“Most of [Sri Lanka’s] deficit reduction plans hinge on turning around loss-making state ventures hampered by subsidy schemes, mismanagement and an infamously intractable corps of bureaucrats.”
Public sector resistance to the government’s proposed economic reforms, and poor government follow-through, “could put the [proposed] changes at risk, and leave potential foreign investors still wary of Sri Lanka as a destination," Reuters reports.
Sri Lanka's 1.3 million public employees are not pleased with what they see as an insufficient wage hike, which President Rajapaksa has been promising since he won office in 2005, the agency said.
Sri Lanka's has a population of 21 million.
See Reuters’ summary of ‘Key political risks to watch in Sri Lanka’
Last week, reviewing Sri Lanka’s new budget, the Wall Street Journal also expressed scepticism. Noting President Rajapakse’s proclivity for a state-managed economy, the paper warned:
"Given its recent track record Colombo should expect investors to sit on the sidelines until the government shows it's serious about reform"
See also the analysis by Joseph Sternberg, the WSJ's Business Asia editor, here.