ADB; Weerakoon, Dushni; Kumar, Utsav; Dime, Roselle2021-10-052021-10-052019-03N/AN/A2313-58672313-5875https://www.adb.org/publications/sri-lanka-macroeconomic-challenges-two-deficitshttps://hdl.handle.net/20.500.14540/5666This paper provides a narrative of Sri Lanka’s history of twin fiscal and current account deficits. It examines the macroeconomic outcomes and policies to deal with the imbalances. Fiscal dominance has been a persistent feature of Sri Lanka’s macroeconomic landscape. This has manifested itself in high macroeconomic volatility and the country has seen frequent balance-of-payments crises. The paper makes policy recommendations to deal with these issues.48Economic dataEconomic researchEconomicsPublic expenditurePublic financial managementPublic revenue