Sri Lanka's Accountability Deficit

Sri Lanka's 2022 economic crisis was not merely a result of poor fiscal and monetary policy but also the direct consequence of a deep-rooted, systemic accountability deficit. Termed Sri Lanka's "third deficit" (alongside its chronic budget and trade deficits), this governance failure enabled catastrophic policy decisions, such as the 2019 tax cuts, to proceed without institutional challenge.

The study identifies the extreme concentration of power within the Executive Presidency as the primary cause of this accountability deficit. Through process tracing, key informant interviews, and a historical-institutional analysis, the paper demonstrates how the Executive systematically eroded horizontal accountability, i.e., the capacity of state institutions to check and balance one another. It details the subordination of Parliament and its oversight committees, the Executive's direct interference in the Ministry of Finance and the Central Bank, and the parallel decline of an independent, professional public service into a politicised bureaucracy.

The analysis reveals a critical gap between de jure institutional design and de facto political behaviour, where formal checks and balances exist but are rendered inert by political capture and institutional timidity. The paper concludes that sustainable economic recovery is impossible without first addressing this foundational governance crisis. It asserts that closing the accountability deficit through genuine constitutional and institutional reform is a prerequisite for preventing future crises, challenging the long-held notion that democratic accountability must be sacrificed for economic development.

Macroeconomic-Policy_NTT-2.pdf

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