Ceylon - Economic situation

RESTRICTED Report No. FE-46 This report was prepared for use within the Bank and its affiliated organizations. They do not accept responsibility for its accuracy or completeness. The report may not be published nor may it be quoted as representing their views. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION THE ECONOMIC SITUATION CEYLON A Background Paper to "The Foreign Exchange Problem of Ceylon" July 13, 1965 Far East Departnent CURRENC EQUIVALENTS Currency Unit - Ceylon Rupee US$ 1 4 14.76 Rupees 1 Rupee US$ 0.21 1 Million Rupees - US$ 210,000 TABLE OF CONTENTS Page No. BASIC DATA STMARY AND CONCLUSIONS i I. Recent Trends in Output, Income and Expenditure 1 A. Introduction 1 B. Recent Growth in Output and Income 3 Export Agriculture 3 Domestic Ariculture h Fisheries 5 Manufacturing 6 C. Income and Expenditure 8 II. Financial Developments 10 A. Introduction 10 P- PilAir Vinann- I10 C. Balance of Payments 13 III. Growth Prospects 17 A. The Export Sector 18 Agriculture 19 Conclusion 21 BASIC DATA Area: 25.332 square miles Poulation (mid-196): 10.965.000 Rate of Lrowth: 2-6 - 2.7% n.a. Population density (per sq. mile): 433 Ponulation density (per so. mile of arable land): 1,100 Gross National Product: (1964): Rs. 7,540 million Rate of growth (1964): 4.5% Real Income growth (1959-1964): 2.1% p.a. GT yow Pan4+n. TM^Ill A .nn4rml a + official exchange rate. IJ.L IVI"UllLj LL4 I UtI 116LU." LUIt L44 Manufacturing: 8 Cons ruc tion: o Public AdXnUstration 7 Miscellaneous Services 35 Percent of GDP at Market Prices: 1964 19y-1yo3 GrosS inves-tmente****e o o*ooo*** 13 1> GrosS Savings ........................ 11 13 Balance of Payments Current Account Deficit ............... ... 2 2 Investment Income Payments............... less than 1 less than 1 Government Revenue .................... 23 22 Resource Gap as % of Investment: 15 13 1964 Average Annual Change (Rs.million) 1959-1964 (in % T) Total Money Supply..................... ......... 1,624 6 Time and Savings Deposits ....0*......*..... 551 10 Bank Credit to Public Sector ..,............. 1,815 20 Bank Credit to Private Sectore................ 770 9 Rate of Change in Prices: 2,0 1.5 (Official Cost-of-Living Index) (Continued) -2 - Public Sector Operations 1963/64 1958/59-1963/64 (Rs.miUion) Government Current Receiptsueo.... 1,611 5% p.a. Government Current Expenditureoe.... 1.611 6% p.a. Surplus or Deficit............. . - 3 Decline of Surplus Government Capital Exenditure...... 503 Total Ekternal Assistance to Public Sector (net) ......... .. 97 18 pa. Balance of Payments (in I.St millinn): 1oA, 19o-1oA) Total------ -- 1 7A Total Imports .................... 1,9#8 T- TnvicAhlao - 'I- Net Current Account Balance...,,*.. -221 -2% p.a. 1964 1959 Commodity Concentration of Exports., 93% 940 1964 1959 ILII UOJ 4) Mi L±.01J Grs Foreign us (4 Net Foreign Exchange Reserves,*.... 10 131 (or 10 days' (or 4 months' imports) imports) External Financial Assistance (in US$ million): Average 1964 1960-1963 Total isbursements.eoq@*****9* *** 30 18 Grants.o...............o.** *ooo 16 9 Loneooeeoooooo*oo1ooo 14 9 Major Donors United States.................. 5 8 3 2 uana ....o . o *e*.o *************** e 4 United Kingdomaqoq9****oe*o9***e 1 Fed. Z .p0 oaf Ge.. y... ....a*&.**1 0 Ciii coL* o**o eoo**********ooe *oA 7 1 * - 1 SUMARY AND CONCLUSIONS 1 romnnts P.rnnriin nrformann mst he annrnised anainst the background of an economy in which a productive export agriculture provides tih he n fnw nnA mf hJko h4ahow nirn -ntame levels 4n Aca tlhO but where, because the endowment with natural resources is poor, achieve- .ne.-t 0"' ad-0-a grX-WAW-h de-IMMd a 1L4g1, degre of..n AllgeC 4 6n t4he 11Se Of resources and limited administrative, managerial and technical capabilities, of total output has been slow despite substantial investment and impressive 1%VC0V LLu 17$ 1UUUo.LU eULI UXjJV-po UrI1U.u1U* moriovej Uuv'ereU movements in terms of trade have aggravated Ceylon's problems of slow growtun income has not kept pace with the rapid growth of population, and Ceylon found it difficult to live within its means. 2. Total expenditures, spurred by large fiscal deficits resulting primarily from mounting outlays on social services and subsidies, have run well ahead of income and population growth. For several years, heavy use of foreign exchange reserves supplemented current income, but in lyb Ceylon reached a reserve position where it could no longer afford a liberal import policy and further loss of reserves, Import and exchange restrictions were tightened severely but reserves continued to fall, although at a slower rate, and short-term liabilities increased so that by the end of 1964 the foreign exchange holdings of the Central Bank were equivalent to three weeks' imports and more than offset by short-term liabilities, With continuing internal financial instability the tighteaing of import and exchange restrictions led to domestic inflation, It .s unfort unate that now, at, a time when it is impossible to reduce reserves furth3r, Ceylon's import requirements have been increased by a failure in the domestic rice crop. 3. Solutions to Ceylon's financial problems woild.be easier if there were prospects for early improvements in exchange earnings and domestic output. Substantial improvements in exchange earnings, however, are not likely., Export output will probably continue to rise as tea yields maintain their upward trend and production of rubber increases with immature trees coming into bearing. But adverse price movements for rubber and coconut products are likely to cancel much of the gains in output. This emphasizes the need for a substantially higher rate of increase in output for domestic use. esDecially in import saving food crops and manufacturing production, Particvlarly in view of the rapid rate of growth of population. It should be nossible to aintain the record of increasina ricn nrndtion which is already good. Hanufacturing may grow somewhat faster than in the past. Thepre Are nlnnnnruite for sm-pani4gc +1im Pii1+.4-tr+Ar%nr% f subsidiary foodstuffs. The fact that Ceylon has a population that is highly 1i+Prnt.P Rhnl fM414+_n fh1nin% 4n fuikmnnvr yn4cA +4mn4a 4V' agriculture and entry into new fields of activity. However, the extent to rrhih +hese opnwft,4+4oe w-.411 I- -'a14oA 4e -o4 1r .-e 4-6. .l.411 AnA decisively on the G6vernment's ability to improve policies with regard to a" LPCLVJ._L.Yj9 VIL V 0 J.L 1~ULL~ LIU WIWi I"L.UL Q.L LIIV01Z ~1OJ-j ,U THE ECONOMY OF CEYLON I RECENT TRENDS IN OUTPUT, INCOME AND EXPENDITURE A. Introduction 1. Ceylon's economic performance must be appraised against the background of a dual economy in which a large export agriculture supports one of the higher average-income levels in Asia - roughly equivalent to $140 a year - but where conditions in both the exDort and domestic sectors are difficult for achieving adequate growth. Shortages of administrative, manaeerial and technical canacities are narticularly serious because Ceylon is not rich in resources that can readily be exploited. Practically no suitable land In left for the Panian nf Pnnrt Aarnulture. There is new land for domestic agriculture in the island's dry zone but bringing it into riilftivnfii nniT---: *I+J i1 QnInfinn-m ho fniinti fnrn nirnhr nf~ ;4oi niflt.,iral and intitutional problems and substantial funds be made available for necessar3, r ~-iia xeA+i~.As egrd +.'hufactur±ng.. th r% an open; economy long precluded the growth of industrial entrepreneurship. WMreovUr C7ieln lak vlbroad bkaQe of -1-dig-nous rwmter-lals and its domestic market - now 11 million peaple - is relatively small. 2. These obstacles hampered economic progress all through the 19501s. A14-U--1- _u _u. -if,c5 _x mn w.-- u-.vu4-u L- -uve--w v -uvl- -4w u - n_LLUU&L .LUUUt L , /O V.L U111- WcLO UWVLAWU LoV L1V JV 41I~Loy U.JLsLLLP &.L VW VJL"4y CLL an average annual rate around 31. Pressure on resources intensified as population increased by 2.8% a year. New employment was insUfLciet:. In these circumstances, Ceylon, under a Government pledged to improving lving standards, found it dificult to live wihna its income, Foreign reserves were used increasingly to escape the limitations of slow actual growth. 3. The problems and developments of the early 190's are not basically different from those of the 1950's, except that ample exchange reserves no longer exist to supplement current income. With the depletion or reserves and the consequent need to curtail imports, Ceylon's problem of inadequate growth of output became increasingly serious, However, 11ttle was done to bring this problem closer to a solution. In fact, gross fixed capital formation declined by 4.3% between 1959 and 1964, and its share in total resources fell from 12.5% to 10.6%. Although, as will be discussed below, insufficient investment does not seem to have been the cause of slow growth in the past, it was certainly unfortunate that investment declined at a tine when the growth of output urgently needed to be accelerated. 4. Fundamentally, growth has been slow because investment has yielded poor returns. Over the last five years, gross fixed investment has been almost five times the growth of output, indicating unusually high capital requirements in relation to output. For the domestic sectors alone, i.e. excluding export agriculture, the relationship between investment and additional output is even more unfavorable. Moreover, it would appear that the increases in domestic output that were attained, were not altogether attributable to investments. - 2 - 5. Analysis of the use of investment resources provides some explanation of the poor returns. First, investment in fields outside export agriculture - roughly Rs.850 million a year - contained a fairly large element of spending on social services and general administration. In the Government sector alone, this amounted to more than Rs. 100 million a year, Private housing may account for another Rs.150 million a year to bring total annual investment in social and administrative fields to an- amount exceeding Rs.250 million, or nearly a third of non-export invest- ment. Secondly, investments in infrastructure, including transportation, probably accounted for another Rs.150 million a year. Some of these investments (probably much of the railroad outlay) were not of high priority, while other public works, such as maintenance and improvement of roads, were neglected. The usefulness of large investments in the Port of Colombo in relieving congestion was reduced by chronic labor and organizational difficulties. 6. The balance of annual investment amounts to Rs.400-450 million. Of this, ronghlvy. Rs.8 m411ion wen+.into nrivate transport, including trucks and tractors. Thus, Rs,320-370 million was available for investment in output of final products, Over L.% of this was public investment. n land development and irrigation which produced few additional acres and ittl+ e44+ ddiiona oui+tut. With beter organzation and fewer' amenities to the settlers it might have been possible to develop considerably more acres at the same total cost, and. returns~ might have been much improved wirth a different crop pattern that did not reserve exclusive water rights for paddy. imported machinery and equipment, buildings and other construction. Included only limited contribution to growth, because of managerial and technical diffictities and cuse unrelistiLclly low seln price L.understated the real contribution to output. 