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Sri Lanka Sri Lanka

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Sri Lanka

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EconomicPoliticalStructural

Sri Lanka – Quick View
ECR score54.86 (Mar 2011)
ECR rank60 (Mar 2011)
Economic
GDP (Till Q3 2010)USD 17.41 billion
GNI per capita PPP (2009)USD 4,720
FDI inflow (2009)USD 404 million
Inflation (Jan. 2011)6.8%
Central bank assets (2009)USD 7,161.04 million (+37.35%)
Unemployment rate (2009)5.8%
Government deficit (2009)USD 1,541.61 million
Tax revenue (2009)USD 5,392.81 million (5.68%)
Political
Government typeRepublic
Recent political crisisNA
Economic freedom score (2011)107th
Freedom of information score (2010)158th
Corruption perception index (2010)91th (+6 places)
Structural
Birth rate18.4 per ‘000
Population balance (2009)Under 14 – 26.30%
Population balance (2009)Over 54 – 13.20%
Life expectancy years (2008)Males - 70 years
Life expectancy years (2008)Females - 78 years
Mortality rate (2009)5.9 per ‘000
Literacy rate (2008)91%
Internet access (2010)1.17%

[Top] Economic Overview

The economy of Sri Lanka is primarily based on the service sector.

Economy of Sri Lanka observed a strong growth in past 10 years, although the country faced a major civil war and natural disasters in last decade. Service sector contributes majorly to the service sector. Government spending was the major factor for the development of Sri Lankan economy in past ten years.

(Source: Census and Statistics – Sri Lanka page no. – 2; Economy watch)

Gross Domestic Product

 Provisional Gross Domestic Product (GDP) at constant market price of Sri Lankan economy in third quarter of 2010 is LKR 691 million. The GDP registered growth of 8% as against third quarter of 2009.

GDP Growth Rate

Sri Lanka GDP and GDP growth rate

(Source: Central Bank of Sri Lanka)

Service sector is the major contributor to the country’s GDP for Q3 2010. Service industry accounted for 59.52% of total GDP of third quarter 2010 with a growth rate of 8% over subsequent period of last year.

(Source: Central Bank of Sri Lanka, Census and Statistics – Sri Lanka)

GDP per capita at Constant market Price

GDP per capita at constant Market Price stood at LKR 120,998.80 in 2009 which grew by 2.73%.

Sri Lanka GDP per capita

(Source: IMF)

GNP at Constant Market Price

Gross National Product (GNP) at constant price of was LKR 2,420,972 million, an increase of 4.84% over the previous year.

Sri Lanka GNP at constant market price

(Source: Census and Statistics – Sri Lanka)

GNI per Capita, PPP

GNI per Capita at PPP was USD 4,720 in 2009, as compared to USD 4,490 in 2008.

Sri Lanka GNI per capita, PPP

(Source: World Bank)

 Income Tax Rate

 Personnel income tax rate for resident of Sri Lanka

Income Brackets

Income Tax Rate (%)

On the first Rs. 400,000 of the taxable income

5

On the next Rs. 400,000 of the taxable income

10

On the next Rs. 400,000 of the taxable income

15

On the next Rs. 500,000 of the taxable income

20

On the next Rs. 500,000 of the taxable income

25

On the next Rs. 500,000 of the taxable income

30

On the balance of the taxable income

35

(Source: Inland Revenue)

Corporate Tax Rate

In Sri Lanka, Corporate income tax for companies with income less than LKR 5 million is 15%, and companies exceeding LKR 5 million incomes are charged 35%. 

(Source: Inland Revenue)

Inflation Rate

Sri Lanka Inflation rate (%)

(Source: Census and Statistics – Sri Lanka, Ministry of Finance, Census and Statistics – Sri Lanka)

The country observed a significant decline in inflation rate from 2009 to 2010. Average inflation rate in 2010 stood at 5.9%. Inflation rate declined due to downfall in liquefied petroleum prices, further lowering down the utility cost.

FDI Inflow

In 2009, the Foreign Direct Investment (FDI) net inflow was USD 404 million, a decrease of about 46.29% over 2008.

