With an economy worth $93.45 billion $298.310 billion PPP and a per capita GDP of about $4,310, $13,480 PPP as of 2018 Sri Lanka has mostly had strong growth rates in recent years. The Sri Lankan economy has seen robust annual growth at 6.4 percent over the course of the 2003-2012 period, well above its regional peers. In GDP per capita terms, it is ahead of other countries in the South Asian region. The main economic sectors of the country are tourism, tea export, apparel, textile, rice production and other agricultural products. In addition to these economic sectors, overseas employment contributes highly in foreign exchange: 90% of expatriate Sri Lankans reside in the Middle East.
Sri Lanka has met the Millennium Development Goal (MDG) target of halving extreme poverty and is on track to meet most of the other MDGs, outperforming other South Asian countries. Sri Lanka experienced a major decline in poverty between 2002 and 2009 – from 23 percent to 9 percent of the population. Despite this pockets of poverty continue to exist. An estimated 9 percent of Sri Lankans who are no longer classified as poor live within 20 percent of the poverty line and are, thus, vulnerable to shocks which could cause them to fall back into poverty. Since the end of the three-decade civil war, Sri Lanka has begun focusing on long-term strategic and structural development challenges as it strives to transition to an upper middle income country. Sri Lanka has one of the lowest tax-to-GDP ratios in the world, and creating jobs for the bottom 40% has become a challenge. Sri Lanka also faces a challenges in social inclusion, governance and sustainability.
According to government policies and economic reforms stated by Prime Minister and Minister of National Policy and economic affairs Ranil Wickremesinghe, Sri Lanka plans to create a knowledge-based social market economy and an export-oriented economy as well as the Western Region Megapolis a Megapolis in the western province to promote economic growth. The creation of several business and technology development areas island-wide specialised in various sectors, as well as tourism zones are also being planned. But Sri Lanka has recently been facing a danger of falling into economic malaise, with increasing debt levels and a political crisis which saw the country's debt rating being dropped.
|Economy of Sri Lanka|
Colombo, the financial centre of Sri Lanka
|Currency||Sri Lankan rupee (LKR)|
|SAFTA, WTO, IOR-ARC, BIMSTEC, AIIB|
|GDP||$88.223 billion (nominal, 2018 est.) $290.561 billion (PPP, 2018 est.)|
|GDP rank||63rd (nominal, 2018) 59th (PPP, 2018)|
|4.5% (2016) 3.3% (2017) 3.9% (2018e) 4.0% (2019f) |
GDP per capita
|$4,067 (nominal, 2018 est.) $13,397 (PPP, 2018 est.)|
GDP per capita rank
|112th (nominal, 2018) 92nd (PPP, 2018)|
GDP by sector
|agriculture: 7.8% industry: 30.5% services: 61.7% (2017 est.)|
|4.500% (2019f est.) 4.270% (2018) 6.581% (2017)|
Population below poverty line
|6.7% (2012 est.)|
|39.8 medium (2016, World Bank)|
|0.770 high (2017) (76th)|
|8.937 million (2017)|
Labour force by occupation
|agriculture: 27% industry: 26% services: 47% (31 December 2016)|
|Unemployment||4.4% (2017 est.)|
|processing of rubber, tea, coconuts, tobacco and other agricultural commodities; telecommunications, insurance, banking; tourism, shipping; clothing, textiles; cement, petroleum refining, information technology services, construction|
|Exports||$15 billion (2018 est.)|
|textiles and apparel, tea and spices; rubber manufactures; precious stones; coconut products, fish|
Main export partners
| United States 24.6% |
United Kingdom 9%
Germany 4.3% Italy 4.3% (2017)
|Imports||$20.98 billion (2017 est.)|
|petroleum, textiles, machinery and transportation equipment, building materials, mineral products, foodstuffs|
Main import partners
| India 22% |
United Arab Emirates 5.7%
Japan 4.9% (2017)
|US$1.63 Billion (2017) Abroad: NA|
|−$2.31 billion (2017 est.)|
Gross external debt
|$51.72 billion (79.1% of GDP) (31 December 2017 est.)|
|79.1% of GDP (2017 est.)[note 1]|
|−5.5% (of GDP) (2017 est.)|
|Revenues||12.07 billion (2017 est.)|
|Expenses||16.88 billion (2017 est.)|
|Standard & Poor's:|
B+ (T&C Assessment)
|$8 billion (2018.) $7.959 billion (31 December 2017 est.)|
Since becoming independent from Britain in February 1948, the economy of the country has been affected by natural disasters such as the 2004 Indian Ocean earthquake and a number of insurrections, such as the 1971, the 1987–89 and the 1983–2009 civil war. Between 1977 and 1994 the country came under UNP rule in which under President J.R Jayawardana Sri Lanka began to shift away from a socialist orientation in 1977. Since then, the government has been deregulating, privatizing, and opening the economy to international competition. In 2001, Sri Lanka faced bankruptcy, with debt reaching 101% of GDP. The impending currency crisis was averted after the country reached a hasty ceasefire agreement with the LTTE and brokered substantial foreign loans. After 2004 the UPFA government has concentrated on mass production of goods for domestic consumption such as rice, grain and other agricultural products. however twenty five years of civil war slowed economic growth, diversification and liberalisation, and the political group Janatha Vimukthi Peramuna (JVP) uprisings, especially the second in the early 1980s, also caused extensive upheavals.
Following the quelling of the JVP insurrection, increased privatization, economic reform, and a stress on export-oriented growth helped improve the economic performance, increasing GDP growth to 7% in 1993.
