Economic policies which followed in
the Sri Lanka in between 1970 -1977 and after the 1977 years are totally different.
Before 1977, Economic of Sri Lanka followed internal oriented economic
policies, such as limitation of exports and imports, limitation of the foreign exchange
currency. In these time most of the Economic policies of Sri Lanka tried to
build a national economic without any interfere of other countries. Follow
mentioned some characteristics of the economy in that time.
- Restricted for the import, in order to achieve these policy makers conducted huge amount of custom duties.
- Economic polies built policies buildup for develop import substitution industries inside the Sri Lanka. Government gave assistance for these industries.
- Strong rules for foreign currency control are conducted by policy makers. Government conducted foreign currency exchange rates. Government did not allow deciding it by market operations. Therefore in this period Sri Lanka has an over valuated exchange rate.
- Capital account and current account were closeted. Thereby peoples couldn’t exchange rupees in to foreign currencies even for use transactions of current account.
- Government controlled prices of the economy. Therefore open market mechanism was interrupted. Involvement of government for the market was high and main industries conducted by government.
In the 1977, government changed and
new president Mr. J.R. Jayawardene decided to change economic policies. He opened
the market for private section. Foreign policies were totally changed. Government
followed liberal policies Instead of the government involvement for all element
of the economy. Government allowed and promoted investment in private section. After
the 1977, policy makers follow more external oriented policies. Some characterizes
of the Economic in these years, shown below.
- Liberalization of the economy
- Decrease rules related import and exports
- Cancel the Multiple exchange rates and official exchange rates. Then, established the floating exchange rates decided according to demand and supply in exchange currency market.
- Foreign investments were increased in Sri Lankan Economy.
- Prices of the internal market mainly decided by market demand and supply, but prices of some goods and services still control by government authorities. (Bus fees, petroleum etc.)
- Industries developed armed to foreign market