 FDI net inflow (LKR million)

Year

2009

2008

2007

2006

2005

FDI net inflow

404

752.20

603

479.70

272.4

(Source: World Bank)

Net Portfolio Investment

The net portfolio investment in the country observed a sharp decrease from LKR 11,249 million 2007 to LKR -785 million in 2009.

Net Portfolio Investment (LKR million)

Year

2005

2006

2007

2008

2009

Net Portfolio Investment

6,103

5,377

11,249

6,460

-785

(Source: Central Bank of Sri Lanka)

Reserve Requirements (Cash Reserve Ratio)

In 2009, reserve requirement ratio of Sri Lanka was 7%, where total reserves stood at LKR 303,537.3 million.

(Source: Central Bank of Sri Lanka, Central Bank of Sri Lanka)

Public Sector Debts

In 2009, Public Debts in Sri Lanka was LKR 4,161.4 billion, an increase over 2008 value of LKR 3,589 billion. Public debts for the year 2009, accounted for 86.2% of the total GDP.

(Source: Central Bank of Sri Lanka)

Banking Sector Assets

Total assets of Central Bank of Sri Lanka stood at LKR 821,873 millions in 2009, registering a growth of 37.35% over 2008.

Assets

2009 (LKR million)

2008 (LKR million)

Total Assets

821,872.8

598,370

Cash and Bank Balances Abroad (including Treasury Bills)

232,705

177,766

Foreign Government and Non-Government Securities

376,411

94,721

Special Drawing Rights

2,286

221

IMF Related Assets

74,223

72,179

Receivable

38

125

Loans and Advances to Government

73,880

76,308

Loans and Advances to Others

1,137

1,577

Government and Government Guaranteed Securities

37,451

142,275

Other Assets and Accounts

23,741

33,199

(Source: Central Bank of Sri Lanka)

[Top] Financial Indicators & Government Financial

Consumer price index (CPI)

 

Sri Lanka CPI

 

(Base: 2002 = 100)

 

The average CPI for the period from December 2009 to March 2010 was 215.4, and has further increased steadily from 212.6 in April 2010 to 228.3 in December 2010.

 

(Source: Census and Statistics – Sri Lanka)

 

Wholesale price index

 

The average Wholesale Price Index was 3,500.9 in 2009, declining -4.2% over the previous year.

 

 

Sri Lanka WPI

(Base 1974=100)

 

(Source: Central bank of Sri Lanka)

 

Interest rates on savings deposits

 

Interest rates in the country were from 1.5% to 10.5% for saving deposits as of October 2010.

 

Interest rate on Savings deposits

Year

Interest Rates (%)

2010 (Till Oct.)

1.5 - 10.5

2009

1.5 - 10.5

2008

3 - 16.5

2007

3 - 16.5

2006

3 - 10.5

2005

3 - 10.25

2004

3 - 7.75

2003

2.1 - 7.25

2002

3.5 – 11

2001

4 – 12

2000

2 - 11

 

(Source: Central bank of Sri Lanka)

 

Interest rates on time deposits

 

Interest rate on Time deposits (%)

Year

3 Months

6 Months

12 months

24 months

2009

3 -19

6 - 18

7.25 - 19

7 - 21

2008

9.5 - 20

13 - 19

8.5 - 20.25

13 - 23

2007

8.5 -19.5

6.5 - 19.25

8.5 - 20

13 - 20

2006

5.75 -14

6 - 13.75

5.5 - 14

9 - 14.25

2005

5 - 13

5.5 - 11.25

5.5 - 11.5

8.5 - 11.5

2004

4 - 9.25

4.5 - 9.5

5.5 - 9.75

6.8 - 10.25

2003

4 - 7.13

5 - 7.25

5 - 7.75

5.41 - 7.5

2002

6.5 -10.5

7 - 10.5

7.5 - 11

7.44 - 11.5

2001

7.5 -14

8 - 14.25

9.5 - 14.5

11.5 - 14.5

2000

7-17

8 - 15

9 - 15

10 - 14.5

 

(Source: Central bank of Sri Lanka)

 

Money supply (currency in circulation)

 

Money in circulation in 2009 was LKR 336,710 million, increasing 21.41% over previous year.

