Sri Lanka - An interim assessment of experience and priorities

Report No. 4482-CE Sri Lanka: An Interim Assessment C of Experience and Priorities- May 4, 1983 South Asia Programs Department FOR OFFICIAL USE ONLY Document of the World Bank This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  .el z - I t  FOR OFFICIAL USE ONLY SRI LANKA AN INTERIM ASSESSMENT OF EXPERIENCE AND PRIORITIES Table of Contents Page No. List of Text Tables List of Annex Tables Country Data Introduction ........... . .......... ..... 1 I. A MACRO-ECONOMIC REVIEW, 1977-82 . . . . . . . . . . . . . . 2 A. Development Objectives. 2 B. Factors Affecting the Experience with Liberalization . . 5 External Factors ......... . 5 Government Policies. . . . . . . . . . . . . . . . . . 7 The Economy and Its Institutions . . . . . . . . . . . 9 II. PRIORITIES FOR POLICY AND INSTITUTIONAL DEVELOPMENT. . . . . 11 A. Fiscal Policy. . . . . . . . . . . . . . . . . .11 B. Balance of Payments. . . . . . . . . . . . . . . . . . . 15 C. Industrial Growth in the Private Sector. . . . . . . . . 20 III. BALANCE OF PAYMENTS PROSPECTS AND AID REQUIREMENTS . . . . . 25 This report was prepared by an economic mission, composed of Mr. Rene Vandendries and Mrs. Martha de Melo, which visited Sri Lanka in March 1983. This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  LIST OF TEXT TABLES Page No. Table 1: Development Objectives, 1977-82 4 Table 2: Effects of External Factors 6 Table 3: Interest Rates and Commercial Bank Advances 10 Table 4: Selected Balance of Payments Data 16 Table 5: Effective Exchange Rates for Imports and Exports 19 Table 6: National Accounts Estimates of Manufacturing Growth at Factor Cost in Constant Prices 21 Table 7: Characteristics of Public and Private Sector Factory Industries in 1979 23 Table 8: Investment Approvals in Industry 25  LIST OF ANNEX TABLES Page No. Table A-1: Gross Domestic Product: Composition and Sectoral Deflators, 1970-82 29 Table A-2: Growth Rates of GDP and Its Components, 1970-82 30 Table A-3: National Product and Expenditure, 1970-82 31 Table A-4: Summary of Budgetary Operations, 1977-83 32 (Rs million) Table A-5: Summary of Budgetary Operations, 1977-83 33 (in percent of GDP) Table A-6: Balance of Payments, 1977-83 35 Table A-7: External Debt Service (on Public Medium and Long-Term Debt as of End-1982), 1978-86 36 Table A-8: Tentative Estimates of Public Short-Term and Non-Guaranteed Private Debt as of End-1982 and Debt Service 37 Table A-9: Import Taxes and Export Taxes and Subsidies 38 Table A-10: Aid Commitments and Disbursements 39 Table A-li: Overall Aid Pipeline, 1981-83 40 Table A-12: Aid Commitments, 1970-82 41 Table A-13: Aid Disbursements, 1970-82 42   Page 1 of 2 pages COUNTRY DATA - SRI LANKA AREA POPULATION a/ DENSITY 65,607 sq km 15.2 million (mid 1982) 235 per sq km (1981) Rate of Growth: 1.7% (from 1971 to 1981) 763 per sq km of agricultural land (1979) POPULATION CHARACTERISTICS (1982) HEALTH (1980) Crude Birth Rate (per 000): 26.5 Population per physician: 7,186 Crude Death Rate (per -000): 6.0 Population per Hospital Bed: 340 Infant Mortality (per -000 live births): 38.0 b/ INCOME DISTRIBUTION (1978) DISTRIBUTION OF LAND OWNERSHIP % of national income, highest quintile: 54 % owned by top 10% of owners: - lowest quintile: 4 % owned by smallest 10% of owners: - ACCESS TO PIPED WATER (1981) ACCESS TO ELECTRICITY (1971) population - urban: 47 wellings - total: 9 rural: 10 rural: 3 NUTRITION (1977) EDUCATION (1979) Calorie intake as % of requirements: 97 Adult literacy rate: 85% Per capita protein intake (grams per day): 43 Primary school enrollment: 98% GNP PER CAPITA IN 1980: $270 c/ OUTPUT IN 1982 BY SECTOR ANNUAL RATE OF GROWTH (%, constant ptices) Value Added $ MilliOn % 1970-77 1977-82 1970'82 Agriculture 1,209 27.4 2.0 4.0 2.9 Industry d/ 1,205 27.4 2.1 6.5 3.9 Services 1,990 45.2 3.7 7.2 5.2 Total e/ 4,4.04 100 2.Y 6.2 4.3 GOVERNMENT FINANCE Central Governlent (Ts-million) % of GDP at Market Prices 1982 1T95 -981 1982 Current Receipts f/ 16,603 17.2 17.9 16.5 Current Expenditures g/ 18,075 18.3 19.7 18.0 Current Surplus -1,472 -1.1 -1.8 -1.5 Capital Expenditures h/ 15,952 7.3 13.9 15.9 External Assistance 8,597 3.2 8.9 8.6 a/ Based on Provisional 1981 Census estimates. b/ 1979: Source: Central Bank of Ceylon. c/ World Bank Atlas estimate. d/ Manufacturing, mining, construction, and utilities. e/ GDP at factor cost. f/ Includes capital revenue. g/ Includes advance accounts. h/ Includes net lending.  Page 2 of 2 pages COUNTRY DATA - SRI LANKA MONEY; CREDIT; AND PRICES 1970 1976 1977 1978 1979 1980 1981 1982 (end of period) (