7. There can be little doubt that a relatively high capital outlook ratio i.s inherent in Ceylonis poor resource endowment. Two conclusions can be drawn from this situation: first, that even with most efficient management of investment resources, Ceylon has to mobilize a relatively large share of total resources for investment in order to be able to raise average incomes significantly; secondly, that efficient management in the allocation of investment resources and the use of investment made, is even more important in Ceylon's circumstances than in other cases where the resource potential is better. As regards the first requirement, Ceylon's performance has been deteriorating in recent years and this trend will have to be reversed. However, it is in the management of investment resources that Ceylon's record has been poor indeed. Rather large amounts of investment went into fields such as railroads, land development and irrigation, and some Government industries where they made little contribution relative to the resources invested. At the same time, some promising possibilities in tea processing, import-saving agriculture:, fishing and private manufacturing were not exploited nearly as much as might have been possible. B. Rennnt Gr(owth in Outnut and Income 8. fntnut in rennt vanrn has nntinned to rien at the sIow averaen annual rate of a little over 35. The growth rate in 1964 was somewhat highr_ Hnwver, for the novid 1 -A, + wnvno "n+= ua g r e s proay Tno more than the pace of the 1950's. This is a growth pattern which can neither add s4ci-i-nf4 y+r to pe+-Un an 7-+11+ 5s 0 vc 4 nea nnia r - Moreover, declining export prices have taken nearly one-third of this limited grew by only 2.1% a year after allowance for adverse changes in the terms %AVL 4IQ~ .1"sL 11~ nL L "A.L IVV1 L4ALJ.LW UtJ.VWO La 1VUts.LUL_ AlUU11V (Rs. million) 1959 1960 1961 1962 1963 1964 U. ross National roduct at Constant 1959 Factor Cost Prices........... 5,854 6,078 6,260 6,493 6,620 6,919 2. Terms of Trade Effect due to Export of: (i) Tea ***** *************** -26 -39 + 2 -13 _L57 (ii) Rubber.,,.....,,.............. +39 -25 -14 - 56 -94 (iii)Coconut Products............** -33 -ll -96 - 79 -105 (iv) Other Products................ + 6 +1 + 5 + 6 + 9 (v) All Products.........0........ -14 -173 -102 -262 -346 3, Gross National Income at Constant 1959 Factor Cost Prices................ 5,854 6,064 6,087 6,391 6,358 6,572 (Source: Central Bank of Ceylon) Export Agriculture 9. Export agriculture, except perhaps coconuts, is the economic sector that is least handicapped by shortages of managerial talent or skilled super- visors and field workers. Considerable gains in output are to be had from replanting and improvements in cultivating techniques with respect to all these crops - tea, rubber and coconuts. Therefore, opportunities for expansion exist in this sector despite the fact that little new land suitable for these crops is available. However, conditions on the world market limit the extent to which gains in output can be translated into increases in income. Between 1959 and 1964 net output rose by nearly 20%, yet income rose by only about 3% because of declining prices. 10. Output of tea in 1964 was roughly one-third higher than in the mid- 1950's. This increase was almost entirely due to better technioues of cultivation, including the use of more fertilizer, which produced yields that in the past were believed nossible onvl after replantine. It is. therefore not surprising that investment in replanting was small , particularly as nlnnt+.Pr.s YTPT-.- ?n^,fu f 7a%e-c4hloc n3+4^vn14.c4n^n ^-P na+n+ c TmTrr,c+"n"+ in tea plant and machinery has also been small, perhaps less than half the amount ran1Med + expand -tes i+nlinn fwto414+4to ut 4. o4+'s at++o++ previously unused capacity and more economical use of facilities helped over- Conn 1. ; a ~ 'L 4..Ar +'k VJ n. 4- But ther -"I con Ide.LW co c r nowJ 1AiLL.LA.A 4LL.L 1i.LA. 4I -IA, LI I -4 - the industry and the Government, that the quality of tea will decline, if it has not already beann to do so. unless substantial investments are madle. The industry contends that high taxation does not leave siiffinipnt invAstmpnt funds. In 1964. production was lower than in the previous year for the first time over a long period. Unfavorable weather was an import+Pntfacoi- in the dnlin_ Ruit. thern wprn also other Droblems. particularly a developing shortage of fertilizers and other chemicals, reflecti ng t he +4Ihtn"4ng ofP 4ynynv-t trto ns, l andp.r-.i.qt.nt vpakness in the market for low grown teas, aggravated by virtual cessation of exports to Iraq, rveylon's pr"ncipal customer 4I n e nT- V.c+ in .hp Inrt quartpr. following nationalization of the Iraqui tea trade. 11. Rubber output, which remained for several years between 95,000 U.K XVI VLI.', V II aQ11 JtLIt±A V9:2 W.LU.CWII LUL-.5 I_UJJaAIU.LL16 WJ.IL varieties, has now begun to climb as replanted acreages matures. Production J11 7V44 Wa LD "cUUV1 Li&Vf.Lv LU .U VIAn LZaLW L7,VO*o Le nLUJ.U LuJuuu to increase as a result of the impressive replanting record. The subsidized replan,Ung program nas raiseU ue area now planteu wih high yieldgmg rubber to more than 40% of total rubber land. The program has been extended for another five years with an increase in the subsidy per acre. 12. Average coconut production in 1961-6 was substantialLy above that of preceding years, 1964 in particular being an excellent year due to favorable weather conditions. There have also been some improvements under the Coconut Rehabilitation Scheme which provides for the subsidized distri- bution of fertilizer and high-grade seedlings. Fertilizer use now covers about 27% of total acreage. About 10% of the acreage appears to have been re- planted in the last five years. Domestic Agriculture 13. The island's dry zone offers the only opportunity for enlarging the cultivated area on a large scale. The traditional approach to the utilization of this potential has been irrigation works and colonization, based on paddy, but achievements have been commensurate neither with the substantial investments nor with Ceylon's needs for expanding output and employment. Even in paddy, towards which most of the effort was directed, only about one-third of the increase in crop acreage can be attributed to the Government's irrigation and colonization schemes, in which roughly one- fourth of total public capital outlays has been invested annually. The increase in output of paddy from this investment has been calculated at abouit one-fifth of the additional food requirements which result annually from the increase in population. These poor results suggest the need for alternative means of developing the dry zone. 14. Nevertheless, impressive increases were achieved in paddy product- ion between 1954-56 and 1960-62 when output rose at an accelerating rate which averaged 6% a year and reached almost 9% towards the end of the period. Floods and drought kept the gains in output to 2-3% a year in 1963-1964. The 1965 crop was affected by even more severely adverse weather conditions and output is likely to be consIdArqhly less than in preceding years. However, these are temporary setbacks which do not detract from the impressive gains that were achieved. Increased acreage, mostly outside the Government schemes, accounted for roughly half these increases, The-bulk of additional paddy acreage was from gains in double cropping and additions of marginal land that were partly attributable to sufficient rainfall in those years and partly the result of more economical use of water from existing facilities. An important factor in this iMprovirg use of water has been the rapid spread of tractor plowing, mostly on private contract, Increases in yields were directly responsible for the other half of the increase in output and were brought about by spreading adoption of the high-yielding H4 rice variety in the dry zone and well drained parts of the wet zone and a sharp rise in the use of fertilizer and weed killers and other improvements in cultivation. However, it is well to remember that despite the increases in home production of rice, more than half of Ceylon's requirements still have to be met by imports. 15. Subsidiary foodstuffs, mostly curry stuffs, onions, pulses and sweet potatoes - are grown in upland areas. princiDally in the dry zone. Shifting cultivation is dominant. Crops are dependent on rainfall and little fertilizer and hardly any imnroved varieties are used. These subsidiary foodstuffs are produced under conditions that are not conducive to achieving marked increases in outout. In fact. oroduction of these commodities annear to have been stagnant over the last several years, involving Ceylon in large and increasing exchange navmAnts for imnort-s nf subsidiary fordtffs._ 16- The prodhuction mf suar isq tecial yr p.roNmiimrlna starqyt, was made several years ago in planting sugar cane on Government-owned n1nAnin. \eflllina nnrunityi e%f' 9r) 000 +nnQ ra-Q+onh hitcerd WnT.Tvr - the project has run into serious organizational difficulties, including nrnViloyn.q ^f nni-r ie7 ni nroin+ A hn v C^'t In n +I. - ^n- n 4-,~ll If- - _------ - _ 'J t - f- e -- J.A. - -1 C... 1~- - - 1AJ harvested was sufficient only to employ 10% of installed milling capacity, Irn contrast,cz prgr- to - ---~- -'-"- -' 4- -' ty with considerable success and the country is now self-sufficient in these Pprn o d,- nt - 10 1:.LIAJ.L~ IiOV A=v cL "6VJJUVL1.L a_LdL ±JVL LUL L11ML r,.LVWt111 L1"_U,LLU L-LDIL"Ir by small, mechanized craft within the continental shelf, by trawlers mainly in Uh fishing baUns to the northeas and northwest of the isUand, ana by deep-sea tuna boats in more distant waters, Fish production has increased consiueraly l recent years, This creditabe acievement is attributacle to the mechanization of small craft with Government financial assistance, the entry of organized private enterprise into the industry, and the acquisit- ion of new equipment by the Government Fisheries Corporation. Further develop- ment of the fishing potential will require a substantial investment in shore facilities as well as fishing vessels and equipment. Development of the shore and port facilities has been slow and poorly organized but is now being improved, and the government-owned fisheries corporation has an ambitious 10-year plan to develop all aspects of the industry, -6- 1anufacturing 18. Manufacturing has so far been a relatively small factor in total outPut - now about 7-8% of gross domestic product - and employment. This reflects the obstacles to rapid development of the industrial sector: thA dnnstic market is small! entrenreneurshin and manaeerial exDerience are limited; few industrial raw materials are available domestically; the difficult labor relations, 1oreover, the Government that was in power development through private enterprise that greater participation by the public4 sector wa ,-cn -1oAl + resmyezri fry -r +cz, f ++o manufacture of such basic materials as steel, cement, petroleum products, -pe-*U 4J Qer an pa er .It ca'lco ngge J.~ &A V IA L.J. .&l ceramics, oils and fats, shoes and other leather products, sugar, plywood, U..L Q : LL V.&A -Q (2AAU %a4A1J .L_O* £ kL-.L .aV4W %;14VV .LL.V Vj" cw V"UVV US.J % --± in all fields except the production of basic materials, but private initiative was i,&ry o.L c1langesV -J.nGv.LI OLLU Ju.LJA'y wiuU "J. 1.L Ld4-.LL1gA LO.L.v JUUJ.LJ-. kL%, in manufacturing. 