Economic growth has been uneven in the ensuing years as the economy faced a multitude of global and domestic economic and political challenges. Overall, average annual GDP growth was 5.2% over 1991–2000.
In 2001, however, GDP growth was negative 1.4%--the first contraction since independence. The economy was hit by a series of global and domestic economic problems and affected by terrorist attacks in Sri Lanka and the United States. The crises also exposed the fundamental policy failures and structural imbalances in the economy and the need for reforms. The year ended in parliamentary elections in December, which saw the election of United National Party to Parliament, while Sri Lanka Freedom Party retained the Presidency.
During the short lived peace process from 2002 to 2004, the economy benefited from lower interest rates, a recovery in domestic demand, increased tourist arrivals, a revival of the stock exchange, and increased foreign direct investment (FDI). In 2002, the economy experienced a gradual recovery. During this period Sri Lanka has been able to reduce defense expenditures and begin to focus on getting its large, public sector debt under control. In 2002, economic growth reached 4%, aided by strong service sector growth. The agricultural sector of the economy staged a partial recovery. Total FDI inflows during 2002 were about $246 million
The Mahinda Rajapakse government halted the privatization process and launched several new companies as well as re-nationalising previous state owned enterprises, one of which the courts declared that privatizationis null and void. Some state-owned corporations became overstaffed and less efficient, making huge losses with series of frauds being uncovered in them and neopotism rising. During this time EU revoked GSP plus preferential tariffs from Sri Lanka due to alleged human rights violations, which cost about USD 500 million a year.
The resumption of the civil-war in 2005 led to a steep increase defense expenditures. The increased violence and lawlessness also prompted some donor countries to cut back on aid to the country..
A sharp rise in world petroleum prices combined with economic fallout from the civil war led to inflation that peaked 20%. However, as the civil war ended in May 2009 the economy started to grow at a higher rate of 8.0% in the year 2010 and reached 9.1% in 2012 mostly due to the boom in non-tradable sectors. However the boom didn't last and the GDP growth for 2013 fell to 3.4% in 2013 and only slightly recovered to 4.5% in 2014.
In 2016 the government succeeded in lifting an EU ban on Sri Lankan fish products which resulted in fish exports to EU rising by 200% and in 2017 improving human rights conditions resulted in the European Commission proposing to restore GSP plus facility to Sri Lanka. Sri Lanka's tax revenues per GDP also increased from 10% in 2014 which was the lowest in nearly two decades to 12.3% in 2015 Despite reforms, Sri Lanka was listed among countries with the highest risk for investors by Bloomberg.
The chart below summarizes the trend of Sri Lanka's gross domestic product at market prices. by the International Monetary Fund with figures in millions of Sri Lankan Rupees.
|Year||Gross Domestic Product||US Dollar Exchange|
|1980||66,167||16.53 Sri Lankan Rupees|
|1985||162,375||27.20 Sri Lankan Rupees|
|1990||321,784||40.06 Sri Lankan Rupees|
|1995||667,772||51.25 Sri Lankan Rupees|
|2000||1,257,637||77.00 Sri Lankan Rupees|
|2005||2,363,669||100.52 Sri Lankan Rupees|
|2016||6,718,000||145.00 Sri Lankan Rupees|
For purchasing power parity comparisons, the US Dollar is exchanged at 113.4 Sri Lankan Rupees only.
The following table shows the main economic indicators in 1980–2017.
|GDP in $
|16.58 Bln.||27.43 Bln.||37.74 Bln.||56.28 Bln.||83.03 Bln.||112.59 Bln.||124.94 Bln.||136.99 Bln.||147.99 Bln.||154.39 Bln.||168.80 Bln.||186.76 Bln.||207.60 Bln.||218.11 Bln.||233.01 Bln.||247.37 Bln.||261.72 Bln.||274.72 Bln.|
|GDP per capita in $
|5.8 %||5.0 %||6.2 %||6.1 %||8.4 %||6.2 %||7.7 %||6.8 %||6.0 %||3.5 %||8.0 %||8.4 %||9.1 %||3.4 %||5.0 %||5.0 %||4.5 %||3.1 %|
|26.1 %||1.5 %||21.5 %||7.7 %||6.2 %||11.0 %||10.0 %||15.8 %||9.6 %||3.4 %||6.3 %||6.7 %||7.5 %||6.9 %||2.8 %||2.2 %||4.0 %||6.5 %|
(Percentage of GDP)
|...||...||82 %||80 %||82 %||79 %||77 %||74 %||71 %||75 %||72 %||71 %||70 %||72 %||72 %||78 %||80 %||79 %|
In 1977, Colombo abandoned statist economic policies and its import substitution trade policy for market-oriented policies and export-oriented trade.
Sri Lanka's most dynamic industries now are food processing, textiles and apparel, food and beverages, telecommunications, and insurance and banking.
By 1996 plantation crops made up only 20% of exports (compared with 93% in 1970), while textiles and garments accounted for 63%. GDP grew at an annual average rate of 5.5% throughout the 1990s until a drought and a deteriorating security situation lowered growth to 3.8% in 1996.
The economy rebounded in 1997–98 with growth of 6.4% and 4.7% – but slowed to 3.7% in 1999. For the next round of reforms, the central bank of Sri Lanka recommends that Colombo expand market mechanisms in nonplantation agriculture, dismantle the government's monopoly on wheat imports, and promote more competition in the financial sector.
