Economy of Sri Lanka
Encyclopedia
With an economy
worth $56 billion (2011 IMF estimate) ($140 billion PPP
estimate), and a per capita
GDP
of about $7000 (PPP
), Sri Lanka
has mostly had strong growth rates in recent years. 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
.
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
. The parties which ruled the country after 1948 did not implement any national plan or policy on the economy, veering between left and right wing economic practices. The government during 1970-77 period applied pro-left economic policies and practices. Between 1977 and 1994 the country came under UNP
rule and between 1994 and 2004 under SLFP rule. Both of these parties applied pro-right policies. 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.
(JVP) uprisings, especially the second in the late 1980s, also caused extensive upheavals.
The Mahinda Rajapakse government halted the privatization process and launched several new companies. Sri Lanka has a relatively high Human Development Index
with a high literacy rate (90.1%) which are the result of universal education policies and widespread healthcare. Sri Lanka's Human Development Index and literacy rate are among the highest in the South Asia
n region, and infant mortality is among the lowest. Sri Lanka has 555 publicly funded hospitals.
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 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 a pro-capitalism
party to Parliament, while the socialism oriented Sri Lanka Freedom Party
retained the Presidency.
The government of Prime Minister
Ranil Wickremasinghe
of the United National Party
has indicated a strong commitment to economic and social sector reforms, deregulation, and private sector development.
In 2002, the economy experienced a gradual recovery. Early signs of a peace dividend were visible throughout the economy—Sri Lanka has been able to reduce defense expenditures and begin to focus on getting its large, public sector debt under control.
In addition, the economy has 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, 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 largest share of FDI has been in the services sector. Good progress was made under the Stand By Arrangement, which was resumed by the International Monetary Fund
(IMF). These measures, together with peaceful conditions in the country, have helped restore investor confidence and created conditions for the government to embark on extensive economic and fiscal reforms and seek donor support for a poverty reduction and growth strategy.
The resumption of the civil-war in 2005 led to a steep increase defence expenditures. The increased violence and lawlessness also prompted some donor countries to cut back on aid to the country.http://www.washingtonpost.com/wp-dyn/content/article/2007/07/27/AR2007072702462_2.htmlhttp://hrw.org/english/docs/2007/08/15/slanka16690_txt.htm.
Sri Lanka has also accumulated a 9.2 % deficit and the central bank has not intervened since late 2006 to print more currency http://www.lankabusinessonline.com/fullstory.php?newsID=1399754854&no_view=1&SEARCH_TERM=1.
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.
membership is on the decline. There are more than 1,650 registered trade unions, many of which have 50 or fewer members, and 19 federations. Many unions have political affiliations.
The Ceylon Workers Congress (CWC) and Lanka Jathika estate workers union are the two largest unions representing workers in the heavily unionized plantation sector. The president of the CWC also is Minister of Livestock Development and Estate Infrastructure. The CWC's agenda includes political issues.
Some of the stronger and more influential trade unions include the Ceylon Mercantile Union, Sri Lanka Nidhahas Sevaka Sangamaya, Jathika Sevaka Sangayama, Ceylon Federation of Trade Unions, Ceylon Bank Employees Union, Union of Post and Telecommunication Officers, Conference of Public Sector Independent Trade Unions, and the JVP-aligned Inter-Company Trade Union.
The unemployment rate has declined in recent years and hovers at 4-5%. The rate of unemployment among high school and college graduates, however, remains proportionally higher than the rate for less-educated workers.
The government has embarked on educational reforms it hopes will lead to better preparation of students and fewer mismatches between graduates and jobs. In addition, it also has begun a youth corps program to provide employment skills to the unemployed.
For purchasing power parity comparisons, the US Dollar is exchanged at 113.4 Sri Lankan Rupees only.
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.
A continuing cloud over the economy is the fighting between the Government of Sri Lanka and the LTTE, which has cost 65,000 lives in the past 15 years.
Government provides employment for 13% of the work force and follows state enterprise oriented policies.
Privataization of such enterprises has stopped and reversed, with several new state enterprises launched.
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 http://www.wtc.lk 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.