19, As regards private manufacturing, the most important single deterreO untU 1961 was prouably tUE lacA of reasonalUe protecU from imports. This factor was renoved when, beginning in 1961, restrictions on manufactured imports were tightened in order to conserve 1o1eigU exchange. At the same time, the Government began actively to promote private manufact- uring development by granting, upon application, tax concessions and allocation of foreign exchange for raw materials and machinery to approved ventures. These changes in policy produced a rush of applications mostly in light manufacturing on a fairly small scale. Many applicants were former import traders whom the import restrictions left without access to their traditional sources of supply. However, approvals for new ventures were granted in a rather indiscriminate manner and many ventures were approved - and thereby automatically given import licenses - without due regard to Ceylon's tight balance of payments position. As the shortage of foreign exchange intensified, it became apparent that the requirements of the private sector for the import of raw materials and investment goods could not be met. In 1964, private sector imports of such goods fell. Although the imediate effect of these restrictions on imports on production appear to have been nitigated somewhat by drawing on stocks, it was evident in early 1965 that industry was running well below capacity. In some sectors, such as the engineering trade, output was probably only 30% of capacity, as compared with 60-70% for the industrial sector as a whole. The slump that has overcome the industrial sector 3s also apparent in the fact that demand for power has ceased to increase. 20. These problems related to Ceylon's foreign exchange situation apart, it would appear that the manufacturing sector expanded significantly over the last five years. Investment is estimated at Rs.350 million during this period and value added by manufacturing doubled. Not all of the invest- ment and the additional production was in lines to which one would accord the highest economic priority, but it is encouraging to note that for the first time in Ceylon's history a rapid expansion of manufacturing took place. - 7 - Moreover, the advance cccurred on a broad front of light manufactured goods for consumption and included such diverse products as biscuits, garments, miscellaneous chemicals, paper and metal and rubber goods. Production of investment goods also increased considerably, but it started from a very small base and in 1964 accounted for only 10% of total industrial output. These developments suggest that. if the problem of insufficient foreign exchange can be solved and the Government establishes suitable policies, particularly with reeard to the proper direction of industrial development. industry will continue to grow, 21. Around 70% of present industrial production is in the private sector- Tn the nublic sector some industries date back to World War IT. but most of them have been established since the mid-1950's By 1964 Rs_24 million had hnn invested in the 12 mainr niblin nornornations_ They have at best a mixed record, Some of them, e.g. the Cement Corporation, haven hoon Ri nO wcall * n+.her.5 anirh as t-he enwadam nd nlyni ea,rrrcirnovvatioAns have recently been improving. Yet the majority have been troubled since terinception by, jndn,t econom ic a _1~ - il-~~ oxx ~ facilities, and weak management, as a result of which they have been operating far b e.r ^nnia+,r AAAI4" + + an.4110 +ha* n h ra k n e+-"n Iv 1-^" c+4c pressures for excessively low selling prices by government-owned industrial whihalag n o. "LIVLfthn inVcu.LLALA ojWLr made insigfc.an p O. f.4. which a large number of them incurred losses or made insignificant profits. C. Income and Expenditure 22. Over the last six years the economy appears to have passed through a period of rising consumption, and falling capital formation and savings, which reflects the government's own tendencies in the same direction. The essential magnitudes are shown below:- Resources and their Utilization,99-6h (Rs. -ilionT A. Resources 1959 1960 1961 1962 1963 1964 1959-64 - change GDP 6,457 6,625 6,757 6,920 7,064 7,561 +17.1 Imnorts 2.176 2.209 1.972 2.070 2.031 2.036 -4.1 TOTAL 83 , T3T 8;729 8,90 9,647 +11.7 B. Utilization Frivate Consumption 4,678 4,991 4,849 5,010 5,184 5,641 +20.6 Fubli CRonmptin 881 911 9 7Q 1 011 100 +937 TOTAL 2,559 5,902 5,773 5,990 1 731 +21.1 Frivate Capital Fublic Capital TOTAL 1,059 921 1,047 1,030 999 982 .7.3 Exports 2,016 2,011 1,907 1,971 12903 1,933 -4.1 TOTAL 8,633 8283 8,729 8,990 9,095 L +11.7 23. Between 1959 and 1964, resources available to the economy for domestic use - consisting of gross domestic product and net imports - increased by Rs.1,100 million. This increase was derived solely from higher domestic production; net imports remained unchanged as reductions in imports and exports offset each other. The rise in total consumption expenditures exceeded the increase in resources by Rs.75 million and there was, therefore, a corresponding decline in outlays on capital formation. Disregarding 1960 when special factors, such as a record inflationary deficit of the Government, caused consumption expenditures to rise steeply. the trend towards a larger share of resources going into consumption and a smaller one to investnent was fairly uniform throughout the period. It reflected the policies of the Government which were directed towards raising the standard of livinLy - an objective which in the absnce of adqnte economic growth throughout the economy it sought to accomplish by redis- tribution of incomp* throniah tapnt.inn on +.he one hand on +he other by subsidies and transfers. 24. The consequence of the increase in consumption was a decline in the savings rate from 14% in 1959 to 11% in 1964. Most of the decline appears to have occurred in the private sector, suggesting that the large increases in taxation, particularly of the higher-income groups and corpora- tions, were achieved to a considerable extent at the expense of private savings, while simultaneous increases in current expenditure prevented a corresponding rise in Government savings. As investment outlays declined by roughly the same amount as domestic savings, the resource gap - corre- sponding to net imports - remained unchanged, comparing 1964 with 1959. In absolute amount, it was not large - around Rs.150-160 million or 30-35 million - but as the net inflow of foreign capital was considerably less than this amount. Cevlon had to draw on its exchanae reserves. In the course of the five-year period, these were depleted. - 10 - II. FINANCIAL DEVELOPMENTS A. Introduction 25. Financial developments in Ceylon between 1957 and 1962 provide almost a textbook case of the consequences that follow from successive lara ilections of purchasing power in circumstances of sluggish growth in real income. Beginning in 1956/57, Government deficits moved up rapidly to a nIntmn whpre thev corresoonded roughly to 7-8% of GNP. They required financing through bank credit equivalent to 4% of GNP and net domestic credit jimped at an aveane rate of rA n v.qr- As Cpvlon maintained an open econ- omy until 1960, this expansion in purchasing power became translated largely into akitinn-ni Amnnei fry imnrt. In fnnt- the arnount of Rs.1qO million. by which annual imports in 1957-62 were higher than they would have been if imnnit. rmnl hnAd arnAuin linn iit.h innenmp. myih1v narrR.nond to the amount by which the rate of increase in net domestic credit exceeded the rat of4 - ".-n - i~!~ otpu~it e-pv_rv -ticpejnd AZ fn-rian APPPf. wpp used largely to finance these additional imports, money supply increased end of 1962 it became necessary to impose increasingly severe import restric- 4-4o.'J , V1, -f P4 - 4- q1;f - +^.J +I-O. .LdtA~.L. ~ 4L. ~ ~ A 'U 4~ rL. as money supply rose substantially. The actual extent to which price increases Liav take placeL in±d the U l as~t~ UjW U IU LI11te yt d±: JU21L- J UL.L;aJU.LVA UU Ut: IUU±ILAL4UO It would appear that for the great majority of the population the cost of _Lving nidZi execuony mouerately, mainly because most stapLe foous are UlU through the Government at subsidized and controlled prices and because imports Of basic consumer goods were affected much less, if at all, by restrIctions than semi-essential or luxury goods. The exceptions among basic commodities are the free market prices or certain rationed goods, such as textiles, whose prices have risen considerably. As regards goods outside this basic category, their supply has dwindled to such small amounts that prices are no longer meaningful, B. Public Finance 26. The basic trend in public finance in recent years has been one of rapidly increasing current expenditures, stagnating capital outlays, and increases in revenue roughly parallel to total expenditures. Thus despite strenuous and successful efforts of raising additional revenue, which brought its share in GNP to 23%, the overall cash deficit of the Government remained almost unchanged at a level around Rs.400-450 million - equivalent to nearly one-fourth of total Government outlays or over 5% of GNP. The current surplus also changed little, except in 1963/64 when it became negative, but declined in relation to total revenue. Some progress has been made in reducing dependence on expansionary financing, mainly because of increased absorption of Government securities by state-owned savings banks, the insurance corpo- ration and provident funds. However, in effect this meant that less private savings were available for financing private sector activities which cnnRe.- quently became more dependent on net bank credit expansion. Thus overall, little oroaress towards re-establishing financinl sthj1ity wn achiered Recent performance has been as follows:, - 11 - Government Finances (Rs. million) 1958/59 1960/61 1962/63 1963/64 1964/65 Est. Current Revenue 1,248 1,457 1,588 1,611 1,700-1,725 Current Expenditure 1,157 1.382 1,480 1,585 1,550 Surplus 91 75 108 26 (155-175) Losses by govt. enterprises -42 -33 -36 -29 -25 Current Surplus 39 72 -3 130-150 Canital Exnenditures h93 519 496 503 550 Cash Deficit 1/ -420 -392 7- 2 (-350-400) Financed by: 1) Non-expansionary 179 221 213 302 '35 EAYinia+."aive horrmaing 97 29 -3h -1 20 M1arket borrowing 109 165 154 206 210 Foreign loans 36 A4 66 ),('1 / 105 Foreign grants 7 13 31 32 ) 2) Epansionary 241 242 178 160 (40-60) D1U'IUWLUr LI-I LJOIL M -L~ 7 L4 1' Use of cash balances 62 -- -- 45 -- 1/ Adjusted. (For details see Appendix Table XIII.) 27. Among current expenditures, outlays on social services as well as payments for subsidies, relief, pensions, interest on debt and similar purposes (transfer payments), which reflect -the Governmentis social policies, were the most expansionary itcis. Current and capital outlays on social services now amount to yn of GNP. Transfer payments and subsidies total around Rs. 525 rdllion, or a third of current expenditurcs and account for moro than half the cxpenditure growth since 19o-59. 