational, personnel)

CBSL Act Sep 2023 codifies operational independence and bans monetary financing.

↑

product market competition

regulatory.product_market_competition

Product-market regulation, entry barriers, licensing burdens, network-industry regulation, price controls.

increased · moderate

more competition-friendly (lower entry barriers)

SOE restructuring benchmarks + energy-price pass-through reduce entry barriers.

↓

sectoral subsidy

fiscal.sectoral_subsidy

Targeted industrial and sectoral subsidies (renewable energy, chip manufacturing, agriculture, green hydrogen, etc).

decreased · moderate

reduced sectoral subsidies

CEB/CPC cost-recovery pricing reduces implicit subsidy.

Enacted by

Empirical evidence — linked hypotheses

Explicit links are curated by the author. Inferred links are hypotheses in the library that test the same axes this policy moved — the framework's answer to "what does the data say about a policy like this?".

The Soviet central-planning system, having already exhibited TFP stagnation 1970-1989, underwent a canonical institutional and economic collapse 1989-1998 as plan-enforcement was withdrawn without functioning market institutions in place.

soviet_union_central_planning_gdp_collapse_1989_1991inferred

viaregulatory.product_market_competitionfiscal.spending_level

INCONCLUSIVE_DATA_PENDING — no outcome variable loaded; missing: ['derived: count of canonical_metrics with threshold met']

run pending

Truss 2022 mini-budget shows that unfunded fiscal expansion above the ZLB triggers sharp bond-market and currency responses through expected-inflation and risk-premium channels.

unfunded_fiscal_expansion_above_zlb_bond_market_responseinferred

viafiscal.spending_levelmonetary.central_bank_independence

SUPPORTED — GBP/USD trough on 2022-09-26 (1.0703) was 5.02% below the 2022-09-22 pre-announcement close (1.1269); log-decline +0.0515 clears the 3.0% threshold …

supported

UK Truss mini-budget 2022 gilt crisis reflected market confidence and institutional-framework rupture rather than an MMT-predicted hard fiscal limit, because the BoE restored order by intervening as issuer.

uk_truss_mini_budget_currency_sovereign_mechanisminferred

viamonetary.central_bank_independencefiscal.spending_level

partial — Both mechanism legs are directionally consistent but at least one fails the SUPPORTED threshold: FX leg holds (5.02% trough decline); yield leg partia…

partial

Rapid market liberalisation (price decontrol, mass privatisation, trade opening) under weak institutions produces large short-run welfare losses—rising mortality, falling life expectancy, rising inequality, and collapsing output—that may persist for at least a decade, compared to gradual reformers or non-reformers at similar initial income levels.

free_market_shock_therapy_social_costinferred

viaregulatory.product_market_competitionfiscal.spending_level

PARTIAL — mean_gap=-3.156, |gap|/pre_sd=1.8, p_perm=0.367; claim direction ambiguous

partial

Among high-income economies 1990-2020, services-sector competition — measured by low barriers to entry, low incumbent-protection scores, and high churn in retail, transport, communications, and professional services — predicts long-run prosperity (real GDP per capita growth and labour-productivity growth) better than manufacturing-specific industrial policy spending.

sectoral_competition_services_productivityinferred

viaregulatory.product_market_competitionfiscal.sectoral_subsidy

PARTIAL — coef=+0.000842, p=0.361 (above α=0.05); direction inconclusive

partial

Countries in the top quartile of Heritage lower-tax-burden score in 2024 have higher latest-available electricity access than bottom-quartile countries, consistent with free-market country policy regimes outperforming less market-oriented regimes on this outcome.

heritage_tax_burden_electricity_access_current_gapinferred

viafiscal.tax_progressivityfiscal.spending_levelregulatory.product_market_competitionfiscal.sectoral_subsidy

PARTIAL — gap sign/magnitude not decisive (diff=4.491, p=0.2842)

partial

Across a broad panel of economies 1980-2020, market reforms (privatisation, trade liberalisation, and price decontrol) produce durable gains in real GDP per capita growth only when rule-of-law scores exceed a minimum threshold (WGI Rule of Law > -0.5, approximately the 40th percentile of the global distribution).

rule_of_law_market_reform_complementarityinferred

viaregulatory.product_market_competition

REFUTED — coef=-0.1483 (sign opposite claim +), p=0.00481

refuted

Countries in the top quartile of Heritage lower-tax-burden score in 2024 have higher latest-available account ownership than bottom-quartile countries, consistent with free-market country policy regimes outperforming less market-oriented regimes on this outcome.

heritage_tax_burden_account_ownership_current_gapinferred

viafiscal.tax_progressivityfiscal.spending_levelregulatory.product_market_competition

REFUTED — top-vs-bottom gap has opposite sign and Welch p=2.887e-05

refuted

Similar historical policies

Ranked by axis-fingerprint overlap with this policy. Direction match bolded — those are the closest historical analogues. Shape of the match is what drives policy-outcome comparison, not the country or party label.

Milei Shock Therapy — Argentina December 2023 onward

ARG·2023

match

2.7

spending levelsectoral subsidyproduct market competition

New Economic Policy — Decree 21060 (Bolivia stabilisation 1985)

BOL·1985

match

2.7

central bank independenceproduct market competitionsectoral subsidy

Rogernomics — New Zealand market reforms 1984-1990

NZL·1984