Sri Lanka and Pakistan, Two Neighbours of India are Facing the Worst Economic and Political Crisis Since their Independence: A Critical Comparison between Two Economies with Different Systems of Governance

Manya Saraf

Abstract: The increasing worrying situation with respect to Sri Lanka and Pakistan resulted in hardship and turmoil for the citizens of the country. The reason behind this was the fact that the economies ignored the rising fiscal deficit and along with that, external factors led to runaway inflation. The solution is of course restructuring loans, following the policy measures that have been indicated in the IMF documents. The Sri Lankan government has been able to follow this and is emerging out of the crisis but the Pakistan government has to put its political unrest behind it before it can take these stringent decisions. Research question: The research paper will attempt to understand the crisis that both Sri Lanka and Pakistan are facing, economically, socially and politically. Are the reasons for the crisis embedded in past policies with respect to burgeoning fiscal deficit? Is it the lack of political will to take harsh decisions? Or is it a sudden change towards new innovative policy decisions which may have gone wrong given the world environment? These questions would be addressed in the course of the research paper.

Keywords: Pakistan, Sri Lanka, Fiscal deficit, IMF, Governance, Inflation