28. The largest subsidies are the cost to the Government of the rice ration scheme, a legacy from World War H1 but since then vastly expanded as a result of increases in popla-ti-otand domestic production as well as successive reductions in the ration price which is now at about half the landed cost of imported rice. This means that the Government takes a loss of about 50% on imported rice, which covers two-thirds of requirements under the ration scheme, but loses about 70% on sales of domestic rice whose support price is about 80% higher than the landed cost of imports, Any increase in the proportion of requirements met from domestic production, as was made possible in recent years by growth of output and expansion of storage facilities, increases the cost to the Government disproportionately. - 12 - Gross Food Subsidy Payments (Rs. million) 195b/59 lyo/l 1905/OW A PIou Imported Rice 91 133 125 129 Domestic Rice 140 226 283 296 Other Costs 20 25 29 38 Total 251 384 437 463 29, Ceylonts Government budget with revenue standing at 23% of GNP and expenditure somewhat higher is large in relation to national output. The Government has been able to achieve such a high level and fairly rapid increases of revenue mainly because foreign trade is large relative to GNP and highly organized so that tax administration is greatly facilitated. These advantages have been steadily Dressed and it would appear that they have been fairly nearly exhausted. In fact, present rates of taxation on exnorts seem to have ;ffented adverse1v investments in certain fields of export agriculture and some relief may be necessary to remedy this situation. Mnrover- foreign trade as a whole is likely to rise only slowly over the next several years. In view of these limitations, the Government will nrobbhly find it nonamry +.n 1)rnnHen +.hp tAv ban in order to 57nure further substantial increases in revenue. Efforts in this direction have so far n~ot been SucceSSful, largeplyfr poliic" p%-nnnf -P~ 'n" +'HM introduction in 1963 of a general turnover tax whose revenue however is '.'J..L ... U- 0114CA."oL JL~ Q LJj 1 0 j VLV CAL IA4Q~V.1. K, V w A 4.".L VL1U.L Q " VvILi'.'..L. increases in revenue would be stricter control over the expansion of UCYO liUu JLU.LLr, L.L'IIL CLI VV11LL VuvLumUa vew, UL amoUrnaVivV would be preferable. 30. The broad aggregates of the budget for 1964/5 are shown in the tUl aUve, reviseU to take account Of a proable Shortfall In vaptal expenditures, which in the original estimates were estimated at Rs.648 mlli"on. rart of this shortfall is due to a revision downwards of Ue likely foreign aid receipts. Current expenditures are likely to be less than originally estimated, and have been revised in the table. This shortfall is caused largely by the likelihood that the fall in food subsidy payments due to the failure of the domestic rice crop will more than offset the additional expenditure arising from drought and cyclone relief. 31. It is therefore likely that the Government's cash deficit in 1964/65 as well as the need for bank financing will b6 considerably less than in previous years. After two years of stagnation, revenue is expected to rise considerably. Partial failure of the rice crop will ease the subsidy burden and other current expenditurus will not rise much. As a result, a record current surplus of Rs.130-150 million may omerge (budget estimatc:Rs.200 mill.). Assuming that capital expenditure may actually amount to Rs,550 million - 13 - and that foreign aid will be slightly above the 1963/64 level, it will probably be necessary for the Government to seek expansionary finance of about Rs.40-60 million during the financial year. This amount exceeds the budget estimate, but it would constitute a significant improvement over recent years. C. Balance of Paymeft 32. In the years 1957-1962, prior to the imposition of strict import controls, annual import payments were, on the average, Rs.370 million or 25% higher than in 195h-1956. while export earnings were Rs.75 million or o4% less., As a result of these sharply divergent trends, the balance on currpnt account shifted from nn annual surplus of Rs-210 million in 19514-56 to a deficit of the same magnitude in 1957-1962. While in the earlier npriod Cvlon had added ahout R.q-200 million a year to its exchance reserves, it drew on them by Rs.150 million a year in the later period. Since 1962, imnort and nnyments rctrictions nrevented increan in imnort nnympnts. but as export earnings continued to stagnate, the current account deficit remained around Rs.200 million. Reutosin Ce ylorn Is net+ exchnae rrves -were somewhat less than in previous years, because foreign capital became avail- Ceylon could afford and by the end of 1966 net reserves had fallen to an (Rs. million) 195h-56 1960 1961 1962 1963 1964 Exports 1,769-. 1,796 1,707 1,763 1,708 1,765 Imports 1,481 2,006 1,794 1,906 1,868 1,948 Trade Deficit/Surplus 315 -210 -86 -143 -160 -183 Current invisibles -101 -61 -47 -44 -50 -38 Current Deficit/Surplus 214 -271 -133 -187 -210 -221 Financing (net) Official grants 53 41 37 44 76 Official long-term loans 20 19 40 75 75 Official short-term liabilities -66 44 -7 45 53 External assets 220 0 41 42 56 INF Transactions - 54 54 1 1 Private Capital Movements -5 6 -3 1 12 Errors and Omissions -1 -31 25 2 -8 33. The disappointing performance of Ceylon's exports since 1954.1956 reflects the successive effects of staanating volume and declining prices. During the period 1957-1959, total volume was slightly less than in 195LL-1956. as exports were affentAd by noor nononut nrons. lower nrndnntinn of rubber and only small increases in the output of tea. Since 1959, however, " 14 - export volume has climbed annually by nearly 4%, and in 1964 was 20% above the level of 1954-1956. Declining prices offset these gains, and export earnings in 1964 mere still at about the level of 1954-1956. 34, Recent import performance can be seen from the following table:- Classification of Imports (Rs. million) 195L-56 Average 1959 1960 1961 1962 1963 1964 Consumer Goods n,a,. 1,203 1,195 972 979 919 1,172 of which: food & drink n.a. 800 752 672 657 767 917 Intermediate Goods n.a. 396 397 383 409 372 410 Investment Goods n.a- 389 3q 339 137 32 10 Unclassifid n.a- 17 13 9 8 13 10 Tn~tnl ii19 Oc 1-960 1-70-4 1-7-4- 1 - 09 I -97 S o ur ce C u St o s Retu r n S/ / Adjusted for erroneous recording of food imports. The table shows that the import controls operating since late 1960 brought imports down from the high level reached in l959-1960. Altogether, during the four-year period 1961-1964 imports were roughly Rs.970 million less han thiney could have been if imports had continued at the annual level of 1959-1960. Of this reduction, about two-thirds was due to lower imports of consumer goods other than foodstuffs, comprising a wide range of goods consumed by the middle and higher income groups and including in particular motor cars, watches and clocks, radios, and higher-priced textiles. Another 100 of the total reduction in imports was due to lower imports of foodstuffs, Reduced imports of investment goods accounted for the remaining 20%. 35a. So far, despite a level of demand for imports inflated by domestic monetary expansion. imnort controls (n nnt. anar to have w to widespread price increases or administrative abuses. In part this has been due to the fact that goods of maT n nnam+tnn hav 4 n U --- -ou by import controls to any appreciable extent,-whereas in the case of imported goods consumed by thp mirlIA - anb Moncmegr - .--' h v dwindled,to such small quantities that prices have ceased to function as meaningful indicator of the maretsiat+on uL--- t o h e-aa n t r. ofAsUVsU on uVrnmGs has taken over an increasing share in the trade of mass consumption goods - 15 - in a deliberate attempt to prevent price increases. Other adverse economic effects abound, however, and both the unsatisfactory techniques for allocating import licenses, and the restrictions on the overall level of imports, have been having an increasingly adverse effect on output and investnent. In general government import requirements are fully met, so food needs, and the needs of public sector corporations and enterprises, are satisfied. Allocations to the private sector are from the residual, and usually are based arbitrarily on a percentage of pre-1961 import levels, rather than any assessment of oriorities. New private industrial investment. which boomed when consumer goods imports were initially restricted, has been prngressively discourna because private sector izoorts of raw materials and investment goods wbe both reduced, Private transport has been 2,000-3,000 trucks used to be imported annually, only about 200 were allowed to coA"e in uogth last -rv. rn" ~A it Inn ' 'rn "ch Cri nrl K difficult to prevent a breakdown of the transportation system. An even more de pe at s.o v' 4,,,s4-n pir e - JI Wn .;r+I, -eCn_-A +_ n 0J-t e *n anl+tor c,- of -11-ich nl 0 ' tJ.liA V WJ1 VO..L VN. I 4C. ' , .4%A -J p4.J..VO V WWW'*4 44t ... l4A virtually none has been imported since 1961. The consequences of these and are affecting agricultural production. 36. There has, however, been no improvement in the balance of payments ' L'QJVJ.LVL. 1J1ShIILi0UL)U± W LJ J L I V IV%AU%o "14L JAI -L1Ul U(0 ao .LUAJ± LLLL _L11 ULLU( customs returns. In fact, payments for imports have shown very little red2LuctionL LOUJ.AW ULIU( .L72 7-±7U'J _L. L0 . .JULA0 4LUU11L'.L,Y, 0 ULU LIL~ UJ-dL .U- crepancies have developed between payments for imports and recorded Import Payments and Recorded Imports (Rs. mllion) 1959 1960 1961 1962 1963 196L Payments 1,958 2,006 1,794 1,906 1,868 1,948 Recorded Imports 2,005 1,960l 10 1,733 1,628 1,897 Excess Payments -47 46 91 173 240 51 To some extent, the discrepancy that developed after 1960 can be explained by a growing backlog of entries in the customs returns on account of imports by Government departments, enterprises and corporations. For this reason, customs returns would understate actual imports. However, this error is not likely to be very large. It could also be that imports are underdeclared for customs purposes or that shipments, for which payments are made, are subsequently diverted to other countries and therefore never enter Ce.lon. But there is no evidence to suggest that such irregularities occur on a substantial scale. In fact, what appears to have been haoening since 1959-1960 is a serious deterioration in Ceylonts terms of payments. Imports through bilateral clearing accounts, where debits are entered at the time of shipments, rose by nearly Rs.250 million, at the expense of imports financed - 16 - through normal trade channels. Imports by laree tradine comnanies in Cevlon whose principals overseas used to extend credit for 3-5 months after the arrival of Ppnnds in Cevln declined by Rs. 1q million. Furthernore, as Ceylon's payments difficulties mounted, an increasing number of overseas xnortrs insiteAH on ltters of t-erit nA-vah1l nt tiyn of shinnent ndr refused to extend credit as they had done previously. As each month by whit-h v mran +o.pm e%f nvmnt howpo%n=d TmAnd -Invnrne nAAi.+Annn1 nnimnts of nearly Rs, 150 million, it does not seem unreasonable, taking all these factor t+o.her +o a++"Jhut+AWn e noAP +A arI. of av, --so -e 10s4w +e deteriorating tenns of payment. The fact that excess payments in 1964 were V J. AAU..J ntz VIC1ia .Lj.j jj.LV%,.~LLAG Y VO.Lj 4 L1mdy vW VC."i~a 0. 0 A. 6.L1 SJ.&WAA that this deterioration has slowed down significantly as payments caught upJ -Witj. curren .LUJU.LU ..) .UVer 1h I L 1U L IUUrL iU .L.VUd YWdlOp C L L -U .J41 ULO.~LU."Cu in Ceylon's pattern of trade as the Government established and expanded traUe rQLoUn w1U counWiU OUMne an Dabll bLoo, L"nc.LUu.U1g m1u±Ld1U China. These countries took only 8% of Jeylon's exports in 1959-60, but by 1964 their share had risen to 1>%o In imports, their role expanded even more rapidly, from 8% to 19,. 