When I visited Colombo last April, the airport was humming with a lot of tourists. My experience at the immigration was very good while foreign exchange booths were showing a much more stable exchange rate. Afterwards my interactions with a few entrepreneurs revealed a revival of industrial production and exports too.

What is more heartening is that the country last Wednesday officially announced the conclusion of its debt restructuring exercise with almost all official creditors. A significant comeback from the brink of rupture.

This is no doubt an amazing revival story for a country which just two years ago saw extreme fuel rationing, many hours of power cuts and mass agitation to oust an elected president.

If we take stock of what brought them here, it will revalidate their efforts:

Decisive and dynamic monetary policy: It raised policy rates significantly (interest rates were at 30 percent at one point) and floated the currency (the Sri Lankan rupee depreciated from LKR 200 to LKR 370 against the US dollar) before gradually reducing rates as inflation eased.

Market pricing of energy aimed at dampening demand: It raised electricity prices to reflect cost and market price of fuel, gas and other imported commodities. No subsidies were given from the government.

Prudent fiscal policy: A steep rise in tax rates has increased government revenue to GDP to more than 10 percent, well on its way to 15 percent, with a rebound in growth kicking in.

Confidence focused legislation: The central bank's independence, fiscal management, energy sector reform, banking sector reform and domestic debt restructuring also played an important role.

These  were all bitter pills to swallow for the policymakers and, more importantly, for the country's citizens. But the outcomes were very good.

Inflation was down to 0.9 percent in May 2024 from a high of 70 percent in September 2022.

The currency has appreciated approximately 20 percent from a low of LKR 370 to LKR 305 against the US dollar.

The interest rates (both of bank lending and treasury bills) are now single-digit rates. The economy bounced back to 5.3 percent in the first quarter of 2024 from a few quarters of negative growth. The stock market went up around 80 percent.

When the governor of the Central Bank of Sri Lanka visited Bangladesh a few months back, he accepted that there is still a long way to go and more reforms are needed. He also made it clear that monetary policy and fiscal policy are all it takes to run an economy. You can either run a country to the ground or towards a growth trajectory.

And for this revival my friends in Colombo would want to give a standing ovation to the teams at the various ministries and the central bank who have taken the road less travelled to fast bring the country back from the brink of a crisis.

I wish we could one day say the same for our country and the policymakers. Led by a dispassionate diagnosis of the problems, acceptance of policy prescriptions and implementation with precision.

I have been visiting Sri Lanka quite frequently since 2000 and have many friends as well as interests there. I don't think our friends and citizens of Sri Lanka got the deserving deals from their politicians and even policymakers. They simply were in the soup for almost two years. However, they have redefined the definition of austerity, cost optimisation, cutdowns and crisis management. Moreover, some of their policymakers, common people and civil society members rose to the occasion and brought the country to where it is today. 

When I joined Citibank in 2001, my regional head, Mr. Nanoo Pamnani, said that Sri Lanka had all the potentials to become the next Singapore, but political crisis and social cracks didn't favour the island state to exploit its potentials.

I hope Sri Lanka never has to go through any more political crisis and, more importantly, policy paralysis.

The author is an economic analyst.