Sri Lanka reforms targeted at debt reduction

Foreign funds looking at investing in Sri Lanka face an interesting dilemma.

With GDP growing at an average annual rate of 7.4% over the past five years, the south Asian nation has one of the fastest growing economies in the world. And yet it also continues to struggle with several sources of instability including high levels of public debt and a depreciating currency triggered by capital outflows.

To tackle such issues, the new government of Sri Lanka is taking “bold political steps” to re-establish fiscal consolidation and reduce public debt so as to stop the capital outflows and attract foreign investment, finance minister Ravi Karunanayake said at...