Pre 2009 there was a continuing cloud over the economy the civil war and fighting between the Government of Sri Lanka and LTTE. However the war ended with a resounding victory for the Sri Lankan Government on 19 May 2009 with the total elimination of LTTE.
Last Updated on 24 June 2018
2018E: 4.5%, 2019E: 4.8%
Following a real GDP expansion of 3.1% in 2017, the economy is however anticipated to be in the "negative output gap" territory in 2018E and 2019E (i.e. below its potential output of 5.25% - estimated by the IMF)
Global Environment not likely to assist in reducing the Negative Output Gap of Sri Lanka
Even though the CBSL tried to adopt a soft monetary policy by early April 2018 to reduce the output gap of the Sri Lankan economy, the chances of the Regulator opting for further policy interest rate cuts seem to be limited at this juncture, given hawkish approach of the FED in the near term (as there could be a potential capital flight from domestic markets as already seen with the domestic fixed income market's foreign holding). The expected FED rate (at least more than a couple in 2H2018E) hikes are anticipated to continue to reduce foreign participation in the domestic fixed income markets as seen during previous rate hikes of the FED.
Climatic Change Impact on South Asia to Hinder Agri allied output in the Short to Medium Term
Another reason why the Sri Lankan (real GDP) output is likely to be low in the near to medium term is low absolute output expected from Agriculture and Agri-allied manufacturing processes. There was a flood in May 2018 (followed by floods in May 2016 and May 2017), and based on the World Bank’s recent Annual Reports, world climatic change related impact may likely result in annual floods and / or droughts for the South Asian region in the near to medium term (that includes Sri Lanka).
Investment Environment and Sustainable Revenue allied Limitations
Sri Lanka's investment to GDP ratio (average for past five years) hovers ~ 31% which is made up of 24% Private Sector Investment, 5% Public Investment (or Government Capex) and 2% via Foreign Direct Investment (FDIs). For an economy to reach a sustainable productive capacity (or real GDP growth rate) equivalent to 6% - 7%, the investment to GDP ratio has to at least increase to the level of ~34% - 35%, which requires an increase in the said investments level. Given Sri Lanka's natural savings rate of ~23% - 24%, private sector investment may continue to remain at 24% levels at least in the near term. Given Government of Sri Lanka's (GoSL) commitment to contain fiscal deficits in the near term, Public investment in GoSL' s best case will be at ~5% level in the short to medium term. This leaves room only for one area of focus in the near term, if Sri Lanka needs to increase its potential output level, which is FDIs. For this to improve, few indices like the "doing business index (Sri Lanka stood at 111 for 2018 which deteriorated its rank from 85th position during 2014)", the overall tariff structure & allied reforms and infrastructure project execution pace (to increase economic efficiency) play a key role. However, increasing FDI level to 5% - 6% in the medium term may require fast pacing the matters mentioned above.
From a sustainable revenue point of view, Sri Lanka has continued to perform low, given its declining Export to GDP ratio, which was at 33% in 2000, that deteriorated to 15% in 2014 which has now (by end of 2017) further deteriorated to 12%, emphasizing the fact that policies by the successive Governments during past few decades have not helped in increasing the country’s sustainable revenue. A classic example for this is, during 1992, Sri Lanka’s absolute Export Value was on par with countries like Vietnam and Bangladesh (at US$2bn), which has only grown to a shade below US$12bn by end of 2017 (compared to Vietnam’s US$214bn and Bangladesh’s US$36bn for 2017)
Head line CCPI and NCPI will hover at 6% by 30 June 2019
Even though the Government did not adopt the fuel pricing formula, the Government took action to increase domestically controlled Petrol and Diesel prices, that will eventually increase non-financial SOE gains (which were in the red zone up to 2015) in the near term. This reform (even though, it is a spot action) and the anticipated adoption of the electricity pricing reform or a similar adjustment to electricity prices by end of September 2018 (as agreed with IMF's reform agenda for Sri Lanka), may transfer Ceylon Petroleum Corporation - CPC and the Ceylon Electricity Board - CEB (two of the top three loss making SOEs – other being Sri Lankan air lines) in to the green zone (profits), in SOE financials.
These changes may however, result in upward inflationary pressures in the short to medium term which will also be further slightly stimulated by supply side shocks anticipated via adverse weather related mishaps in the near term.
However, given the tighter monetary approach in the world economy, commodity prices may likely ease at least commencing 2019, which will eventually help sustain imported inflation to the country. As a result inflation in Sri Lanka could be possibly contained at around 6% by mid-2019.
12 Month T bill to be at 10% by 30 June 2019
The CBSL has reduced its T bill holding significantly from April 2017 to date reversing any monetary stimulated inflationary actions. Thus the resultant liquidity levels in the money market broadly reflects natural market conditions compared to the market that was there an year ago, which reflected more realistic banking sector interest rates as of June 2018.
Private sector credit growth declined from high levels of 29% YoY in July 2016 to 15% YoY levels in 1Q2018. One of the main features of this decline includes a significant reduction in the uptake of credit from the Corporates, which is depicted by the declining Prime - Net Interest Margins (Prime - NIMs) since September 2016. Prime - NIMs declined from 5.2% in Sep 2016 to 2.2% in May 2018, which is a 300bps reduction in corporate lending business for the local banking system. However, retail margins in the economy declined only 30bps to 5% during the same period, which confirms the tilt of credit towards less credit worthy from high credit rated corporates (pausing possible NPA threats for the banking system in the near term).