, 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 trains in Sri Lanka are very well maintained and both the National Railway and CTB employ highly qualified and experienced local engineers. Rail accidents have been minimal in Sri Lanka compared to most developing nations, train travel is rather punctual and schedules are usually well followed.
The total length of Sri Lankan roads exceeds 11000 kilometres (6,835.1 mi), with a vast majority of them being paved. 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 attempt to improve the road network in Sri Lanka. Sri Lanka's commercial and economic centers, primarily the capitals of the nine provinces are connected by the "A-Grade" roads which are categorically organized and marked. Furthermore, "B-Grade" roads, also paved and marked, connect district capitals within provinces.
, while the production and retailing of electricity is carried out by the Ceylon Electricity Board
. Energy in Sri Lanka is mostly generated by hydroelectric power stations
in the Central Province. The Sri Lankan Government and many individual "green groups" in Sri Lanka have been focusing on eco-friendly solutions to energy development and the country is undergoing changes to enforces stricter environmental policies in industries, both public and private.
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 sapphire
s 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%
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.
Recently, Sri Lanka has become one of the countries exporting fair trade tea to the UK and other countries. It is believed that such projects could reduce rural poverty
.
and Europe
. Europe increasingly relies on Sri Lankan textiles due to the high cost of labor in Europe. There are about 900 factories throughout country serving companies such as Victoria's Secret
, Liz Claiborne
and Tommy Hilfiger
.
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.
, World Bank
, Asian Development Bank
, Japan
, the European Union
and the United States
, totalled $4.5 billion.
Economic system
An economic system is the combination of the various agencies, entities that provide the economic structure that defines the social community. These agencies are joined by lines of trade and exchange along which goods, money etc. are continuously flowing. An example of such a system for a closed...
worth $56 billion (2011 IMF estimate) ($140 billion PPP
Purchasing power parity
In economics, purchasing power parity is a condition between countries where an amount of money has the same purchasing power in different countries. The prices of the goods between the countries would only reflect the exchange rates...
estimate), and a per capita
Per capita
Per capita is a Latin prepositional phrase: per and capita . The phrase thus means "by heads" or "for each head", i.e. per individual or per person...
GDP
Gross domestic product
Gross domestic product refers to the market value of all final goods and services produced within a country in a given period. GDP per capita is often considered an indicator of a country's standard of living....
of about $7000 (PPP
Purchasing power parity
In economics, purchasing power parity is a condition between countries where an amount of money has the same purchasing power in different countries. The prices of the goods between the countries would only reflect the exchange rates...
), Sri Lanka
Sri Lanka
Sri Lanka, officially the Democratic Socialist Republic of Sri Lanka is a country off the southern coast of the Indian subcontinent. Known until 1972 as Ceylon , Sri Lanka is an island surrounded by the Indian Ocean, the Gulf of Mannar and the Palk Strait, and lies in the vicinity of India and the...
has mostly had strong growth rates in recent years. 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
Middle East
The Middle East is a region that encompasses Western Asia and Northern Africa. It is often used as a synonym for Near East, in opposition to Far East...
.
Since becoming independent from Britain
British Empire
The British Empire comprised the dominions, colonies, protectorates, mandates and other territories ruled or administered by the United Kingdom. It originated with the overseas colonies and trading posts established by England in the late 16th and early 17th centuries. At its height, it was the...
in February 1948, the economy of the country has been affected by natural disasters such as the 2004 Indian Ocean earthquake
2004 Indian Ocean earthquake
The 2004 Indian Ocean earthquake was an undersea megathrust earthquake that occurred at 00:58:53 UTC on Sunday, December 26, 2004, with an epicentre off the west coast of Sumatra, Indonesia. The quake itself is known by the scientific community as the Sumatra-Andaman earthquake...
and a number of insurrections, such as the 1971, the 1987-89 and the 1983-2009 civil war
Sri Lankan civil war
The Sri Lankan Civil War was a conflict fought on the island of Sri Lanka. Beginning on July 23, 1983, there was an on-and-off insurgency against the government by the Liberation Tigers of Tamil Eelam , a separatist militant organization which fought to create an independent Tamil state named Tamil...