38. Ceylon has traditionally had a negative net position on account of services and invisibles, because it had to make fairly large payments for the transfer of profits and dividends of foreign-owned companies, including especially tea plantations, and for remittances abroad by private individuals. Before exchange restrictions were imposed, net payments were around Rs. 125 million, They were reduced to Rs. 50-60 million in the early 1960's as foreign travel and private remittances were curtailed and declining export prices lowered the profits of foreign companies. In July 1964, further restrictions were introduced, in particular a moratorium on the transfer of profits and dividends. These measures had the effact of reducing net payments to Rs, 30 million in 1964 and, if they remained in force in 1965, would probably result in a balanced net position on account of services and invisibles. 39. So far, Ceylon has not been a recipient of large amounts of foreign aid. By the end of 1963 public external debt. amounting to Rs. 424 million had been incurred, requiring maximum annual debt service over the next few years of about Rs. 45 million which is equivalent to about 2.5% of export earnings. In the period 1960-1964. official grants and loans provided a net capital inflow of Rs. 90 milLion (about US$ 19 million) a year on the average. Such assistance amounted to less than half the current account deficit and was equivalent to less than one-tenth of gross domestic investment. These are not larve amounts. thoueh the trend has been rising since 1963 as the result of increased aid from Canada and in particular Eastern bloc countries whose assistance. havinL been insignificant oreviouslv. iumned to an annual level of Rs. 50 million. Moreover, it is not likely that the 1963-1964 level of aid - armnind Rs. 120 millinn - rqn he sntaenn hpvon 19f4 unlpss new aid agreements are concluded. The fact that foreign aid covered only part of thep current. accont defit. ment+ thatn+ ClorIn Hadr toe rawry n" its exchlinane reserves to cover the remainder. Between the end of 1959 and the end of 1964, net wxchae assen afeW reduced by payme7t 414ove eA thentaill t-a level where even a few days? excess payments over receipts entail the threat - ~ ~ . %4..44 ,.L _O.0. Gross and Net External Assets (Rs. million) End of Year 1957 1959 1961 1962 1963 196k Gross Assets 1,062 735 532 504 462 351 Short-term Liabilities 109 112 202 244 293 304 Net Assets 953 623 330 260 169 47 III. GROWTH PROSPECTS 40. Ceylon is not among the group of developing countries where rich natural resources await exploitation and the principal obstacles to economic growth are to be found in the lack of investment and in shortages of manaRerial. technical and administrative caabilities. Ceylon certainly shares these obstacles, but in addition it is poor in opportunities ready to be exploited. Few minerals are found in Ceylon. New arable land is entirely in the so-called dry zone where yields from investment are small and slow to materialize. The scone for industrial develonment is limited by the small size of the domestic market and handicapped by the lack of donesti- indnstrial raw materiqls - wAll a the absennp - so far - of a well-established group of industrial entrepreneurs. Against these handicaps, rnv1nn hn- +.hP nrunt.nae- .f n TT11_PAwn.tPA nnnii1nAonn_ Ht it is nlso densely populated in relation to its arable land, and its population and 1Ahnr fnVNeA are Arowine rapnil The nromoton nf family nlnnnina i. st.ill largely a private venture, and although the government has given some basic aim of government policy. Considering all these factors, Ceylon will cotiueto have a diffcul __wn, prole -_ +-_ J-^_o L+ O V'U ~1 LAV PWU .-J LA VJ. &.LUVVVA1 " U.L .L% L&A UJ -, .J C years was not solely the reflection of Ceylon's inherent development 11 -P-Pn e%i +4 Th-onn 4 no A ,'k+ *L,n+ flt,..wr4 I ~,. - 4 ^-r -.. a ,_+ 4;- respects, conducive to economic growth. The main emphasis was on redistri- vUV.LVu,y Uneua runv awnV uvueve soult o x th- ues u redistribution was the dissipation in increasing consumption of the UUQU%11o.Lau.L o UAVQLuLJ.LW DUJy LUQ WiLULIn .AY.LuL'O .oJULL, aGL.LUU.LtLtU iso cpce of generating, so that export agriculture and the economy as a whole were uupriveL 01 tue means o 11inancing an auequate Leve of investmentU Further- more, investment in and through the public sector was guided largely by the objective of spreading the benefits over as many people as possible, whether as producers or consumers, rather than by the objective of obtaining maximum productive returns, Examples of this policy are the Governmentis land settle- ment schemes, several industrial corporations and such rural development schemes as the program for developing the textile industry by distributing over the countryside a large number of looms to be operated by the rural population as a secondary source of income. Improvements with respect to both the division of resources between consumption and investment and the use of investment resources are prerequisites for a better performance in the future. - 18 - A. The Export Sector 42. The potential for growth in export volume appears to be reasonably favorable. Replanting in particular offers the prospect of greatly increased yields in each of the major export crops - tea, rubber and coconuts. Replant- ing programs, providing for a government subsidy toward the cost, have been underway for some time, with mixed success. The program for tea has had very limited response. improved varieties promise to double yields but whether this would be sufficient to compensate for several years' loss of income after replanting is not clear so long as existing bushes continue to respond well to improved techniques of cultivation. The replanting program for rubber has been quite successful, largely because of the clear advantage of replacing old trees with new high yielding varieties in the circumstances of sagging world prices for natural rubber. Nevertheless, less than half the rubber 'Land is now under high-vielding varieties and considerable scone exists for continuing with replanting. Coconuts are grown mostly by small farmers in thp low Innds and it hns hPn diffinii1t qn fqr to et an effPrtive nrogram underway that reaches a large number of farmers. However, in the last few vpnrp th ny-nai-Am hnqhr c!nrnp L ihinh- if' ovyrknntipti nnl nntA1art.Ar1_ could lead to substantial increases in production in the longer-term future. h3. Replanting of course has a relatively long gestation period and in ~ ~ ~ - th-hr.~m ~wll deress, rathe than. mise U. _ f' outpub rwh as acreage is withdrawn from production. There are, however, also possibilitics .LW4J.. L &.L0.L&AF XJU%jPXAV J LL i XAI IU 1U11VA_2%J .1AU 1t, -4UV1r VAV ULIV 0k"LLL___u W J.L larger amounts of fertilizer would appear to be of particular importance, 'oMield pehap with.J WI L11±1JL1JVt::11=E1Ub 11 U,LIU VkJ",L-M1t-L1 jUUjLUY schemes., Improvements in processing facilities, particularly for tea, should also be undertaken, and to this end it may be necessary to give export agriculture some tax relief. 44. With proper incentives and policies, it may be possible to raise the output of tea by 3-47 and of ruDDer Dy 57 a year, while the production of coconuts may increase somewhat faster than the growth of domestic con- sumption. However, with the exception of Tea whose average price is now expected. to hold steady over the next several years, increases in the volume of exports are not likely to be fully translated into higher earnings because of expected declines in prices. It is now believed that by 1970 prices of rubber and coconut products may fall roughly 20% below their present level. If these declines materialize, they will severely circumscribe the contribu- tion which export agriculture will be able to make to growth of income and the main burden of economic growth will have to be borne by increased pro- duction for domestic use. B. The Domestic Sector 45. There are opportunities for substantial growth in output for domestic use. Most of the technological problems in increasing food production appear to have been solved now - there remain the organizational, social and administrative problems which are often more intractable. Simi- larly there are opportunities for industrial expansion, albeit from a small base and limited by the size of the domestic market. - .L9 Agriculbure 6 There are several large river basins in Ceylon, which, if properly developed, would increase substantially the output of a large variety of food crops. Judging by preliminary studies, it would appear that development of these basins could offer higher returns on investment than the numerous small and medium-sized colonization schemes in the dry zone to which the Government directed most of its attention and resources in the past. However, at the moment it is far too early to say when and at what pace these basins can be developed. Extensive studies are still required and substantial amoun's of investment resources will have to be found. In the meantime, agricultural growth will have to come nainly from increased productivity for which there appear to be considerable possibilities. 47. Technical improvements in rice cultivation are likely to resume making substantial contributions to output, after a series of relatively poor harvests due to floods and drought. It may even be possible to attain a rate of erowth which is faster than the very favorable proaress of the early 1960's. Adoption of the high-yielding H4 variety has now spread over _ fairly Inrap nnrt of th qr. whor suitable conditions exist. Work is going on to develop varieties suitable for the remaining areas. Other improvemnnt in cultivationincluding increasing use of fertilizer. and water control are expected to sustain Ceylon's upward trend of paddy pro- riunt.i nn - crops to develop at a fast rate and to contribute significantly to growth technical obstacles to the local production of chillies, onions, pulses CALA. JJLL~. ~ .ALID iJLI.L LL U.LV V.LVV,4VL U JV.JLVeU a tu an an ua ex-Inange outlay of Rs.250 million now seem to be either solved or nearing solution. 1j__.L.U.± IU P -LjU.L#Z=1b - U1-rdE1.LZZ1L,LL[1d_. d11Ui dU1LLL"tiU1-JLd1L.VU OLIU.9 Fd1-LkU Jd1_L. insofar as they apply to changes in agricultural practices in the dry zone, Human - remain. lNevertneless, it would appear that if the Uoverauent wexe to give priority in the allocation of funds, manpower and equipment to Ut,Vk-.Ju .L116 tim t;U.UVdt~j.LU1 i ~U U..LY uuutsullti il 1-i.i±-leuu dilu liftv- irrigated areas, output could be increased significantly over the next few years and very suostantially expanded over the longer run. Promising possibilities, also seem to exist in the cultivation of citrus fruit on a commercial scale in parts of the dry zone, provided the Government is willIng, as it has so far been reluctant to do, to lease to private plantations old irrigation tanks that fell into disuse several hundred years ago when paddy cultivation shifted to the wet zone, but could be restored fairly inex- pensively. It should also be possible to turn the cultivation of sugar cane into a success as there are no forbidding technical obstacles to be overcome. 