Given the changes taking place in the private credit space (i.e the retail tilt), and provided the CBSL's recent policy rate cut in April 2018, credit growth may still continue to move either horizontally (i.e. at 15% level) or continue to reduce slightly given anticipated near term inflationary pressures, as the consumption led borrowings may also tend to decline on account of anticipated reduction in near term disposable income. This will however not add any excessive upward pressures on interest rates (including 12 month T bill yields) especially during 2H2018E. As a result 12 month Treasury bill yields may in fact slightly decline from its June 2018 --> 9.4% to 9% levels by end of 2018E. However, given the International Sovereign Bond (ISB) bullet payments >US$3bn p.a. commencing from 2019E may likely add some upward pressure on interest rates, resulting in the 12 month T bill yields rising to at least 10% by 30 June 2019.
In the recent past, the Sri Lankan Government has identified some key focal areas to address the external imbalances of the economy, especially with regard to reducing its high trade deficit (~15% of GDP for 2012) in order to make the economy comply with the Marshall–Lerner condition. Sri Lanka's oil import bill accounts for an estimated 27% of total imports while its pro-growth policies have resulted in an investment goods import component of 24% of total imports. These inelastic import components have led to Sri Lanka's Export goods price elasticity + Import goods price elasticity totalling less than 1, resulting in the country not complying with the Marshall–Lerner condition.
Some of the suggested proposals include:
The Central Bank of Sri Lanka is the monetary authority of Sri Lanka and was established in 1950. The Central Bank is responsible for the conduct of monetary policy in the country and also has supervisory powers over the financial system.
The Colombo Stock Exchange (CSE) is the main stock exchange in Sri Lanka. It is one of the most modern exchanges in South Asia, providing a fully automated trading platform. The vision of the CSE is to contribute to the wealth of the nation by creating value through securities. The headquarters of the CSE have been located at the World Trade Center Towers  in Colombo since 1995 and it also has branches across the country in Kandy, Matara, Kurunegala, Negombo and Jaffna. In 2009, after the 30 years long civil war came to an end, the CSE was the best performing stock exchange in the world.
Most Sri Lankan cities and towns are connected by the Sri Lanka Railways, the state-run railway operator. The Sri Lanka Transport Board is the state-run agency responsible for operating public bus services across the island.
The government has launched several highway projects to bolster the economy and national transport system, including the Colombo-Katunayake Expressway, the Colombo-Kandy (Kadugannawa) Expressway, the Colombo-Padeniya Expressway and the Outer Circular Highway to ease Colombo's traffic congestion. The government sponsored Road Development Authority (RDA) has been involved in several large-scale projects all over the island in an attempt to improve the road network in Sri Lanka. Sri Lanka's commercial and economic centres, primarily the capitals of the nine provinces are connected by the "A-Grade" roads which are categorically organised and marked. Furthermore, "B-Grade" roads, also paved and marked, connect district capitals within provinces. The grand total of A, B and E grade roads are estimated at 12,379.49 km.
The energy policy is governed by the Ministry of Power and Energy, while the production and retailing of electricity is carried out by the Ceylon Electricity Board. Policy recommendations and planning comes under the oversight of the Public Utilities Commission of Sri Lanka. Energy in Sri Lanka is mostly generated by hydroelectric power stations in the Central Province.
Sri Lanka has a well established education system which has successfully created vast supply of skilled labor. The Sri Lanka's population has a literacy rate of 92%, higher than that expected for a third world country; it has the highest literacy rate in South Asia and overall, one of the highest literacy rates in Asia. Information technology literacy of the urban sector population is also satisfactory at 39.9 percent and people around the country use web based job boards to find skilled employment together with other sources such as news papers and government gazette. In Sri Lanka all persons above age limit 15 years and above of either gender are identified as working age population. In the fourth quarter of 2017, Sri Lanka had an unemployment rate of 4.2 percent and is shown to reduce gradually over the years.
Tourism is one of the main industries in Sri Lanka. Major tourist attractions are focused around the islands famous beaches located in the southern and the eastern parts of the country and ancient heritage sites located in the interior of the country and resorts located in the mountainous regions of the country. Also, due to precious stones such as rubies and sapphires being frequently found and mined in Ratnapura and its surrounding areas, they are a major tourist attraction.
The 2004 Indian Ocean Tsunami and the past civil war have reduced the tourist arrivals, however the number of tourists visiting have been recently increasing, beginning in early 2008. March 2008 by 8.6% and Sri Lanka attracted 1,003,000 tourists in 2012 according to the Central Bank of Sri Lanka's 2013 roadmap.
The tea industry, operating under the Ministry of Public Estate Management and Development, is one of the main industries in Sri Lanka. It became the world's leading exporter in 1995 with a 23% share of global tea export, higher than Kenya's 22% share. The central highlands of the country have a low temperature climate throughout the year and annual rainfall and the humidity levels that are suitable for growing tea. The industry was introduced to the country in 1867 by James Taylor, a British planter who arrived in 1852.
The apparel industry of the Sri Lanka mainly exports to the United States and Europe. There are about 900 factories throughout country serving companies such as Victoria's Secret, Liz Claiborne and Tommy Hilfiger. Textiles & Apparels, as categorized and reported by the Sri Lanka Export Development Board, made up to around 44% of Sri Lankan merchandise exports, in the year 2017.
The agricultural sector of the country produces mainly rice, coconut and grain, largely for domestic consumption and occasionally for export. The tea industry which has existed since 1867 is not usually regarded as part of the agricultural sector, which is mainly focused on export rather than domestic use in the country.