. The parties which ruled the country after 1948 did not implement any national plan or policy on the economy, veering between left and right wing economic practices. The government during 1970-77 period applied pro-left economic policies and practices. Between 1977 and 1994 the country came under UNP
United National Party
The United National Party, often referred to as the UNP ), , is a political party in Sri Lanka. It currently is the main opposition party in Sri Lanka and is headed by Ranil Wickremesinghe...
rule and between 1994 and 2004 under SLFP rule. Both of these parties applied pro-right policies. In 2001, Sri Lanka faced bankruptcy, with debt reaching 101% of GDP. The impending currency crisis
Currency crisis
A currency crisis, which is also called a balance-of-payments crisis, is a sudden devaluation of a currency caused by chronic balance-of-payments deficits which usually ends in a speculative attack in the foreign exchange market. It occurs when the value of a currency changes quickly, undermining...
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.
Economic history
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. Twenty five years of civil war has slowed economic growth http://www.jstor.org/view/00130079/ap040179/04a00090/0, diversification and liberalization, and the political group Janatha Vimukthi PeramunaJanatha Vimukthi Peramuna
The Janathā Vimukthi Peramuṇa is a Marxist-Leninist, Communist political party in Sri Lanka. The party was involved in two armed uprisings against the ruling governments in 1971 and 1987-89...
(JVP) uprisings, especially the second in the late 1980s, also caused extensive upheavals.
The Mahinda Rajapakse government halted the privatization process and launched several new companies. Sri Lanka has a relatively high Human Development Index
Human Development Index
The Human Development Index is a composite statistic used to rank countries by level of "human development" and separate "very high human development", "high human development", "medium human development", and "low human development" countries...
with a high literacy rate (90.1%) which are the result of universal education policies and widespread healthcare. Sri Lanka's Human Development Index and literacy rate are among the highest in the South Asia
South Asia
South Asia, also known as Southern Asia, is the southern region of the Asian continent, which comprises the sub-Himalayan countries and, for some authorities , also includes the adjoining countries to the west and the east...
n region, and infant mortality is among the lowest. Sri Lanka has 555 publicly funded hospitals.
Following the quelling of the JVP insurrection, increased privatization
Privatization
Privatization is the incidence or process of transferring ownership of a business, enterprise, agency or public service from the public sector to the private sector or to private non-profit organizations...
, 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
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
.
The crises 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 a pro-capitalism
Capitalism
Capitalism is an economic system that became dominant in the Western world following the demise of feudalism. There is no consensus on the precise definition nor on how the term should be used as a historical category...
party to Parliament, while the socialism oriented Sri Lanka Freedom Party
Sri Lanka Freedom Party
The Sri Lanka Freedom Party is one of the major political parties in Sri Lanka. It was founded by S.W.R.D Bandaranaike in 1951 and, since then, has been one of the two largest parties in the Sri Lankan political arena. It first came to power in 1956 and since then has been the predominant party in...
retained the Presidency.
The government of Prime Minister
Prime minister
A prime minister is the most senior minister of cabinet in the executive branch of government in a parliamentary system. In many systems, the prime minister selects and may dismiss other members of the cabinet, and allocates posts to members within the government. In most systems, the prime...
Ranil Wickremasinghe
Ranil Wickremasinghe
Ranil Shriyan Wickremesinghe , MP, is a Sri Lankan politician and current Leader of the Opposition in the Sri Lankan parliament. He was Prime Minister of Sri Lanka twice, from May 7, 1993 to August 19, 1994 and from December 9, 2001 to April 6, 2004...
of the United National Party
United National Party
The United National Party, often referred to as the UNP ), , is a political party in Sri Lanka. It currently is the main opposition party in Sri Lanka and is headed by Ranil Wickremesinghe...
has indicated a strong commitment to economic and social sector reforms, deregulation, and private sector development.
In 2002, the economy experienced a gradual recovery. Early signs of a peace dividend were visible throughout the economy—Sri Lanka has been able to reduce defense expenditures and begin to focus on getting its large, public sector debt under control.
In addition, the economy has benefited from lower interest rates, a recovery in domestic demand, increased tourist arrivals
Tourism
Tourism is travel for recreational, leisure or business purposes. The World Tourism Organization defines tourists as people "traveling to and staying in places outside their usual environment for not more than one consecutive year for leisure, business and other purposes".Tourism has become a...