49. In other fields there are favorable prospects for an early increase in raising pigs, goats, and poultry on a small scale, but further development of beef and dairy cattle involves a long-term program of selection and breeding of suitable herds which may take about 15 years. There are also good prospects for fish production to continue to grow at a fairly rapid oace. nn Manufacturg 50. Despite the possibilities of growth in domestic agriculture,.there is, in principle, little doubt that part of the solution to Ceylonts problem of attaining a satisfactory rate of growth of income should be sought in a substantial effort to develop Ceylon's industrial sectora 51. In the private sector, there can be little doubt that tight import restrictLons, with which Ceylon will probably have to live for a long time, will continue to act as an incentive. In the domestic market, there is undoubtedly room for further expansion of the manufacturing industry. Thus, conditions are basically favorable, provided the period of readjustment which is likely to occur because of over-expansion in some fields is weathered without adverse efffpct on incentives. The Ministry of Industries is now working on new guidelines imr order to ensure that applications for private industrial invesampn. qrp hnnrllprl in n morp rntionnl f;;shion than in the past and excess capacities are avoided. Nevertheless, it is difficult to predict how rapidly mnu~ifacturing output wilI rowy VJ 7rc+. - wnrni t-v of' VnrP. an P-,.hq nop hq nnf. only compelled the Government to limit more strictly than in the past the alloatio oeTf exhag for ne industia deve Trlop ment, 'hi !%z Inr ton a shortage of imported raw materials and spare parts which has resulted in raw materials and spare parts for private sector industry the more severely ~ UL~~JL4~J~ C& U.~J I t: C2_LJVJ-, LIAiU.Li. 4.UJ-L.L - . J Us~ L %J continued growth will depend decisively on the ability of the new entrepre- consumptIonwould appear to limit the possibilities for growth along established. Lines. In this respect, the growth hat, has occurred is encouraging, Out it is still too early to say how well Ceylonts entrepreneurs will meet this challenge. 52. In the public sector, substantial investments have been made and more are planned, both to expand existing enterprises and to establish new ones. Some of them can be expected to contribute to growth, such as addi- tional capacity for cement production, ceramics and the establishment of another textile mill. The Government is also considering the construction of an oil refinery, probably in cooperation with a foreign company, and establishing a fertilizer plant and a hardware factory. These projects may be justified economically and if so could be valuable additions to Ceylon1s economy. The critical problem here is good management which in the past has often proved difficult to find. There are, however, other large and costly projects, such as a steel mill and a tire factory whose economic justification is questionable, 53. For the industrial sector as a whole, it is likely that output will continue to grow in the immediate future provided the present shortage of raw materials and spare parts is alleviated. For the longer term, there are - opportunities for further growth over a wide range of fields. The extent to which thevrwill be exloited will denend a good deal on Government oolicy with regard to private industrial development and expansion of public corporations, howover- sufficient investmont resources- narttcularlv in foreign exchanve. will have to be made available if growth is not to be stunted. Apart from these fnnforn thrp is the mian.ion how rvnidlv nreqpnt -nt.rP.nYenPnrs will be able to expand and diversify their activities and at what rate new entrepreneurs 21 - Conclusion 54. It is evident from the foregoing discussion that there are oppoCU t" 16 101-i :KCUJr-J.LCE.L116 U iLL%, 61UW.LL .LL1 %JZ.Y.LVL.LO LJUflUkU WA.I VAAl- are of the kind which will begin to bear fruit only over the longer run, bUt neverhuenss a faIrLy wLe range of postiutie1 exist ;Lev.LU ul tn more immediate future, It is impossible now to predict with a high degree of confLdUence how fast real national income will grow, Ina Ls so becauU deoisions on future Government policies with regard to financial stability, the use of resources and the direction of investment sti nee- to be made and because a planing framework against which one might judge opportunities and investment requirements does not exist now. Cey.on has never had an operative development program, Several plans, for both the short and long runs, were prepared in the past but they were either not translated into useful programs for action or did not become accepted guidelines for development outlays. 55. It will no doubt be necessary to prepare an operative investment program for the future which can give guidance to decisions about the level of investment and the choice of projects. A new planning office to undertake this task has recently been established but staffing and organization have been proceeding very slowly and so far little has been done to identify and work out the details of urgently required development programs. STATISTICAL APPENDIX M 1-1±' .0 f External ruulc Debt II Estimated Service on External Public Debt III Gross Domestic Product by Industrial Origin IV Expenditure on Gross National Product V Gross Domestic Capital Formation VI Gross Savings ViI Real National Income and Expenditure VIII Production of Principal Crops -LX Production Acreage and Yield of Export Urops X Production, Acreage and Yield of Paddy XI Production and import of Fish XII Value of Industrial Production XIII Summary of Government Accounts and Financing XIV Government Revenue XV Government Current and Capital Expenditure XVI Analysis of Factors Affecting Money Supply XVII Composition of Money Supply XIX Consolidated Assets and Liabilities of Commercial Banks XX Cost of Living Index XXI Balance of Payments XXII Composition of Exports XIII Composition of Imports XXIV Index of Terms of Trade XXV Export Quantities and Prices XKVI Official Grants and Loans XXVII Gross and Net External Assets Table I: CEYLON - EXTERNAL MEDIUM AND ONG-TER /1 PUBLIC DEBT OUTSTANDING INCLUDING 1ZMflISBM.SED AS OF DECEMl~BER -4- 10. 1-7TT m .fl? Cr4WT: JANUARY 1, 1964 - FEBRUAR: 28, 1965 Debt Repayable in Foreign Currency (In thousands of U.S. dollar equivalents) 1AVO)U oUUrU - LL1r, rluj Ur E-Upur UeU December 31, 1963 changes Net of' IncLuaing january I - undisbursed undisbursed February 28, 1965 TOTAL EXTERNAL PUBLIC DEBT 59,649 89,110 - 601 Publicly-issued bonds 2 13,765 13,76- Privately-placed debt 486 9,990 I3RD loans 26,420 35,564 - 601 Loans from Western governments /3 7,990 18,803 - Canada 1,045 1,05 - Germany 2,407 10,000 - Yugoslavia /4 996 996 - United Kingdom 3,542 6,762 - Loans from Sino-Soviet Bloc /5 10,988 10,988 - U.S.S.R. /4 5,901 5,901 - China /b 4,746 4,746 - Czechoslovakia 341 341 - /1 Debt with an original or extended maturity of one year or more. 77 Net of accumulated sinking funds of $21,498,000. 7- Does not include estimated disbursements in 1965 and 1966 of Cey Rs 6.300.000 on a loan from France to Kaudy Water Supply Scheme. / Excludes uncommitted portions of frame agreements in the following amounts: Yugoslavia $14,403,000 U.S.S.R. 824.096.000 China 3 5,539,000 /6 Loes not include: Cey Rs 2,610,000 from Czechoslovakia Cey Rs 38.000.000 from Poland 142,000,000 from East Germany and Cev Rs 50.000.000 from U.S.S.R. for which total amounts committed to projects are not known. IBRD-Economics Department jl y- 1,4 1 it Table II: CEYLOM -- ESTIMATED CONTRACTTUAL SERVICE PAYENTS ON EXTERNAL PUBLIC DEBT OUTSTANDING IYCLUDING UNMSBURSED AS OF DECEBRM 31 J13 T4 n 4,jOR REFORTED CHANGES JANUARY 1, 1964 - FEBRUURY 28, 1965 /1 Debt Repayable in Foreign Currency (In thousands of U.S. dollar equivalents) PAGE 1 TOTAL DEBT DEBT OUTST (BEGIN OF PERIOD) PAYiMENTS DTRING ERIOD INCLUDING AMORTI- YEAR UNDISBURSED/Z ZA TION INTEREST TOT.L_- 1964 78,993 2,758 3,614 6,372 1965 75 R33 4,661 3,875 8,536 1966 70,236 4,515 3,734 8,249 1967 65 433 4,971 3,545 ,2516 1968 60,150 4,391 3,312 7,703 1969 55,423 4,264 3,102 7,36 1970 50,898 4,212 2,813 7,025 1971 46,8 R 4,222 9 7 6,749 1972 41,934 4,191 2,321 6,512 1973 37,493 4,166 2 ,119 6,285 1974 33,058 4,271 1,916 6,187 1975 28,499 10,483 1,1427 11,910 1976 17,905 3,915 930 4,845 1977 13,990 3,715 715 4,430 1978 10,275 2,675 522 3,197 PUBLICLY-ISJUED BGNDS DEBT OUTST 1( Mrr- T-M CV 73T-'3 TC n '1 - 1 7- ,t,"'C 7T T 1, r~C I~'L T Tnn \ - A .J LI'4 SJJ 1- L Ä L 4 . L xI Ii ý. £ 1 -i&.AA L .1 LJ UL-L ILNIJ.4 17 - L k.YLJ GROSS NET /2 AMORTI- vYAR - 7ETIO WNITEPET T'TTL 1964 35,263 13,765 310 1,346 1,656 1965 22,663 13,053 1,640 968 2,608 1966 17,500 11,078 246 736 982 1967 17,500 10,544 246 736 982 1968 17,500 9,986 246 736 982 1969 17,500 9,404 246 736 982 1970 17,500 8,897 293 648 941 1971 14,000 8,306 210 560 770 1972 14,000 7,864 210 560 770 1973 14,000 7,404 210 560 770 19714 14,000 6,925 210 560 770 1975 14,000 6,427 6,316 280 6,596 Table II: CEYION - EST IATED CONTRACTUAL SERVICE PAMEETS ON EXTER: AL PUBLIC LEBT OUT1STANINf ICLIUDTNG UNITSAURSFD AS OF DECEIBPR 31, 1963 17I1 AOR REFORTED CHAONGES JANMUARY 1, 196h FEBRUARY 28, 1965 /1 (CNT.) Debt Repayable in Foreign Currency (In thousands of U.S. dollar equivalents) PAGE 2 PR. IVAý.TELY-PLACED i'EBT DEBT CUTST (-i C O ) 1F 0 TnRIO) P 'AV ;XIMO nT!ETNTS D)TURIN >Tn JL.L.4 ukJ .L LN.~UL - LZ-IX I-.LJ.U ý - -.LX~ INCLUD ING AL 2ORT l- YVi A UNISBU TCZ M * T I.T TOT1ALT r r"l T 1964 9, 990 172 172 1965 9,990 - 362 362 1966 9,990 416 552 968 1967 9,574 832 562 1,394 1969 7,910 832 462 1,294 19070 7,0Y7fl 832 4 1,2441 1971 6,246 832 362 1,194 I972 4 132 312 .,144 1973 4,532 832 262 1,094 1 9v7 4 3 7 5 0 8 3 2)1 3 1 45n) 1975 2,918 832 163 995 19X 76 2,-8 831 r _ 2 1 13 945 1977 1,254 832 63 095 9722 422, n121 13 435 1rV7 1- /'1- * IBRD LOANS DEBT -UTST (BEGIN OF PERIOD) PAYULENTS DURING PERIOD INCLUDING AIMORTI- YEAR UNDISBURSED ZATION INTEREST TOTAL i 9 6 4 3 5 5 1 , 3 r, 4 n . 2, 5 5 5e L:7Ult Ji,JU' u,+J.L j- .3-3 1965 34,433 1,331 1,774 3,155 1966 32,45 1,429 1,704 3,133 1967 31,022 1,470 1,630 3,100 1968 29,552 1,546 1,552 3 , 09 1969 28,006 1,629 1,469 3,098 1970 26,377 1,712 1,3814 3,096 1971 24,665 1,005 1,295 3,100 1972 22,860 1,899 1,198 3,097 1973 20,961 1,999 1,098 3,097 19714 18,962 2,194 992 3,096 1975 16,858 27214 81 3,095 1976 11,644 2,333 7614 <19 1977 12,311 2,458 640 3,098 1978 9,853 2,253 509 2,762 Table II: CEYLON - ESTTMATED CONTRACTUAL SERVICE PATENTS ON EXTETNAL PUBLIC DEBT fUTTANTD1 Tr INlTTUTTD-rll TN TOM-ND I C-UR n k c Fln DClTh BEtRlD"r 31 , 1963 TTMU -MAJ T REPORTI C.UANG-ES JANUARY 1, 1964 - FE3RUARY 28, l9615 / (CONT.) Debt Repayable in Foreign Currency (In thousands of U.S. dollar equivalents) PAGE 3 LOANS FRO UIESTERN GOV ,iNTS - TOTAL DEBT OUTST (BEGIN OF ?PRIOD) AYNSDUINýG -PERIOD INCLUDING A:4ORT I- YEAR UNDISBURSED '¯ATION INTEREST TOTAL 1964 14.587 992 543 1.535 1965 13 595 1,624 651 2'275 1966 11..971 1.949 623 2,572 1967 10,022 1,948 510 2,458 1968 8.074 1,292 417 1.709 1969 6v782 1,082 352 1,434 1970 5,700 900 298 1,198 1971 14,800 900 251 1,151 1972 3,900 775 204 979 1973 3,125 650 163 813 1974 2,475 650 127 777 1975 1,325 650 91 741 1976 1.175 750 53 803 1977 425 L425 12 437 L.OANS FRO M SIHO--SOVTIET BLOClf DEBT OUTST (BEGIN OF PERlOD) PAY-Li-Ts )URING I1-1) PR INCLUDING AM,1ORTI- YEAR UNDISBURSED ZATi ON iNTEREST TOTAL 19 5,1ZJifn087 325 129 454 1965 4,762 16 120 136 Ii 71t4- 1, 7r 1 n]. -1V 1 -M r i - 1967 4,271 475 107 582 i Inr-O Q 'M _ , C C-7f 4.7 I v-t f. i. JJ1(tv 1969 3,321 475 83 558 1971 2,371 475 59 534 1972n 1 89 67C . 7 n2 1973 1,1421 475 36 511 .,1 '«7 1 ei."c! n fl.'9 1975 947 4751 2 48 1 975 471 471 12 483 Table II: CEYLON - ESTIIED CONTTACTUAL SERVTCE PAYENTS 0NT EXTERNAL PUBLIC DEBT OUTSTNDTING INCLUDaNG UNDISBURSED AS OF DEiEMB1R 31, 1963 WITH MAJOR REPORTD CHANGES JAT TARY 1, 1964 - FEBRUARY 28, 1965 /1 (CoNT.) PAGE 4 71 Includes service on all debt listed in Table 1 prepared July 13, 1965 excE!t: 0 996,570 from Yugoslavia p ,9o1,ol from U.S.S.R. $3.220.000 from United Kingdom for which the amortization terms are not available. /2 Net of accumulated sinking funds., Statistics Division TPPT-Economir. Department July 13, 1965 Table III Gross Domestic Product by Industrial Origin (Rs. million at current factor cost prices) Percent of 1959 1960 1961 1962 1969 1964 GDP in 1964 1. Agriculture, forestry, livestock, fisheries 3 2. _ 2A05 2-29890l 44 (a) for export 1,465 1,509 1,449 1,460 1,430 1,507 - (b) for domestic use 1,298 1,363 1,408 1,447 1,553 1,614 2. ining and quarrying 11 11 11 12 11 10 3. MCanufacturing (excluding construction materials) 271 317 353 417 499 553 8 4. Construction (including construction materials) 384 349 385 429 424 419 6 5. Transport, storage and commu- nication 471 512 498 523 545 617 9 6.