Sri Lanka is known for producing a variety of gemstones, including chrysoberyl, corundum, garnet, ruby, spinel, and tourmaline, and is a leading producer of the Ceylon Blue sapphire. The best known areas for gemstone mining in Sri Lanka were Balangoda, Elahera, Kamburupitiya, Moneragala, Okkampitiya, and Ratnapura. In addition Sri Lanka has a variety of industrial minerals, which include ball clay, kaolin, and other clays, calcite, dolomite, feldspar, graphite, limestone, Ilmenite, mica, rutile mineral sands, phosphate rock, quartz, zircon, dolomite and silica sand. Pulmoddai beach sand deposit is the most important non-ferrous mineral reserve in Sri Lanka as well as one of the world's most richest mineral sand deposits with heavy mineral concentrates of 50% to 60% and contain manyminerals including titanium.
Sri Lanka is specially for its highly valued and high-purity vein graphite. As of 2014, graphite was produced at the two largest graphite mines in Sri Lanka, the Bogala and the Kahatagaha Mines. Major investors in graphite mining are Graphite Lanka Ltd., Bogala Graphite Lanka Plc, Bora Bora Resources Ltd. (BBR) of Australia, MRL Corp. Ltd. of Australia, and Saint Jean Carbon Inc. of Canada.
Sri Lanka has developed several multi-national companies and international brands. The most notable companies include:
Exports to the United States, Sri Lanka's most important market, were valued at $1.8 billion in 2002, or 38% of total exports. For many years, the United States has been Sri Lanka's largest market for garments, receiving more than 63% of the country's total garment exports. India is Sri Lanka's largest supplier, with imports worth $835 million in 2002. Japan, traditionally Sri Lanka's largest supplier, was its fourth-largest in 2002 with exports of $355 million. Other important suppliers include Hong Kong, Singapore, Taiwan, and South Korea. The United States is the 10th-largest supplier to Sri Lanka; US imports amounted to $218 million in 2002, according to Central Bank trade data.
A new port is being built in Hambantota in Southern Sri Lanka, funded by the Chinese government as a part of the Chinese aid to Sri Lanka. This will ease the congestion in Sri Lankan ports, particularly in Colombo. In 2009, 4456 ships visited Sri Lankan ports.
Sri Lanka had applied for credit ratings from international agencies in its efforts to apply for loans from international markets in 2005 after the election of Mahinda Rajapakse as president. Standard and Poor's has rated Sri Lanka a "B+" speculative rating, four grades below investment grade. Fitch has rated Sri Lanka with "BB-" which is three grades below investment grade. Standard and Poor's maintains Sri Lanka is constrained by providing widespread subsidies, a bloated public sector, transfers to loss-making state enterprises, and high interest local and international burdens . Standard and Poor's estimates public sector debt has reached 95% of GDP , in comparison to CIA estimates of 89% of GDP . Sri Lanka in mid-2007 sought to borrow $500 million from international markets to shore up the deteriorating exchange rate and reduce pressure on repayment of the domestic debt market . The head of the opposition UNP, Ranil Wickremasinghe has warned that such intense borrowing is unsustainable and will not repay these loans if elected to power .
Sri Lanka is highly dependent on foreign assistance, and several high-profile assistance projects were launched in 2003. The most significant of these resulted from an aid conference in Tokyo in June 2003; pledges at the summit, which included representatives from the International Monetary Fund, World Bank, Asian Development Bank, Japan, the European Union and the United States, totalled $4.5 billion.
During the past few years, the country's debt has soared as it was developing its infrastructure to the point of near bankruptcy which required a bailout from the International Monetary Fund (IMF). "Without an IMF loan, Sri Lanka would have been in a precarious position," in May 2016 according to Krystal Tan, an Asia economist at Capital Economics who added, "foreign exchange reserves only covered around 80 percent of short-term external debt." The IMF had agreed to provide a $1.5 billion bailout loan in April 2016 after Sri Lanka provided a set of criteria intended to improve its economy.
By the fourth quarter of 2016 the debt was estimated to be $64.9 billion. Additional debt had been incurred in the past by state-owned organizations and this was said to be at least $9.5 billion. Since early 2015, domestic debt increased by 12 percent and external debt by 25 percent.
In late 2016 the World Bank provided US$100 million in financing and the Japan International Cooperation Agency provided a US$100M loan, both intended to "provide budget financing and to support reforms in competitiveness, transparency, public sector and fiscal management", according to the World Bank. The bank also reported that the country's government had agreed that there was a need for reforms "in the areas of fiscal operations, competitiveness and governance" and if fully implemented, "these could help the country reach Upper Middle Income status in the medium term" according to the bank.
In November 2016, the International Monetary Fund reported that it would disburse a higher amount than the US$150 million originally planned, a full US$162.6 million (SDR 119.894 million), to Sri Lanka. The agency's evaluation was cautiously optimistic about the future: "While inflation has abated, credit growth remains strong. The central bank indicates its readiness to tighten the monetary policy stance further if inflationary pressures resurge or credit growth persists. The authorities intend to continue building up reserves through outright purchases while allowing for greater exchange rate flexibility. The banking sector is currently well capitalized. Steps are being taken to find a resolution mechanism for the distressed financial institutions. Going forward, there is a need to strengthen the supervisory and regulatory framework, and identify and mitigate vulnerabilities in the financial sector, particularly with regard to non-banks and state-owned banks."