, a revival of the stock exchange, and increased foreign direct investment (FDI).
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 largest share of FDI has been in the services sector. Good progress was made under the Stand By Arrangement, which was resumed by the International Monetary Fund
International Monetary Fund
The International Monetary Fund is an organization of 187 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world...
(IMF). These measures, together with peaceful conditions in the country, have helped restore investor confidence and created conditions for the government to embark on extensive economic and fiscal reforms and seek donor support for a poverty reduction and growth strategy.
The resumption of the civil-war in 2005 led to a steep increase defence expenditures. The increased violence and lawlessness also prompted some donor countries to cut back on aid to the country.http://www.washingtonpost.com/wp-dyn/content/article/2007/07/27/AR2007072702462_2.htmlhttp://hrw.org/english/docs/2007/08/15/slanka16690_txt.htm.
Sri Lanka has also accumulated a 9.2 % deficit and the central bank has not intervened since late 2006 to print more currency http://www.lankabusinessonline.com/fullstory.php?newsID=1399754854&no_view=1&SEARCH_TERM=1.
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.
Labour
More than 20% of the 6.1 million-strong labour force, excluding the north and east, is unionized. Trade unionTrade union
A trade union, trades union or labor union is an organization of workers that have banded together to achieve common goals such as better working conditions. The trade union, through its leadership, bargains with the employer on behalf of union members and negotiates labour contracts with...
membership is on the decline. There are more than 1,650 registered trade unions, many of which have 50 or fewer members, and 19 federations. Many unions have political affiliations.
The Ceylon Workers Congress (CWC) and Lanka Jathika estate workers union are the two largest unions representing workers in the heavily unionized plantation sector. The president of the CWC also is Minister of Livestock Development and Estate Infrastructure. The CWC's agenda includes political issues.
Some of the stronger and more influential trade unions include the Ceylon Mercantile Union, Sri Lanka Nidhahas Sevaka Sangamaya, Jathika Sevaka Sangayama, Ceylon Federation of Trade Unions, Ceylon Bank Employees Union, Union of Post and Telecommunication Officers, Conference of Public Sector Independent Trade Unions, and the JVP-aligned Inter-Company Trade Union.
The unemployment rate has declined in recent years and hovers at 4-5%. The rate of unemployment among high school and college graduates, however, remains proportionally higher than the rate for less-educated workers.
The government has embarked on educational reforms it hopes will lead to better preparation of students and fewer mismatches between graduates and jobs. In addition, it also has begun a youth corps program to provide employment skills to the unemployed.
Macro-economic trend
This is a chart of trend of gross domestic product of Sri Lanka 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 |
For purchasing power parity comparisons, the US Dollar is exchanged at 113.4 Sri Lankan Rupees only.
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
Government
Government refers to the legislators, administrators, and arbitrators in the administrative bureaucracy who control a state at a given time, and to the system of government by which they are organized...
's monopoly on wheat imports, and promote more competition in the financial sector.
A continuing cloud over the economy is the fighting between the Government of Sri Lanka and the LTTE, which has cost 65,000 lives in the past 15 years.
Government provides employment for 13% of the work force and follows state enterprise oriented policies.
Privataization of such enterprises has stopped and reversed, with several new state enterprises launched.
Financial institutions
The Central Bank of Sri LankaCentral Bank of Sri Lanka
The Central Bank of Sri Lanka is the monetary authority of Sri Lanka. It was established in 1950, two years after independence. The founder governor of the Central Bank of Sri Lanka was John Exter, while the minister of finance at the time was J.R...
is the monetary authority
Monetary authority
Monetary authority is a generic term in finance and economics for the entity which controls the money supply of a given currency, and has the right to set interest rates, and other parameters which control the cost and availability of money...
of Sri Lanka
Sri Lanka
Sri Lanka, officially the Democratic Socialist Republic of Sri Lanka is a country off the southern coast of the Indian subcontinent. Known until 1972 as Ceylon , Sri Lanka is an island surrounded by the Indian Ocean, the Gulf of Mannar and the Palk Strait, and lies in the vicinity of India and the...
and was established in 1950. The Central Bank is responsible for the conduct of monetary policy
Monetary policy
Monetary policy is the process by which the monetary authority of a country controls the supply of money, often targeting a rate of interest for the purpose of promoting economic growth and stability. The official goals usually include relatively stable prices and low unemployment...
in the country and also has supervisory powers over the financial system
Financial system
In finance, the financial system is the system that allows the transfer of money between savers and borrowers. A financial system can operate on a global, regional or firm specific level...
