Targeting Social Assistance in The Context of Crises and Austerity: The Case of Sri Lanka

Sri Lanka’s public spending on social assistance remained higher than its capital spending in the early decades post-independence. The prioritisation of social welfare was made possible by the surpluses earned by the exports from the plantation economy. Although Sri Lanka was susceptible to global shocks from time to time even before the liberalisation of the economy, including the fluctuations of commodity prices, successive governments committed to maintaining agricultural subsidies, land distribution programmes and social investments as part of its annual budget allocations. Recently, Sri Lanka joined several other countries facing debt distress in the Global South when it announced that it would default on all its foreign debt obligations in May 2022. The country faces tough prospects in negotiating the restructuring of its foreign debt in a manner that is genuinely sustainable. Sri Lanka’s celebrated social investment programmes have been under stress since the late 1970s as investments for these programmes were systematically reduced. Given the current economic crisis, social protection programmes are under serious threat. Reform agendas have been put on the table or have already been implemented to dismantle Sri Lanka’s social protection schemes.