Thread by @ChayuDamsinghe

I may be just a single macroeconomist, but studying dozens of countries where this happens gives you a sense of what works and what doesn't.

Prioritized timed list of what I think should be done to turn the lights back on and keep them on.

#PowerCutLK #EconomicCrisisLK
(1/9)

1. Immediately raise interest rates as much viable
2. Immediately suspend debt payments+begin negotiations with creditors
3. Immediately send a letter to the IMF officially asking for a bailout+publicize said letter
4. Immediately remove all forex surrender requirements

(2/9)

5. Begin a technocratic overhaul to get people that hold international credibility
6. Layout a weekly roadmap of fiscal policy adjustments
7. Complete the technocratic overhaul
8. Halt as much capex and infrastructure projects as possible and divert import space to fuel

(3/9)

1-4 can be done literally overnight if needed. 5-8 can be done within 2 weeks if you work hard.

1-4 will bring enough temporary relief to immediately reduce powercuts. 5-8 will fix them.

Then you need to follow up on all this and actually do the fiscal adjustments.

(4/9)

After this,
9. Cut down as much expenditure as possible
10. Start privatizing (give stake to employees) as much as practical
11. Raise taxes as much as viable
12. Give as much of that fiscal space to the poor (Raised taxes will reduce inflationary pressures from demand)

(5/9)

9-12 will be tough but essential to maintain macro stability beyond the immediate term. You can work hard and do this by end-April in an interim budget.

Then
13. Conclude your debt negotiations
14. Conclude your IMF negotiations
15. STICK TO THE POLICY

(6/9)

The alternative is rapidly worsening powercuts that make the ability to fix the powercuts harder and harder, and require worse and worse measures to fix it.

Every single day that this is delayed, worsens powercuts, worsens prices, worsens the action needed to stabilize.

(7/9)

Will any of this get actually get done?

Probably yes, but it likely won't happen fast enough and well enough=we have to face more pain until things resolve.

But they will resolve and we just have to hold on until then. And then hold on and rebuild properly afterwards.

(8/9)

Ask any clarification/explanation, especially if this is not your area of expertise, happy to detail out.

(9/9)