As part of the debt management program the Sri lankan government carried out several reforms which including the implementation of a new Inland Revenue Act as well as an automatic fuel pricing formula. Tax reforms also increased VAT rates and narrowed exemptions and the third review by the IMF noted that performance was on track regarding fiscal consolidation, revenue mobilization, monetary policy management, and reserves accumulation. In the fourth review in June 2018 the IMF claimed that " Sri Lanka has made important progress under its Fund-supported program." but stressed the need of further progress with revenue-based fiscal consolidation and a prudent monetary policy with sustained efforts to build up international reserves. In 2018 China extended a loan of $1.25 Billion consisting of a below market rate syndicated loan and smaller Panda bond to bailout Sri Lanka.
While the government is aiming to raise its low revenue collection, partly through an increase in the value-added tax rate ... the country has a spotty record on tax collection.
'We still don't know the exact total debt number,' Sri Lanka's prime minister admitted to parliament earlier this month.
The report emphasizes the importance of adhering to the revenue-led fiscal consolidation path to create fiscal space for increased investment in human and physical capital and the provision of other public goods to sustain growth in the medium term. It also highlights the need for structural reforms to improve competitiveness and governance.
[IMF] completed the first review of Sri Lanka's economic performance under the program supported by a three-year extended arrangement under theExtended Fund Facility (EFF) arrangement.
The primary form of agriculture in Sri Lanka is rice production. Rice is cultivated during Maha and Yala seasons. Tea is cultivated in the central highlands and is a major source of foreign exchange. Vegetables, fruits and oilseed crops are also cultivated in the country. There are two Agriculture Parks abbreviated as A.Parks established by the Department of Agriculture. Out of the total population in Sri Lanka, 31.8% engages in agricultural activities. Agriculture and allied sectors like forestry and fisheries accounted for 18% of the GDP (gross domestic product) in 2014, about 26.4% of the workforce or employment.Bandaranaike Airport attack
The Bandaranaike Airport attack was an assault by the Liberation Tigers of Tamil Eelam (LTTE) on Bandaranaike International Airport, on July 24, 2001. The attack was one of the boldest the LTTE mounted during its war with the Sri Lankan government, and had a profound impact on the country's military, economy, and airline industry.Board of Investment of Sri Lanka
The Board of Investment of Sri Lanka (BoI) (Sinhala: ශ්රී ලංකා ආයෝජන මණ්ඩලය Shri Lanka Ayojana Mandalaya) is the investment promotion agency of Sri Lanka. It was established in 1992, expanding the scope of the Greater Colombo Economic Commission (GCEC) which was formed in 1978.Ceylon Chamber of Commerce
The Ceylon Chamber of Commerce is the oldest and one of leading business chambers in Sri Lanka. It is a confederation of trade associations, regional- and sectoral chambers of commerce and industry, business councils and employer organisations in the country.Coconut production in Sri Lanka
Coconut production contributes to the national economy of Sri Lanka. According to figures published in December 2009 by the Food and Agriculture Organization of the United Nations, it is the world's fifth largest producer of coconuts, producing 2,200,000 tonnes in 2009.Indian Tamils of Sri Lanka
Indian Tamils of Sri Lanka are Tamil people of Indian origin in Sri Lanka. They are also known as Hill Country Tamils, Up-Country Tamils or simply Indian Tamils. They are partly descended from workers sent from South India to Sri Lanka in the 19th and 20th centuries to work in coffee, tea and rubber plantations. Some also migrated on their own as merchants and as other service providers. These Tamil-speakers mostly live in the central highlands, also known as the Malayakam or Hill Country yet others are also found in major urban areas and in the Northern Province. Although they are all termed as Tamils today, some have Telugu and Malayalee origins as well as diverse South Indian caste origins. They are instrumental in the plantation sector economy of Sri Lanka. In general, socio-economically their standard of living is below that of the national average and they are described as one of the poorest and most neglected groups in Sri Lanka. In 1964 a large percentage were repatriated to India, but left a considerable number as stateless people. By the 1990s most of these had been given Sri Lankan citizenship. Most are Hindus with a minority of Christians and Muslims amongst them. There are also a small minority followers of Buddhism among them. Politically they are supportive of trade union-based political parties that have supported most of the ruling coalitions since the 1980s.
Today there are two groups of Tamils in Sri Lanka. The first are the Sri Lankan Tamils, who either descended from the Tamils of the old Jaffna kingdom or who migrated to the east coast. The second are the Indian Tamils or Hill Country Tamils, who are descendants of bonded labourers sent from Tamil Nadu to Sri Lanka in the 19th century to work in tea plantations.Many came as laborers to work in the plantations, but few of them came as business people. Most of the recruits came as they were recruited by the head man in their villages, mostly by high caste Tamils, Kallars and Vellars.
Sri Lankan Tamils mostly live in the Northern and Eastern Provinces and in the capital of Colombo, whereas Hill Country Tamils largely live in the central highlands. The Hill Country Tamils and Ceylon Tamils historically have seen themselves as separate communities. In 1949, the United National Party (UNP) government stripped the Indian Tamils of their nationality, including their right to vote. Prominent Tamil political leaders such as S. J. V. Chelvanayakam and his Tamil opposition party opposed this move.Under an agreement between the Sri Lankan and Indian governments in the 1960s, around 40% of Hill Country Tamils were granted Sri Lankan nationality, and many of the remainder were repatriated to India. However, the ethnic conflict has led to the growth of a greater sense of common Tamil identity, and the two groups are now more supportive of each other. By the 1990s most Indian Tamils had received Sri Lankan citizenship, and some were not granted Sri Lankan citizenship until 2003.Indian numbering system
The Indian numbering system is used in the Indian subcontinent (Bangladesh, India, Nepal, Maldives, Pakistan and Sri Lanka) and in Burma. The terms lakh (100,000 or 1,00,000 in Indian notation) and crore (10,000,000 or 1,00,00,000) are used in Indian English to express large numbers. For example, in India 150,000 rupees is called 1.5 lakh rupees, written ₹1,50,000; while 30,000,000 (thirty million) rupees is called 3 crore rupees, written ₹3,00,00,000 with commas at the thousand, lakh, and crore levels; and 1,000,000,000 (one billion) rupees is called 100 crore rupees or one arab अरब, written ₹1,00,00,00,000. There are also words for numbers larger than 1 crore, but these are not commonly used and unfamiliar to most speakers. In common parlance, the thousand, lakh, crore terminology repeats for larger numbers: thus 1,000,000,000,000 (one trillion) becomes 1 lakh crore, written as 10,00,00,00,00,000. However, after 100 crore it is called 1 arab and after 100 arab it is called 1 kharab and so on.