= -holesale and retail trade 647 647 624 662 719 768 1l 7. Banking, insurance, finance 48 52 56 59 68 71 8. Ownership of dwellings 169 178 196 205 223 2:38 3 9. Public administration and defense 397 402 403 444 469 493 7 10. Services n.i.e. 731 784 _799 806 826 865 12 Gip at current factor cost prices .9i1 62 6x 6 6 769 7 155 100 GDP at constant 1959 prices 1.891 6.207 6.,.L 6.'493 6j.91 19 Source: Central Bank of Ceylon Table IV Ependiture on Gross National Product (Rs. million in current prices) ].59 1960 1961 1962 1963 164 A. Private Consumption Expenditure 4l 4.991 _4Q .010 4 Imported goods and services 1,995 2,065 1,854 1,879 1,690 1,86? Locally produced roods 2,093 2,208 2,282 2,416 2,650 2,806 Locally prodY ed services 467 475 488 506 524 544 Other (net) .- 123 243 225 209 320 424 B. Government Consu881tion Expenditure _9 _11 926 __9_72 L . 1,090 C. Private fixed capital formation 2_733 649 637 668 60r 682 Planting and replanting 62 63 63 64 70 70 Transport 153 109 85 92 63 50 Plant and rachinery 119 77 113 113 154 17 Building and construction 336 341 320 342 262 331 Other 64 59 55 57 59 '55 D. Public fixed capital forMation _)6 _32 __341 _364 __4 341 E. Stoek changes __-10 -45 _9 - _ 140 F. Gross DoestLc Expenditure 6,617 6,823 6,822 7,020 7,193 7,714 G. less imports/exports of goods & non-factor services -16o -18 -.65 -99 -128 _15 H. Expenditure on GIDP at market Drices 6,457 6,625 6,757 6,921 7,065 7,561 I. Net Factor Income f rom Albroad -37 -44 -.40 -47 -53 -34 J. Residual error _-172 - -B5 _16 16 ý1.4 K. Expenditure on GNP at market prices 6,243 6,493 6,532 6,890 7,175 7,541 iT-i.e. net of goods and services purchased by non-residents. 2/ Includes public corporations. Source: Central Bank of Ceylon. Table V Gross Domestic Capital Formation (Rs. million in current market prices) 1959 1960 1961 1962 1963 1964 I. Private Sector and Fu1blic Corporations (a) Fixed Capital Formation Planting and replanting 62 63 63 64 70 70 Building, other construc- tion 336 341 320 342 262 331 Plant and machinery 119 77 113 113 154 177 Transport 153 109 865 92 63 50 Imported capital goods n.i.e. 64 59 55 57 59 55 Total 733 649 637 668 607 682 (b) Change in Stocks ' 12 -31 16 -41 3 -36 (c) Private Capital Formation 745 618 652 627 610 6 6 II. Government and Public Enterprises 2/ (a) Fixed Capital Formation 336 317 341 364 384 341 (b) Change in Stocks d -22 -14 514 40 5 -5 (c) Public Capital Formation 314 303 395 403 389 336 iI. Total Capital Formation (a) Gross Fixed Capital Formation 1,069 966 978 1,031 991 13023 (b) Changes in Stocks -10 -L5 69 -1 8 -10 (c) Total 1,059 921 1300? 1,0 993 982 1/ Includea only changes in stocks of teal rubber and livestock. 2/ Public enterprises consist of Railway, Port Commission, Department of Govern-- ment Electrical Undertakings, Post and Telecommunications, National Salt Corp. 3/ Includes only changes in stocks of imported rice, flour and sugar; paddy held under the Guaranteed Price Scheme! and arrack. Source: Central Bank of Ceylon. Table VI Gross National Savings;1 (Rs. million in current orices) 1959 1960 1961 1962 1963 1964 Gross Domestic Investment 1,059 921 1,047 1,030 998 982 LA.s: Npt hnrrnwin, abroad2 - -208 -221 -94 -140 -168 -148 Net Factor Payments 37 44 40 47 53 34 1 - JA,*- -J1t~ 0 transfersY 12 -22 11 7 13 40 Grous Domestic Savings YVU I u e-4 uLu UIu Gross National Savings in % of GNP 13i6 10.8 14.6 12.9 11.6 11.0 Gross Domgs,tic Savings in % of GDP/ 14.3 11.0 15.3 13.6 12.4 12,0 1/_The data presented in this table are derived solely from the relevant national income agiragates. No independent estimate of savings exists. 2/ Includes loan repayments to the United Kingdom and use of external reserves. 3 Consists of private remittances and public grants. h/ GDP as -In Tabln TTT nius indirnet tnes net of subsidin aijust for statistical discrepancies between estimates of gross national product and cross national expnditure. SoureP reritrnl ;Pnlc nf' rp-xInn Table VII Real Mational Incorne and Expenditure (Rs. million) Change 1959 1960 1961 1962 l963 1964 1959-1964 Production for Export 1,465 1,515 1,638 1,686 1,640 1,754 19.7% ProduciLon for Do.nestic Use 4,426 41,607 4,663 4,857 5,031 5,199 17.56 Paddy, Tea, Coconut Products 642 723 731 788 844 866 34.99 Governnent n.i.e. 702 755 759 792 821 869 23.8, Other goods and services 3,082 3,129 3,173 3,277 3,367 3,464 12.4 Gross Domestic Product 5,891 6,122 6,300 6,543 6,670 6,953 18.0 Net Factor Income from Abroad -37 -4L -40 --50 -51 -34 Gross Vational Product 5,854 6,078 6,260 6,493 6,620 6,919 18.2% Adiustent for Current Export Frice _- -14 -173 -102 _-262 -346 Tea - -26 -39 2 -134 -157 Rubber - 39 -25 -14 1-56 -94 Coconut Products - -33 -111 -96 1-79 -105 Others - 6 1 5 6 9 G-ross National Income 5,854 6,064 6,087 6,391 6,358 6,572 12.3 1/' All data are at constant 1959 factor prices. 2/ Caliculated as the difference between the value of export at constant 1959 prices and the actual value at current prices. Sou,rce: Central Bank of Ceylon. Table VIII Production of Principal C:rqs Average 1950 1954-1956 .959 1960 1961 1962 1963 1964 !Txnort Grops Tea (million lbs.) 306 374 413 435 455 467 48c 482 Rubber (1,00 iT) 114 94 92 97 96 102 104 111 Coconut (million nuts) 1,925 2,460 2,313 2,183 2,601 2,811 2,557 2,999 Domestic Cros Paddy (million bushels) 24.5 31.4 36.5 43.1 43.2 48.1 49.2 50.4 t,anioc (1,000 ctt) 3,260 4,422 2,865 5,195 5,842 5,553 Onions (1,000 cvt) 294 731 758 736 815 734 Chillies (1,000 cwt) 234 372 202 283 411 30? Peppers (1,000 cut) 86 100 117 151 225 126 Kurakkan (1,000 bushels) 700 658 587 733 726 580 iaise (1,000 bushels) 300 303 319 332 363 .301 Sweet Potatoes (1,000 cwt) 522 945 529 901 1,148 844 1/ Partly based on rough estimates. Sourc: Department of Causes and Statistics. Table IX Production, Acreage and Yield of Export Crops 1954-56 1959 1960 1961 1962 1963 1964 Tea P'roduction (Mi110 los.) 37(4 4-0 435. 4,)5 4ut 45 3 Acreage (thous. acres) I70 5ov U 82 587 591 587 92 ToTich replanted) (0.37 (1.2) (27) TE73 7.~T 97 estates l/ 499 .50 502 5u04 uu Wo W(o small holdings 1/ 71 78 80 83 86 89 96 Yield per acre (lbs.) 656 713 747 775 790 826 814 Rubber Production (thous. tons) 94 92 97 96 102 104 111 Acreage (thous. acres) 660 668 669 671 674 675 669 2/ (of which replanted) (139) (231) (7) 2677) T29) (300) (313) estates 1/ 479 477 476 476 476 n.a. n.a. small holdings 1/ 180 191 193 195 198 n.a. n.a. Acreage in Production 2/ 586 537 522 504 528 525 531 Yield per acre (lbs.) 361 382 417 h27 434 44o 463 Production (ths. nu+ts) 2,460 2,31 29183 690( 2.811 2. 7 2.999 acres) 21,100 1,100 1,100 1,100 1,100 Lim 110i planted) h/ (37) (95) (117) (136) (155) (178) (202) Yield per acre (nuts) 2,236 2,104 1,985 2,365 2,555 2,325 2,726 Estte ua r dei ~..LLne%dJ as 11l-ig COMp).LSin IOW' CaCIre OrL mL0J.re 041aUjj. &;%/.U.L&j6Q cover less than 10 acres, !j IJtLJU dO UULd-L d1:a pn1c.LdnUeu WLI rUUvt UVOOCAUl -Got LIAV LII Lu VU yt:;:U reached tappable age and acreage left untapped. 3 I This is an estimate as no accurate statittics are kept. Includes only replanting under Coconut Rehabilitation Scheme. Rough estimate derived from the number of seedlings distributed. 9/ Decline due to resurvey of acreage planted by large estates. Source: Administration Report of the Tea Controller, Acministration Report of UBan k &. VV.Lt, 1VjJCIU11MUL U VCl oLn.U- d[IU 0 Ud 1j1Z U.Ls UU (IULt Bank of Ceylon. Tale X Production, Acreage and Yield of Paddy - Average 1954-1956 1959 1961 1962 1963 1964 Production (mill. bushels) 31.4 36.5 43.2 48.1 49.2 50.4 Acreage (thous. acres) Gross acreage sowm 1,280' 1,330 1,472 1,536 1,562 1,585 Under -Irrigation 673 720 d62 934 940 Major schemes (362) (395) (473) (508) (516) Minor-schemes (311) (325) (389) n.a. (126) (424) Rainfed 607 610 610 628 645 Gross acreage harvested 1,202=' 1,228 1,407 1,492 1,525 1,535 Under irrigation 632 o9920 917 Major schemes (345) (378) (459) (501) (04) Minor schemes (287) (291) (376) n.a. (419) (413) Rainfed 570 559 572 605 618 Net acreage harvested 1,010 1,061 1,195 1,268 1,297 1,305 Yield per acre (bushel) 31.1 35.0 36.2 37.9 37.9 38.6 1/ Annual figures are totals of both Maha and Yala seasons. 2/ TnolIdci 90000 nrp PQirnntAi t. hnv hppn unrbar nnittivntinn in thp -i Oya Colonized Area. Table XI Production and Import of Fish ('000 owt.) 1956 1958 1959 1960 1961 1962 1963 Production of Fresh Fish 765 779 896 980 1,124 1,50011 1,6501/ IIMports 812 967 858 960 764 666 736 Dried Fish 02 797 702 792 31 1 F Fresh and Tinned Fish 130 170 156 168 176 241 70 1T Data refer to fiscal years 1961/62ad 1962/63, respectively. S~ource: Depa,!rtment of Census~ and SttisA tivc; Ceyl~on Cust*'oms Returns* Table XII Value of Industrial Production (Rs; .milli on ) 1960 1961 1962 1963 1964 Miscellaneous Food Preparations 144.0 146.9 147.8 147.6 160.7 Preserved and Canned Fruit, Vegetables 1.3 1.6 2.3 3.4 L;. Biscuits, Confectionery 11.5 18.2 21.9 28.8 30.9 Cerated Water 8.3 7.8 10.0 11.4 13.4 Beer and Stout 3.1 2.4 2.2 2.4 2.7 Tobacco 30.0 29.0 35.0 39.0 46.2 Garments 19.4 19.8 29.3 38.4 54.9 Footwear, Leather Products 8.3 8.5 19.6 22.3 23.4 Misc. Chemical Products 36.4 40.3 51.5 56.0 73.7 Paper and Paper Board 12.5 13.9 1.4 18.2 30.1 Metal Products 7.4 9.1 11.2 15.1 38.5 4anufactured' Products, n.e.s. 1.5 3.7 4.3 5.8 11.0 Curamics 1.0 1.1 1.9 2.5 2.4 Rubber Products (excl. Footwear) 6.8 8.3 10.9 13.7 17.0 Plywood 2.3 2.9 3.4 3.9 3.9 Mineral Sands - 0.1 0.1 0.1 0.9 Basic Industrial Chemicals - 0.2 1.1 1.2 1.0 Cement, Cement Products 19.6 17.9 20.2 22.5 23.0 Total 313.h 331.7 388.0 132.0 538.2 1/ Based on a survey carried out by the Central Bank. In 1964, a considerably rea.tePr number oif f4rmq w4mnrr +.han -in 1963.A Tl-eoreforen_ t.he inc-rena in output shown in 1964 over 1963 does not represent the actual increase that Souc rred rariBn h yCeylo Source: Central Ba:nk of Ceylon Table :III Eummary of Government Accounts and Financing (Rs. rn-,llion) 1958/59 1959/60 1960 1 1961/62 1962/6 196364 1964/65 1. Current revenue 41 1,248 1,337 1,457 1,610 1,588 1,611 1,790 2. Current expenditure _,1., 260 1,82 1.451 t4,80 i85 190 Current surplus or deficit 91 77 75 159 108 26 200 3. N!et surplus or deficit of govt. enterprises V 2 _2_- Overall current surplus/ deficit 49 39 42 123 72 -3 175 4. Capital expenditure . 493 496 519 586 496 503 555 5. Advance payMents (net) 0 . 1_ -_1 -16 n.a. Overall surplus/deficit -444 -45'7 -491 -478 -410 -490 -3V0 6. Adjustmerits 21 __4 27 _8 __18 _4 20 7. Net cash operating surplus or d eficit -420 -430 -463 -456 -392 -462 -360 Sources of Financing 8. Non-expansionary L9 183 221 270 21 302 335 Administrative borrowing 27 57 29 105 -34 -1 20 Domestic market borrowing (net) 109 84 165 109 154 206 210 Foreign borrowing (net) 36 29 14 38 62 65 ) Fcreign grants 7 :13 13 18 31 32 ) 9. xansionry 241 247 22 __ 18 160 20 Borrowing from banking systems 179 241 242 227 178 115 n.a. Use of govt. cash balances 62 6 - -40 - 45 n.a. (see footnotes on next page) Table ZII (Footnotes) Provisional. Revised. estimate, except that estimated foreign aid receipts, and thus capital expenditures, are lower than the budget estimate. & Revenue includes gross profits on sale of flour and suar, excludes receipts of government enterprises which are offset against recurrent expenditures and appear in line 3. 