 

Sri Lanka Money aggregate

(Source: Central bank of Sri Lanka)

 

Government expenditure

 

The country’s total expenditure in 2009 was LKR 1,201,927 million, increasing 20.66% over 2008. The total expenditure of the nation exceeded total revenue, resulting in a deficit of LKR 176,931 million. 

Expenditure of Government of Sri Lanka (LKR million)

 

2009

2008

Total Expenditure

1,201,927

996,126

Expenditure on Goods and Services

379,731

360,328

Salaries and Wages

271,229

239,078

Interest Payments

309,676

212,475

Transfer Payments

190,168

170,908

Capital Expenditure

277,416

232,607

Acquisition of Real Assets

143,590

128,605

Capital Transfers

133,826

104,002

 

(Source: Central bank of Sri Lanka)

 

Official exchange rate

Sri Lanka Exchange rate

 

(Source: Central bank of Sri Lanka)

Government finances

 

Fiscal balance

Sri Lanka Fiscal balance

E= Estimated

(Source: Central bank of Sri Lanka)

 

The fiscal balance increased from 2007 to 2009, from -1.6% to -3.7% of the GDP.

Total revenue

Total revenue was LKR 728,566 million for 2009, increasing 6.13% over the previous year.

Revenues of Government of Sri Lanka (Million LKR)

 

2009

2008

Total Revenue

728,566

686,481

Taxes

618,933

585,621

Grants

31,222

25,922

 

(Source: Central bank of Sri Lanka)

 

Total grants

Sri Lankan government received total grants of LKR 25,485 million in 2009.

 

Country/Institution

Grants (2009)

Grants (2008)

Asia Development Bank

4648

3757

Japan

1791

1637

United nations

964

-

USA

416

3389

Others

17666

22439

 

(Source: Central Bank of India)

Current account balance – surplus/deficit

Sri Lankan economy witnessed a current account deficit from 2005 to 2009. 

E-Estimated

(Source: Central Bank of Sri Lanka)

Balance of payments

Balance of Payments (USD Million)

Particular

2009

2008

Exports of Goods and Services

7,085

8,111

Imports of Goods and Services

10,207

14,091

Income

-488

-972

Current transfers

3,004

2,666

Capital and financial account

2,594

1,773

Direct investment

384

691

Errors and Omissions

346

728

(Source: Central Bank of Sri Lanka)

[Top] Labour Force and Employment Overview

Labour Force

Total labour force of Sri Lanka was 8.07 million in 2009, which marginally decreased over the previous year. Of total labour force 94.15% people were employed and 5.8% of people were unemployed.

(Source: Census and Statistics – Sri Lanka)

Unemployment rate of Sri Lanka observed a continuous decline from 7.2% in 2005 to 5.4% in 2008 and witnessed and increase in 2009 to 5.8%.

Sri Lanka Unemployment rate (% of total labour)

(Source: Census and Statistics – Sri Lanka)

Total labour force participation rate in Sri Lanka was 48.7% in 2009, a marginal decrease of 0.8% percentage points compared to 2008.

(Source: Census and Statistics – Sri Lanka)

Proportion of population of working age

In 2009, the total working population was 73.70% of the total population.

(Source: Central Bank of Sri Lanka page no. – 15)

Employment in Agriculture

Total labour employed in agriculture, fishing and forestry was 2.47 million in 2009, a decrease of 0.56 million people over the previous year. Total labour employed in agriculture, fishing and forestry account for 32.60% of total employment.

Employment in Industries

Total labour employed in industry sector was 1.91 million, an increase of 5% over the previous year. Total labour employed in industry sector accounted for 25.13% of total employment.

Employment in Services

Total labour employed in Service sector was 3.21 million, an increase of 7.26%. Total labour employed in Service sector accounted to 42.30%.

(Source: Census and Statistics – Sri Lanka page no - 23)

Minimum wage

Average Minimum daily wages in the Sri Lanka

Sector

Average Minimum Daily Wage Rate

Agriculture

235.15

Manufacturing

247.04

Construction

292.50

 (Source: labour dept)

 Level of Unionisation

 Total number of unions functioning in was 2019, with total membership of 322,472.

