By Asoka S. Seneviratne –

Prof. Asoka.S. Seneviratne

“The best way to find out if you can trust somebody is to trust them.” — Ernest Hemingway

In a recent national address, President Anura Kumara Dissanayake indicated how Sri Lanka faces unexpected situations and circumstances due to the war in the Middle East, and outlined a framework for how Sri Lanka’s economic recovery is grounded in fiscal discipline, structural reform, and institutional accountability. The message was clear: the path forward will be difficult, but necessary. Yet, policy direction alone does not guarantee success. At the heart of Sri Lanka’s fragile recovery lies a far more decisive factor—public trust. Without it, even the most technically sound reforms risk resistance, distortion, and eventual failure. With it, however, the nation can endure short-term hardship in pursuit of long-term stability. As the country approaches the economically sensitive period of the Sinhala and Hindu New Year, this interplay between policy, trust, and lived reality becomes even more critical. The purpose of this article is to present the above.

A Nation at a Defining Economic Juncture

Sri Lanka today stands at a defining economic and political juncture. Years of fiscal mismanagement, external shocks, and structural weaknesses have culminated in a crisis that demands not temporary fixes, but deep systemic reform. The President’s emphasis on fiscal discipline, anti-corruption measures, and institutional strengthening reflects a fundamentally correct diagnosis of the problem. However, diagnosis must be matched with delivery, sequencing, and sensitivity. The success of reforms will ultimately be judged not in policy frameworks, but in the daily experiences of ordinary citizens for (i) access to essential goods & services, (ii) their affordability, and (iii) the restoration of economic dignity with peace of mind.

Trust as an Economic Variable

Trust, often treated as a political virtue, must instead be recognized as a core economic variable. Where trust is present, (i) societies are more willing to accept temporary hardship, (ii) markets behave with greater stability, and (iii) investors perceive continuity and credibility. Where trust is absent, uncertainty drives panic buying, hoarding behavior intensifies, and informal or black markets begin to dominate economic activity, which may lead to economic uncertainty. The government appears to possess a real and correct understanding of this dynamic. However, such understanding must be translated into consistent and visible action if trust is to be built and sustained.

Festive Season Pressures and Market Behavior

The approach of the Sinhala and Hindu New Year introduces an additional layer of economic pressure that cannot be underestimated. This period traditionally sees a surge in consumption, which, under current conditions, is likely to trigger panic buying, artificial shortages, and price escalation driven by speculation rather than genuine supply constraints. In such an environment, hoarding and black market activity become not only likely, but almost inevitable unless pre-emptive measures are taken. The state must therefore act in a coordinated and disciplined manner, ensuring real-time price transparency, the timely release of buffer stocks, targeted enforcement in a severe manner, such as confiscation on the spot against organized profiteering, and clear communication that reassures the public about the availability of essential goods. Absent such measures, even well-designed macroeconomic policies risk being undermined at the level of everyday economic transactions. Finally, the outcome is that the government will become unpopular. At the same time, the opposition will try to use this situation to earn popularity.

Equity and the Protection of the Vulnerable

At the same time, the distributional consequences of current policies demand urgent attention. While reforms affect all segments of society, their burden falls disproportionately on the most vulnerable. Nearly one-third of the population remains economically fragile, facing severe pressure from rising living costs. Protecting this segment is not only a moral imperative but also a fundamental requirement for maintaining social stability and political legitimacy. A credible reform programme must therefore incorporate targeted social protection mechanisms, including strengthened and well-targeted cash transfer systems, temporary support for essential goods, and robust local-level mechanisms to ensure that assistance reaches those who need it most. Economic stabilization that neglects social protection risks becoming both unsustainable and unjust.

Transparency, Accountability, and Institutional Credibility

The government’s emphasis on transparency and accountability is a critical strength in the current approach. Sri Lanka’s past crises have been exacerbated by corruption, policy inconsistency, and weak institutional oversight. A firm commitment to clean governance and institutional reform is therefore essential. However, the effectiveness of this commitment will depend on implementation at all levels of administration. Delays, inefficiencies, or gaps in communication can quickly erode public confidence and create space for misinformation. Transparency must be experienced by citizens in tangible ways, not merely articulated in policy statements.

Balancing Necessary Sacrifice with Perceived Fairness

The broader reform narrative rests on the premise that short-term sacrifices are necessary to achieve long-term stability. This is economically sound, but its acceptance depends on the perception of fairness and clarity. When the burden of adjustment is seen as equitably shared, and the rationale for policy decisions is clearly communicated, societies are more likely to cooperate with reform efforts. Conversely, if policies are perceived as uneven or opaque, resistance can emerge even in the face of necessity. The government must therefore ensure that its actions consistently reinforce the principle of fairness.

The Political Context: Opposition without Responsibility

The political context within which these reforms are being implemented also warrants careful consideration. A healthy democracy requires not only a decisive government but also a responsible and constructive opposition. However, the current environment suggests a troubling imbalance. Rather than contributing to policy discourse or offering viable alternatives, segments of the opposition appear to engage in reactionary criticism and the amplification of public anxiety. This dynamic reflects the presence of opposition forces without the stabilizing influence of genuine opposition leadership. Such a situation weakens democratic accountability, undermines national cohesion, and complicates the implementation of long-term reforms. In periods of national difficulty, political actors carry a shared responsibility to prioritize the broader interests of the country over short-term advantage.

From Policy Understanding to Policy Delivery

Ultimately, the trajectory of Sri Lanka’s recovery will be determined by the alignment between policy intent and public experience. Economic discipline, social protection, and public trust must operate as interconnected pillars rather than competing priorities. The government appears to possess a clear understanding of the challenges and the direction required to address them. The task now is to ensure that this understanding is translated into consistent, credible, and people-centered governance that reinforces trust at every stage of the reform process.

Conclusion: A Test of Governance and National Responsibility

Sri Lanka is undergoing not merely an economic adjustment, but a profound test of governance and institutional maturity. The policy direction articulated by President Anura Kumara Dissanayake is both necessary and, in many respects, correct. However, the durability of this approach will depend on the extent to which it is anchored in fairness, transparency, and effective delivery. As the Sinhala and Hindu New Year approaches, the immediate management of market behaviour and social pressures will serve as a visible indicator of the government’s capacity to translate policy into practice. At the same time, the broader political environment must evolve toward a more responsible and constructive form of engagement if Sri Lanka is to sustain its recovery over the medium to long term.

Summary

Given the unexpected situation & circumstances due to the war in the Middle East, Sri Lanka faces challenges, & how Sri Lanka’s path to recovery rests on  (i) the successful integration of economic reform, (ii) social protection, and (iii)  public trust. While the government has demonstrated a sound understanding of the structural challenges and necessary policy direction, the ultimate success of its programme will depend on (i) effective implementation, (ii) equitable burden-sharing, and (iii) transparent communication. The approaching festive season presents an immediate test of governance capacity, particularly in managing market distortions and protecting vulnerable populations. At the same time, the absence of a constructive and responsible opposition risks weakening democratic resilience at a critical moment. Sustainable recovery will therefore depend not only on sound economic strategy, but also on trust, fairness, and the collective responsibility of all political and social actors.

*The writer, among many, served as the Special Advisor to the President of Namibia from 2006 to 2012 and was a Senior Consultant with the UNDP for 20 years. He was a Senior Economist with the Central Bank of Sri Lanka (1972-1993). He can be reached via asoka.seneviratne@gmail.com