.
The Colombo Stock Exchange
Colombo Stock Exchange
The Colombo Stock Exchange 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...
(CSE) is the main stock exchange
Stock exchange
A stock exchange is an entity that provides services for stock brokers and traders to trade stocks, bonds, and other securities. Stock exchanges also provide facilities for issue and redemption of securities and other financial instruments, and capital events including the payment of income and...
in Sri Lanka
Sri Lanka
Sri Lanka, officially the Democratic Socialist Republic of Sri Lanka is a country off the southern coast of the Indian subcontinent. Known until 1972 as Ceylon , Sri Lanka is an island surrounded by the Indian Ocean, the Gulf of Mannar and the Palk Strait, and lies in the vicinity of India and the...
. 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 http://www.wtc.lk in Colombo
Colombo
Colombo is the largest city of Sri Lanka. It is located on the west coast of the island and adjacent to Sri Jayawardenapura Kotte, the capital of Sri Lanka. Colombo is often referred to as the capital of the country, since Sri Jayawardenapura Kotte is a satellite city of Colombo...
since 1995 and it also has branches across the country in Kandy
Kandy
Kandy is a city in the center of Sri Lanka. It was the last capital of the ancient kings' era of Sri Lanka. The city lies in the midst of hills in the Kandy plateau, which crosses an area of tropical plantations, mainly tea. Kandy is one of the most scenic cities in Sri Lanka; it is both an...
, Matara
Matara, Sri Lanka
Matara is a city on the southern coast of Sri Lanka, 160 km from Colombo. It is one of the largest cities in Sri Lanka. It was deeply affected by the Asian tsunami in December 2004.-History:...
, Kurunegala
Kurunegala
Kurunegala , is the capital of the North Western Province, Sri Lanka, Sri Lanka and the Kurunegala District. Kurunegala was also an ancient royal capital for 50 years, from the end of the 13th century to the start of the 13th century. The town itself is a busy commercial and a transport hub...
, Negombo
Negombo
Negombo is a town of about 121,933, approximately 37 km north of Colombo, in Sri Lanka. It is located at the mouth of the Negombo Lagoon, about 7 km from the Bandaranaike International Airport...
and Jaffna
Jaffna
Jaffna is the capital city of the Northern Province, Sri Lanka. It is the administrative headquarters of the Jaffna district located on a peninsula of the same name. Jaffna is approximately six miles away from Kandarodai which served as a famous emporium in the Jaffna peninsula from classical...
. In 2009, after the 30 years long civil war came to an end, the CSE was the best performing stock exchange in the world.
Transportation and roads
Most Sri Lankan cities and towns are connected by the Sri Lanka RailwaysSri Lanka Railways
Sri Lanka Railway Department, branded "Sri Lanka Railways", is a key department of the Sri Lankan Government under the Ministry of Transport with a history that begins in 1858...
, 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 trains in Sri Lanka are very well maintained and both the National Railway and CTB employ highly qualified and experienced local engineers. Rail accidents have been minimal in Sri Lanka compared to most developing nations, train travel is rather punctual and schedules are usually well followed.
The total length of Sri Lankan roads exceeds 11000 kilometres (6,835.1 mi), with a vast majority of them being paved. The government has launched several highway projects to bolster the economy and national transport system
Transport network
A transport network, or transportation network in American English, is typically a network of roads, streets, pipes, aqueducts, power lines, or nearly any structure which permits either vehicular movement or flow of some commodity....
, 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
Traffic congestion
Traffic congestion is a condition on road networks that occurs as use increases, and is characterized by slower speeds, longer trip times, and increased vehicular queueing. The most common example is the physical use of roads by vehicles. When traffic demand is great enough that the interaction...