 (Source: labour dept)

[Top] Political Stability

Sri Lanka is a republic, whose constitution was formed in 1978.

Sovereign powers of the people are to be exercised by parliament.

Political environment in Sri Lanka was unstable for a long period of time. The political instability was mainly caused by the conflict between the two groups, Liberation Tigers of Tamil Eelam (LTTE) and Government of Sri Lanka. It started to stabilise after 2008 mainly because of a ceasefire between Liberation Tigers of Tamil Eelam (LTTE) and Government of Sri Lanka.

 

Major political parties in Sri Lanka are:

 

·         Sri Lanka, the United People's Freedom Alliance

·         The United National Party

·         Sri Lanka Freedom Party

 

(Source: Government of Sri Lanka, Asian Development Bank, Colombopage.com)

Regulatory environment

 

President is the head of the government and the commander in chief of the armed forces.

 

The president has a right to appoint the prime minister and other cabinet ministers, to dissolve the parliament, to declare war and peace and to appoint the chief justice and other judges of the Supreme Court.

 

The current president of Sri Lanka is Mahinda Rajapaksa as of November 19, 2010.

 

(Source: Prime Minister’s Office, Government of Sri Lanka)

 

Sri Lanka Economic Freedom Indices

(Source:Heritage.org)

 

The nation’s economic freedom score is 57.1, ranking it the 107th freest in the 2010 index. Sri Lanka ranks 19th out of 41 nations in the Asia-Pacific region.

 

Corruption perception index (CPI)

 

The corruption perceptions index (CPI) is a survey to measure the perceived level of corruption across countries worldwide. Sri Lanka ranks at 91st with a score of 3.2, indicating a moderate level of corruption in the public department.

 

(Source:transparency.org)

 

Freedom of information

 

The press and media in Sri Lanka are moderately free.  The country owns many of the main broadcasters and publications. There are also private radio stations and TV stations.

 

Major newspapers in the country are:

 

·         Daily News,

·         Dinamina,

·         The Island,

·         Lankadeepa,

·         Daily Mirror

 

The country ranks 158th on the world press freedom index 2010, with a score of 62.50.

 

(Source: BBC, rsf.org)

 

Judicial system

 

The Judiciary System in Sri Lanka consists of six courts:

 

·         Supreme Court

·         Court of appeal

·         High Court

·         District Courts

·         Magistrate’s Courts

·         Primary Courts

 

The Supreme Court is the highest court of justice, and is comprised of a Chief Justice and a minimum six judges and a maximum of ten judges. The Supreme Court has following rights:

·         Jurisdiction in respect of Constitutional matters

·         Jurisdiction for the protection of fundamental rights

·         Final appellate jurisdiction

·         Consultative jurisdiction

·         Jurisdiction in petitions relating to election of President

·         Jurisdiction in respect of any breach of the privileges of Parliament

·         Jurisdiction in respect of other matters which Parliament may by law vest or ordain

 (Source: Ministry of Sri Lanka)

[Top] Demographic Overview

Total population

Sri Lanka’s total population for the year 2009 stood at 20.45 million, an increase of 1.15% over 2008. In 2009, male accounted for 49.62% of total population and 50.38% were females.

Sri Lanka Population by gender

(Source: Census and Statistics – Sri Lanka)

 

Gender balance

 

Gender ratio in 2009, was registered at 97 males per 100 females. (Source: UN data)

 

In 2009, 60.50% of total population lies in the age group of 15 to 54 years, followed by 26.30% in below 14 year and 13.20% in 54 years and above.

 

Population by Age

No. of People (million)

0-14

5,378

15-54

12,373

55+

2,699

 

(Source: Central Bank of Sri Lanka page no-15)

 

Mortality Rate

 

In 2009, mortality rate the country recorded was recorded at 5.9 deaths per 1000 population. Infant mortality rate was 13 deaths per 1000 births. Mortality rate under five was 15 deaths per 1000 population.