The Indian number-word system corresponds to the western system for the zeroth through fourth powers of ten: one, ten, one hundred, one thousand, ten thousand. For higher powers, the names no longer correspond. In the Indian system, the next powers of ten are called one lakh, ten lakh, one crore, ten crore, one hundred crore, and so on: there are the single words lakh = 105 and crore = 107. In the Western system, the next powers of ten are called one hundred thousand, one million, ten million, one hundred million, one billion, and so on: there are the single words million = 106, billion = 109, trillion = 1012, etc.
The written numbers differ only in the placement of commas, which group the digits into powers of one hundred in the Indian system (except for the first thousand), and into powers of one thousand in the Western system. The Indian and English systems both use the decimal point and the comma digit-separator, while some other countries using the Western number-word system use the decimal comma, and space or point to separate digits in powers of one thousand.Information and Communication Technology Agency of Sri Lanka
The Information and Communication Technology Agency of Sri Lanka (Private) Limited (ICTA) (Sinhala: ශ්රී ලංකා තොරතුරු හා සන්නිවේදන තාක්ෂණ නියෝජිතායතනය Shri Lanka Thorathuru Sannivedana Thakshana Niyojithayathanaya) is a company owned by the Government of Sri Lanka. ICTA was established to develop the economy of Sri Lanka through information and communication technologies (ICT). To this end, it works to improve both the technological capacity of the country, such as building infrastructure, and the readiness of its people, through education and human resources. It is also active in developing regulations around the use of technology and disseminating information worldwide about Sri Lankan ICT.Livestock in Sri Lanka
In Sri Lanka many farmers depend on animal husbandry for their livelihood, but not a large proportion. Therefore, many livestock products have to be imported. The main livestock products in Sri Lanka are milk, meat and eggs. Hides, wools and other products are still not produced within the country. Animal power formerly used in the cultivation of rice and vegetables has been replaced by modern technology to farm lands. However animal husbandry plays an important role in the rural economy for improving the living conditions of farmers in the country.
The land area of Sri Lanka is 65,610 km2. and of this, 30% belongs to agricultural activities. From that 30%, 70% is solely devoted to crop production. The remainder consists of a mixture of crops and livestock. Hence, a very small proportion of the farm land is solely devoted to livestock production. In Sri Lanka, livestock sector contributes around 1.2% of national GDP. Livestock are spread throughout all regions of Sri Lanka with concentrations of certain farming systems in particular areas due to cultural, market and agro-climatic reasons. According to statistics from the Department of Animal Production and Health, there are about 1.3 million cattle, 0.3 million buffalo, 0.4 million goats, 13 million poultry and 0.08 million pigs in the country with negligible numbers of sheep, ducks and other animal breeds.Micro Trend
The Micro Trend is a city car produced by Micro Cars Ltd. Sri Lanka. It was designed by Italy's Pininfarina and the Chinese company Hafei Motors. It was first introduced in January 2003 and sales began by April 2003.Milanka Price Index
The Milanka Price Index was one of the principal stock indices of the Colombo Stock Exchange in Sri Lanka till it was discontinued in January 2013 further to introduction of Standard & Poor's Sri Lanka 20 index. It was composed of a select group of 25 best performing stocks, a list which was reviewed each quarter, as opposed to the Colombo Stock Exchange's "All Share Price Index", which uses all of the ~250 stocks on the exchange to calculate an index value.Ministry of National Policies and Economic Affairs
The Ministry of National Policies and Economic Affairs (Sinhala: ජාතික ප්රතිපත්ති හා ආර්ථික කටයුතු අමාත්යාංශය Jāthika Prathipaththi hā Ārthika Katayuthu Amathyanshaya; Tamil: தேசிய கொள்கைகள் மற்றும் பொருளாதார அலுவல்கள் அமைச்சு) is a cabinet ministry of the Government of Sri Lanka responsible for formulation of national economic-, national development and monetary policies and strategies, and for coordinating with international agencies and mobilizing foreign resources for the country's economic development.Ministry of Traditional Industries and Small Enterprise Development
The Ministry of Traditional Industries and Small Enterprise Development was a Sri Lankan government ministry responsible for oversight of policy guidance and facilitation for traditional local industry, SMEs and the handicraft industry, with a goal of helping improve these industries to compete on the international market. It thus targeted home-based enterprises and cited poverty reduction, rural development and inclusive growth and social development as secondary focuses. The ministry was part of the Rajapaksa cabinet.South Asian Free Trade Area
The South Asian Free Trade Area (SAFTA) is an agreement reached on January 6, 2004, at the 12th SAARC summit in Islamabad, Pakistan. It created a free trade area of 1.6 billion people in Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka (as of 2018, the combined population is 2.08 billion people, about 27% of the world's population of 7715456000 ). The seven foreign ministers of the region signed a framework agreement on SAFTA to reduce customs duties of all traded goods to zero by the year 2016. The SAFTA agreement came into force on January 1, 2006, and is operational following the ratification of the agreement by the seven governments. SAFTA requires the developing countries in South Asia (India, Pakistan and Sri Lanka) to bring their duties down to 20 percent in the first phase of the two-year period ending in 2007. In the final five-year phase ending 2012, the 20 percent duty will be reduced to zero in a series of annual cuts. The least developed nations in South Asia (Nepal, Bhutan, Bangladesh, Afghanistan and Maldives) have an additional three years to reduce tariffs to zero. India and Pakistan ratified the treaty in 2009, whereas Afghanistan as the 8th memberstate of the SAARC ratified the SAFTA protocol on 4 May 2011.Sri Lanka Customs