. The government sponsored Road Development Authority (RDA) has been involved in several large-scale projects all over the island in attempt to improve the road network in Sri Lanka. Sri Lanka's commercial and economic centers, primarily the capitals of the nine provinces are connected by the "A-Grade" roads which are categorically organized and marked. Furthermore, "B-Grade" roads, also paved and marked, connect district capitals within provinces.
Energy
The energy policy is governed by the Ministry of Power and EnergyMinistry of Power and Energy (Sri Lanka)
The Ministry of Power and Energy is a ministry of the Government of Sri Lanka that directs the formulation and implementation of policies relating to the generation, transmission, distribution and retailing of electrical energy in Sri Lanka...
, while the production and retailing of electricity is carried out by the Ceylon Electricity Board
Ceylon Electricity Board
The Ceylon Electricity Board , is the largest electricity company in Sri Lanka. With a market share of nearly 100%, it controls all major functions of electricity generation, transmission, distribution and retailing in Sri Lanka. It is one of the only two on-grid electricity companies in the...
. Energy in Sri Lanka is mostly generated by hydroelectric power stations
Hydroelectricity
Hydroelectricity is the term referring to electricity generated by hydropower; the production of electrical power through the use of the gravitational force of falling or flowing water. It is the most widely used form of renewable energy...
in the Central Province. The Sri Lankan Government and many individual "green groups" in Sri Lanka have been focusing on eco-friendly solutions to energy development and the country is undergoing changes to enforces stricter environmental policies in industries, both public and private.
Tourism
TourismTourism
Tourism is travel for recreational, leisure or business purposes. The World Tourism Organization defines tourists as people "traveling to and staying in places outside their usual environment for not more than one consecutive year for leisure, business and other purposes".Tourism has become a...
is one of the main industries in Sri Lanka
Sri Lanka
Sri Lanka, officially the Democratic Socialist Republic of Sri Lanka is a country off the southern coast of the Indian subcontinent. Known until 1972 as Ceylon , Sri Lanka is an island surrounded by the Indian Ocean, the Gulf of Mannar and the Palk Strait, and lies in the vicinity of India and the...
. Major tourist attractions are focused around the islands famous beaches located in the southern
Southern Province, Sri Lanka
The Southern Province of Sri Lanka is a small geographic area consisting of the districts of Galle, Matara and Hambantota. The region is economically backward compared to the Western province, where the capital Sri Jayawardenapura-Kotte is situated...
and the eastern
Eastern Province, Sri Lanka
The Eastern Province is one of the 9 provinces of Sri Lanka. The provinces have existed since the 19th century but they didn't have any legal status until 1987 when the 13th Amendment to the 1978 Constitution of Sri Lanka established provincial councils. Between 1988 and 2006 the province was...
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 sapphire
Sapphire
Sapphire is a gemstone variety of the mineral corundum, an aluminium oxide , when it is a color other than red or dark pink; in which case the gem would instead be called a ruby, considered to be a different gemstone. Trace amounts of other elements such as iron, titanium, or chromium can give...
s being frequently found and mined in Ratnapura
Ratnapura
- Floods :The town of Ratnapura is situated in the flooding plain of the river Kalu. The town experiences regular floods usually in the month of May. There is no large dam across the Kalu, so this leaves the city at the mercy of nature's forces every year. Several proposals have been made to reduce...
and its surrounding areas, they are a major tourist attraction.
The 2004 Indian Ocean Tsunami
2004 Indian Ocean earthquake
The 2004 Indian Ocean earthquake was an undersea megathrust earthquake that occurred at 00:58:53 UTC on Sunday, December 26, 2004, with an epicentre off the west coast of Sumatra, Indonesia. The quake itself is known by the scientific community as the Sumatra-Andaman earthquake...
and the past civil war
Sri Lankan civil war
The Sri Lankan Civil War was a conflict fought on the island of Sri Lanka. Beginning on July 23, 1983, there was an on-and-off insurgency against the government by the Liberation Tigers of Tamil Eelam , a separatist militant organization which fought to create an independent Tamil state named Tamil...
have reduced the tourist arrivals, however the number of tourists visiting have been recently increasing, beginning in early 2008. March 2008 by 8.6%
Tea industry
Kenya
Kenya , officially known as the Republic of Kenya, is a country in East Africa that lies on the equator, with the Indian Ocean to its south-east...