 

(Source: World Bank, World Bank)

Birth Rate

The birth rate of Sri Lanka stood at 18.4 per 1,000 persons. In 2008, recorded average life expectancy rate of 78 years for females and 70 years for males.

(Source: World Bank )

Ethnic Groups

Ethnic group in Sri Lanka are as follows:

  • Sinhalese
  • Sri Lankan Moors
  • Indian Tamil
  • Sri Lankan Tamil
  • Other

 Sinhalese constitute a major share of the population. (Source: Sri Lanka Tourism)

 Migration and Urbanisation

 The net migration rate was -1.4 per 1000 population in 2009, as compared to -2.1 per 1000 population in 2008.

(Source: Central Bank of Sri Lanka page no - Sec1:41)

 Sri Lanka’s 15% of population is urbanized as 3.06 million of total population lives in urban area, where as 85% of the population lives in urban area.

(Source: World Bank)

 Human Development Index

 Sri Lanka is ranked 91st on the Human Development Index (HDI) 2010 Conducted by United Nations. HDI provides a composite measure of three dimensions of human development: living a long and healthy life (measured by life expectancy), being educated (measured by adult literacy and gross enrolment in education) and having a decent standard of living (measured by purchasing power parity, PPP, income).

(Source: UNDP)

Poverty

In 2007, 15.2% of total population was below poverty line.

Sri Lanka People below poverty line

(Source: Census and Statistics – Sri Lanka page no - 7)

[Top] Soft Infrastructure

Education/literacy rate

The literacy rate in Sri Lanka, of population aged 15 years and above was 91.3% in the year 2008.

(Source: Central Bank of Sri Lanka page no – Sec1:1)

Educational Resources

There are 10,205 schools in Sri Lanka, of which 9410 are government, 98 are private and 697 are Pirivenas. Sri Lanka has 15 universities.

In 2009, Government of Sri Lanka spent LKR 100,506 million on education which is 2.08% of total GDP.

(Source: Central Bank of Sri Lanka page no - Sec1:62)

Healthcare resources

In 2009, total number of hospitals (western medicine) was 555 and 475 primary health care centres.   has 68,897 hospital beds and 25,549 nurses.

In 2009, Government expenditure on healthcare sector was LKR 71,452 million, which accounted for 1.48% of the total GDP.

(Source: Central Bank of Sri Lanka page no - Sec1:61)

[Top] Hard Infrastructure

Roadways

In 2009, the total road length in Sri Lanka is measured to be 11,919 km

Railways

The total route length of railways is 1,447 km.

(Source: Central Bank of Sri Lanka, MOT)

 

Ports

The major ports in Sri Lanka are Port of Kankasanturai, Port of Trincomalee, Port of Colombo and Port of Galle.

(Source:world port source)

 

Airports

Town

Airport name

Runway length

Anuradhapura

Anuradhapura AB

4,000 ft

Batticaloa

Batticaloa AB

3,400 ft

Colombo

Bandaranaike Intl

10,900 ft

Colombo

Ratmalana

6,000 ft

Gal Oya

Amparai

3,600 ft

Jaffna

Kankesanturai AB

3,600 ft

Katukurunda

Katukurunda AA

7,500 ft

Koggala

Koggala AB

3,300 ft

Minneriya

Minneriya AB

7,500 ft

Sigiriya

Sigiriya AB

5,800 ft

Trincomalee

China Bay AB

7,300 ft

Vavuniya

Vavuniya AB

5,000 ft

Wirawila

Wirawila AB

4,000 ft

 

(Source: Aircraft charter world)

 

Telecommunications networks

The number of mobile subscribers has witnessed a growth at a rate of about 37.11%.

Year

2006

2007

2008

2009

Fixed access Services

909,894

931,737

933,536

871,248

Wireless local loop Telephones

974,184

1,810,322

2,512,875

2,559,560

Cellular phones

5,412,496

7,983,489

11,082,508

13,949,761

 

(Source: Census and Statistics – Sri Lanka)

 

 

Total internet users in the country were 1.77 million in 2010, as compared to 1.16 million in 2009.

 

Sri Lanka Intenet users

(Source: internetworldstat.com)

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