The IPS' (Institute of Policy Studies of Sri Lanka) annual flagship report Sri Lanka: State of the Economy provides a critical assessment of the country's economic performance and near term outlook for macroeconomic stability and growth in the context of developments in both the global economy and domestic policy arena. Each year, the report also examines key medium term policy priorities to achieve sustained growth and better socio-economic development outcomes for the country. This year's report focuses on the many interrelated problems constraining investment and productivity across the Sri Lankan economy owing to weak public finance management. Under the overall theme of “Fiscal Policy for Growth: Sustainable Financing for Development”, the report calls for fiscal consolidation efforts aimed at broadening Sri Lanka's tax base and minimizing distortions, with expenditure measures aimed at rationalizing spending and improving efficiency. The report argues for sound fiscal policy setting as a priority for macroeconomic stability, a fundamental prerequisite for sustainable growth. At the same time, the report argues that the effectiveness of fiscal consolidation efforts is likely to be enhanced when reforms reinforce each other through a careful calibration of taxes and expenditures to harness growth and improve economic outcomes across key policy areas. Source: http://www.ips.lk/images/docs/publications/series/soe/sri_lanka_soe_2016/The%20Island_24Oct2016.pdf