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
James Taylor (Ceylon)
James Taylor was a British citizen who introduced the tea plantation in Sri Lanka . He arrived to Sri Lanka in 1852 and settled down in Loolecondera estate in Kandy. He lived in Sri Lanka more than half of his lifetime 57 years until his death...
, a British planter who arrived in 1852.
Recently, Sri Lanka has become one of the countries exporting fair trade tea to the UK and other countries. It is believed that such projects could reduce rural poverty
Rural poverty
Rural poverty refers to poverty found in rural areas, but more important, to factors of rural society, rural economy and rural political systems that give rise to the poverty found there...
.
Apparel and textile industry
The apparel industry of the Sri Lanka mainly exports to the United StatesUnited States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
and Europe
Europe
Europe is, by convention, one of the world's seven continents. Comprising the westernmost peninsula of Eurasia, Europe is generally 'divided' from Asia to its east by the watershed divides of the Ural and Caucasus Mountains, the Ural River, the Caspian and Black Seas, and the waterways connecting...
. Europe increasingly relies on Sri Lankan textiles due to the high cost of labor in Europe. There are about 900 factories throughout country serving companies such as Victoria's Secret
Victoria's Secret
Victoria's Secret is an American retailer of women's wear, lingerie and beauty products. It is the largest segment of publicly-traded Limited Brands with sales of over US$5 billion and an operating income of $1 billion in 2006...
, Liz Claiborne
Liz Claiborne
Anne Elisabeth Jane "Liz" Claiborne was a Belgian-born American fashion designer and entrepreneur. Claiborne is best known for founding Liz Claiborne Inc. which in 1986 became the first company founded by a woman to make the Fortune 500...
and Tommy Hilfiger
Tommy Hilfiger
Thomas Jacob "Tommy" Hilfiger is an American fashion designer and founder of the premium lifestyle brand Tommy Hilfiger.-Early life:...
.
Agriculture
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.Global economic relations
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 biggest 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; U.S. 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.
Credit Rating and Commercial Borrowing
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 http://www.lankabusinessonline.com/fullstory.php?newsID=1370696445&no_view=1&SEARCH_TERM=1. Standard and Poor's estimates public sector debt has reached 95 % of GDP http://www.lankabusinessonline.com/fullstory.php?newsID=1370696445&no_view=1&SEARCH_TERM=1, in comparison to CIA estimates of 89 % of GDP https://www.cia.gov/library/publications/the-world-factbook/geos/ce.html#Econ. 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 http://www.lankabusinessonline.com/fullstory.php?newsID=1370696445&no_view=1&SEARCH_TERM=1. 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 http://www.sundaytimes.lk/070819/News/nws13.html.Foreign assistance
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 FundInternational Monetary Fund
The International Monetary Fund is an organization of 187 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world...
, World Bank
World Bank
The World Bank is an international financial institution that provides loans to developing countries for capital programmes.The World Bank's official goal is the reduction of poverty...
, Asian Development Bank
Asian Development Bank
The Asian Development Bank is a regional development bank established on 22 August 1966 to facilitate economic development of countries in Asia...
, Japan
Economy of Japan
The economy of Japan, a free market economy, is the third largest in the world after the United States and the People's Republic of China, and ahead of Germany at 4th...
, the European Union
European Union
The European Union is an economic and political union of 27 independent member states which are located primarily in Europe. The EU traces its origins from the European Coal and Steel Community and the European Economic Community , formed by six countries in 1958...
and the United States
Economy of the United States
The economy of the United States is the world's largest national economy. Its nominal GDP was estimated to be nearly $14.5 trillion in 2010, approximately a quarter of nominal global GDP. The European Union has a larger collective economy, but is not a single nation...
, totalled $4.5 billion.
External links
- Global Economic Prospects: Growth Prospects for South Asia The World Bank, Dec. 13, 2006
- CSE ALL-SHARE
- CIA Factbook
- Information and News