The Sri Lanka Customs (Sinhala: ශ්රී ලංකා රේගුව Shri Lanka Reguwa) is a non-ministerial government department, which performs the duties of collecting customs duties and other taxes and levies in Sri Lanka, under the oversight of the Ministry of Finance. The executive responsible is the director general, currently Mrs. P.S.M. Charles, appointed in September 2017.Formally known as HM Ceylon Customs from 1947 to 1972, the department can trace its roots to 1806. Formally, the agency as it exists today was formed under the Customs Ordinance No. 17 of 1869, to which 51 amendments have been made to date. Being a center for trade in the Indian Ocean since antiquity, however, the history of collection of customs duties in Sri Lanka dates far back as 2nd century BC.The department works with the powers vested under the Customs Ordinance, as well as through several other related enactments. The major functions of the department include the collection of government revenue as customs duty and other levies on behalf of several other government authorities and securing the nation's ports of entry with relation to the import and export of both commercial and personal goods. As such, it has limited policing powers, such as in the areas of the arrest and detention of possible suspects contravening customs and import/export laws, as well as the confiscation of contraband.Sri Lanka Interbank Payment System
The Sri Lanka Interbank Payment System, commonly known as SLIPS, is a LKR-only online interbank payment and fund transfer system in Sri Lanka.SLIPS is owned by LankaClear, an organization owned by the Central Bank of Sri Lanka and all Licensed Commercial Banks operating in Sri Lanka, with 47.19% of shares held by the CBSL and State owned commercial banks, and 52.81% by other private banks. SLIPS transfers are designed primarily for catering low-value payments up to LKR 5 million (equivalent to approximately US$36,000).Sugar production in Sri Lanka
Sugarcane production in Sri Lanka is the major sucrose extracting crop used in sugar industry in Sri Lanka. Sugar is considered as one of the main food items consumed in Sri Lanka. Therefore, sugar production and price is directly affects day-to-day life in the country.
The annual per capita consumption of sugar in Sri Lanka is around 30 kg and the total annual requirement of sugar in the country is around 550,000 t. In 2012 the country only produced 42,940 tonnes and imported 593,870 tonnes, with only approximately 7% of the annual requirement produced locally. The balance requirement has to be imported. The total annual expenditure on sugar imports is around Rs. 20 billion. In 2008, 575, 000 t of sugar have been imported at a cost of Rs. 22.3 billion.Tea production in Sri Lanka
Tea production is one of the main sources of foreign exchange for Sri Lanka (formerly called Ceylon), and accounts for 2% of GDP, contributing over US $1.5 billion in 2013 to the economy of Sri Lanka. It employs, directly or indirectly, over 1 million people, and in 1995 directly employed 215,338 on tea plantations and estates. In addition, tea planting by smallholders is the source of employment for thousands whilst it is also the main form of livelihoods for tens of thousands of families. Sri Lanka is the world's fourth-largest producer of tea. In 1995, it was the world's leading exporter of tea (rather than producer), with 23% of the total world export, but it has since been surpassed by Kenya. The highest production of 340 million kg was recorded in 2013, while the production in 2014 was slightly reduced to 338 million kg.The humidity, cool temperatures, and rainfall of the country's central highlands provide a climate that favors the production of high-quality tea. On the other hand, tea produced in low-elevation areas such as Matara, Galle and Ratanapura districts with high rainfall and warm temperature has high level of astringent properties. The tea biomass production itself is higher in low-elevation areas. Such tea is popular in the Middle East. The industry was introduced to the country in 1867 by James Taylor, a British planter who arrived in 1852.
Tea planting under smallholder conditions has become popular in the 1970s.Western Region Megapolis
The Western Region Megapolis is an urban planning, zoning, and development area stretching from Negombo in the north to Beruwela in the south, and was formulated as a project aimed at creating a planned megapolis in Sri Lanka's Western Province by 2030.The master plan was created by Surbana in cooperation with local experts. The plan hopes to create a Megacity that can match other economic hubs such as Dubai, Singapore, Seoul and Tokyo and solve the issues of traffic congestion, garbage, slums, and environmental pollution. The main goals of the project are for economic growth and prosperity, good governance, creation of an efficient and well-planned region, social equity and harmony as well as environmental sustainability. The project includes Social Infrastructure development such as housing, healthcare, education ,spiritual development, Safety and security, Transportation and traffic Management, Airports and port development, Water and Energy related infrastructure development as well as the development of SMEs, Industries and tourism.
South Asian Free Trade Area (SAFTA)