1961-62 excluCes Rs. 20.6 m. transferred from "ational Flood 1elief Fund. National development taxes of Rs. 19 m. 18 m. ard 3 m. are included in 1961-2, 1962-3 and 196-3-4 respectively. - Includes gross food subsidies, excludes recurrent expenditure of govt. enterprises,and expenditures of a capital nature. Comprising Posts and Telecommunications; Railways; Electrical Department; Broadcasting; and Forts, Harbours and Harehousing. Includes loans to govt. agencies, extra-budgetary expenditures by the rubber and tea replanting subsidy funds, etc. Consists mainly of expenditures from extra-budgetary sources. Source: Central Bank of Ceylon; 1inistry of inance. Table XIV Goverrment Revenue (Rs. million) Prov. Est, 19 "'8/ -;99 C)/60 1960 /61 1961/62 162/53 1 Pv.6 Customs Duties 674 733 Z39 56 676 760 812 Export duties - 306 326 303 290 278 277 300 of which: tea 220 220 213 224 216 219 225 rubber 43 61 54 30 29 12 22" coconut 43 45 30 31 27 42 26 Import duties 367 g6 __5 465 398 482 507 Other 1 1 1 1 1 1 10 Indirect Taxes 234 260 2?2 360 410 316 422 Excises 130 136 136 168 211 218 230 Turnover tax - - - 16 32' Profit on sale of sugar, flour, etc. 104 124 136 192 199 82 160 Taxes on Incomp Profit ?01 195 283 293 289 305 278 Income tax 195 189 259 23 259 285 244 Profits tax 6 5 4 2 3 1 4 Land tax - 8 12 11 6 5 Personal t1x - 1 12 1616 6 13 25 Other Taxes 6 j9 62 66 92 96 85 81 iiscellaneous Receipts 6/86 87 _159 117 145 12? Total Revenue 1,255 1,337 1,457 1,610 1,588 1,611 1,725 1 ncludes tea tax. 2/ Almost all excises are derived from profits and taxes on liquor sales. 3/ Includes surcharge on income tax. 4/ Includes rice subsidy tax. 5/ Includes development tax. 6/ Excludes gross receipts from operations of goverrment commercial enterprises. 7/ Excludes transfer from flood relief fund. Source: Ceylon Government Accounts. Table XV Governrment Current and Capital Expenditure (Rs. million) 958/59 1959/60 1960/61 1961/62 1962/63 1963/64 1964/65 (original est) A. Current Expenditure Administration 208 217 246 237 230 n.a. 258 Social Services 377 420 419 437 446 n.a. 481 Economic Services 80 79 88 80 96 n.a. 106 Transfer payments 492 544 _2 697 708 r.a. 803 Food Subs-idies (gross) 251 317 384 427 435 463 487 Interest on public debt 44 53 67 83 98 n.a. 100 Pensions 91 93 100 109 115 r.a, 136 Other 106 81 78 _78 60 ri.a. _ 0 TOTAL CURRENT EXPENDITURE 1,157 1,260 1,382 1,451 1,480 1,585 1,648 B. Capital Expenditure Administration 46 37 31 29 19 n.a. 21 Social Services 77 70 79 94 92 r.a. 114 Health 10 11 13 13 14 ~~Ea~ ~~ Education 28 26 33 30 36 n.a. 41 Housing 26 24 20 37 27 n.a. 39 Rural Development 13 9 13 14 16 n.a. 17 Economic Services 321 33 362 __7 368 __.a. _92 Public Utilities 121 126 120 148 162 n.a. 209 Agriculture, irrigation and fisheries 179 175 185 166 148 n.a. 186 Manufacturing, mining and trade 20 31 58 63 57 n.a. 97 Acquisition of financial assets . 60 __ 86 10 ri.a. 21 TOTAL CAPITAL EXPENDITURE 493 496 519 586 489 S03 68 C. Current Subsidy Payments to Govt. enterprises 42 38 33 36 36 29 25 D. Advance Account Payments (net) 14 15 -14 16 --.a. TOTAL EXPENDITURE l,692 1,794 1948 2_.088 1,991 2«t12 2.121 (Footnotes on next page) (Table YV continued) 1 U [ L i flaI~.inly ULU IUI I±1U UJI UI iU- 'J, Ul II CV I L t, 0t ;I V -L J suL: J t;- UU uiILL ujJJ ± akL11r, jdyJ i U Ly government enterprises. 2/ Consists of loans to Government Corporations and agencies, some of which may be used for current rather than capital purposes. Some of these loans are not utilised in the year the appropriation took place, and the consequent Treasury deposits form one of the sources of administrative borrowing. (See Table XIII) 3/ Difference between budget receipts and payments by Electrical Department, Broadcasting, Posts and Telecommunications, Ports Harbours and Warehouses, and Railways. Source: Central Bank of Ceylon; Government Accounts, Table XVI Analvsis of Factors Collectinf Myney Spply December 21 Septemfber 30 19l5 1959 1960 1961 1962 1963 1964 163 1964 A. Public Sector 1.7 overnment C B loans and advances - 1214 16h 186 166 203 183 203 210 Gov't securities in C B 19 281 514 687 878 997 1,025 1,025 1,148 Gov't securities in Commercial Banks 285 29! 297 3h0 U08 430 395 h23 h23 Gross bank credit 304 700 975 1~223 1~ 1~ 1,7 0 l~, ó 1~781 Deductions Govlt Cash balance 1/ 16 108 88 110 166 197 203 1,237 2'38 Counter part funds - n.a. 54 50 58 54 70 68 Total 1W 9138 ~68 220 ¯7 271 277 -235 Net Credit to Gov't 158 438 837 1,055 3,232 1,363 1,h69 1,hi1 1,5143 II. Gov't Corporations 2/ Comm. bank credit to govlt corp,. n.a. n.a. n.a. n.a. n.a. n.a. 56 i 34 Deductions Time and savings dep. n.a. n.a. n,a. n.a. n.a. n.a. 71 802/ 65 III. Net Credit to Gov't and Gov't Corporations 158 138 837 1,055 1,232 1,363 1,454 1,345 1,512 Deductions h8 99 118 126 140 154 213 157 212 Net misc. acc'ts of CB 148 99 118 126 140 154 213 157 212 Net Credit to Public Sector 110 439 719 929 1,092 1,209 1,241 1,188 1,300 B. Private SectorV Comm, bank credit 296 48!L 526 516 $78 634 76 681 770 1955 1953 1960 1961 1962 1963 1964 1963 1964 Deductions Time and7savings deposits 170 299 348 347 397 473 467 421 h86 Comm. bank misc. acc'ts (net) 28 29 -7 61 35 13 39 21 56 Total 1 9U -7 395 Th40 T7-,*56 2 Net credit to private Sector 98 156 131 108 96 119 240 239 223 C. Net Domestic Credit 208 595 850 1,037 1,188 1,327 1,481 1,427 1,528 Change between periods 255 187 191 139 151 101 6/ D. Net External Banking Assets- 804 533 331 224 106 172 68 79 95 E. Total Money Supply 1,012 l,128 1,181 1,261 1,294 1,499 1,549 1,506 1,623 Change between periods 53 80 33 205 50 117 17These figures differ from those given in the government accounts because of differences in definition and coverage, and because of sizeable leads and lags in recording transactions. 2/ Up to September 1962 included in this private sector. 3/ Rough estimate. 4/ Up to September 1963 includes credit to, and time and savings deposited of, government corporation 5/ Includes items in transit. 6/ Excludes counter part funds on the liability side. Source Central Bank of Ceylon. Table XVII Conposition of Money Supply (Rs. million) Sputember 30 1997 1999 1961 1962 963 196 Tntpil Mnneyv Riipplyv 1,0Iq5.6 1,1. PA,2A 1,2934.6 1,A 99.3, 1,5Q8.9 Currenor h38.h $50.5 66O.6 697.5~ 813.2 822.0 in of r..oney supply 41.9 ~h.7 52.3 53.9 7.2 3.1 Demand Deposits 607.2 577.5 600.7 596.1 686.1 726.9 in ' ofoe supl 58. 512 6. 61 ~3 T~9 /0L~.L Je.nIVt bUEJnkLY V41 4UDJ. o4feU yIUo Source4 Central Bank of' Ceylon. Table X\YIII Ovmership of Deposits 1956 ?/ 1958 ./ 1959 l/ 1960 / 1961 1962 3/ 1963 2/ 1964 3 Financial Institutions 80,7 93.6 88.9 105.3 105.2 122.0 117.0 120,9 Plantations 214,.5 150.7 172.1 1813.1 145.9 134.5 115.8 100.1 Trading Firms ) 59.5 69.8 86.0 105.6 123.2 188.2 207.5 Other Businesses 108,,3) 85.4 92.5 90.6 88.2 135.5 121.5 132.7 Local Authorities 51,5 28.1 22.5 2'3,2 40.2 31.1 47.7 54.2 Non-Business Inst. 37.1 31.1 33.5 37.5 43.4 55.0 86.9 100.7 Individuals 324.3 336.9 361.6 399.2 398.7 411.6 448.3 529.7 Total 816>4 785.5 841.0 924.9 927.2 1,012.9 1,125.4 1,245.8 Demand Deposits 638.1 551.9 560.1 587.4 592.8 617.0 66290 727.0 Individuals 233.3 211.8 218.9 241.7 230.0 233.4 240.7 273.3 Others 404.8 340.1 341.2 345.7 362.8 383.6 422.2 453.7 Time and Savings Deposits 178.3 233.6 280.9 337.5 334.4 395.9 _625 51. Individuals 91.0 125.1 142.7 157.5 168.7 178.2 207.5 256.4 Others 87,3 1.08.5 138.2 180.0 165.7 217.7 255.0 262.3 7Includes demand, time and savings deposits. Coverage is not identical with that of Table XVII. 21 September 30., J/ December 31. Source: Central Bank of Ceylon. Table XIX Consolidated Assets and Liabilities of Commercial Banks (Rs. mili .on)- AveraLe End of Year 1954-1956 1958 199 1960 1961 1962 1961 1964 Assets Loans nnd q3vnnr 33 502 Co9 5hh 63 6h 68h 783 Gov?t securities / 255 285 284 288 293 317 318 329 Treasinur ills 5O lh h ) , A 111 10 91 Foreign exchange }2 109 49 51 56 46 41 33 S4 Private demand deposits 587 56 609 607 595 628 674 765 Prvate de nd deposits 57 628 O~ 2 2 Private time, savings deost 158 26 300 36 1. 1'r)[f 1. A ff Govtt time, savings depos-Li 22 4h 2 2 1 3 Liquid assets W to erniand deposits 58 49 1 7 58 58 56 55 Loans and advances to total deposits 38 3 1 52 eo ho >3 >b 1/ Includes securities guaranteed by the Government and issues bf the Central Bank. 2/ Consists of foreign currency on hand and balances due from banks abroad. / Comprises cash on hand, balances due from Central Bank and other domestic banks and items in process of collection. / Consists of cash on hand, balances due from Central Bank, foreign currency on hand, balances due from banks abroad, Treasury bills and bills discounted. Source: Central Bank of Ceylon. Table XX Cost of Living Index 1/ 2/ (192 = 100) Average Wpiphts 19Th-1956 19q8 1959 1960 1961 1962 1963 196L All Itm. I00-0 1006 1o 0 105 2 103.5 10L.8 106.3 108.8 112.2 Food 61.7 T0~F f05 5r,7.7 100.8 9 100.9 103,,0 l06- nthino h 80-( 87_9 92T 9_1 1013.-9 108.2 118.2 127.2 Rent 5.7 101.5 101.5 1015 101,5 101.5 101.5 101.5 10i.5 el and ligh+. L. --A 1010 n90-'h 10)27 10),h iot.6 103.0 103.2 Miscellaneous 18.7 95.9 113.1 115.3 117.5 122.8 124.9 12666 129.3 Domestic Group 51 98.7 109.2 108,0 108.9 112.3 113.9 113.4 116,7 TLM+t Goup 1. 1. -1A 0 07 a 07 1 01 7 O) A QA_7 109- 1C .- Export Group 5 109.8 135.0 153.1 138.h 119.1 113.8 117.7 115.3 inuex reters to CoLOMIDO IwOn. ±'gure3 repreUU aulual ZveragUb un.ee nIUU( otherwisea Tne Index is based on surveys of household expenditures of low-income families in 1949-1950. It gives heavy weights to goods whose prices are kept almost constant by the Government through subsidies, price control or a comination of both .and is, therefore, not an indicator of movements in market prices. Source: Central Bank of Ceylon. Table KXI R~1~nøof Pn~cv+ 1963 1964 1960 1961 1962 Credit Debit e redit Debit Net 1. Merehandise Trade a. Export (f.o.b.) 1,796 1707 1,763 1,708 1,764 b. Imports (c.i.f.) 2,006 1,794 1,906 1,868 1,957 Trade Balance -210 -86 -143 -160 -193 2. Services and Current Invisibles -61 -47 -44 216 266 -50 187 218 -31 a. Port expenditure; non-freight Transport and Insurance 75 73 71 112 47 65 107 43 64 b. Foreign Travel -24 -18 -14 6 22 -.16 6 14 -8 C, Investment Income -44 -40 -46 16 68 --52 12 46 ·34 d. Government Expenditures -14 -9 -2 25 25 0 23 20 3 e. Other services -23 -23 -23 51 68 -.17 33 58 --20 f. Private remittances -31 -30 -30 6 36 -30 6 42 -36 3. Current Account Balance -271 -133 -187 - - -210 - - -224 4. Caital Account a. Official grants51 53 41 37 44 · 44 76 - 76 b. Long.term liabilities (i) Private 2 -8 -2 5 -5 4 6 ·2 (ii) Official 20 19 40 82 6 75 78 13 65 (Continued on next page) 1963 1964V 1960 1961 1962 Credit Debit Met Credit Debit Net c. Short-term liabilities (i) Frivate -7 14 -1 4 -4 13 -13 (ii) Official2/ .66 44 -? 45 45 51 - 51 d. External assets 220 0 41 42 42 56 - 56 e. INF transactions - 54 54 1 - 1 1 5. Errors and Ommissions -1 -31 25 - - 2 - 10 -10 1/ Provisional. 2/ Includes P1480, CARE, etc. '3/ Excludes IEF, which is included in e. Includes net balances on bilateral accounts. Source: Based on data supplied by Central Bank of Ceylon. Table XXII Composition of Exports (Rs. millioón)ý Average 195h-1956 1957 i95.9 1960 1961 1962 1963 196h Tea 1,121 1,021 1,0h5 1,096 1,115 1,19 1,ihl ,12 Rubber 309 300 298 378 260 290 257 290 Mnior Cnconut Produic~ 218 16 2M, 18), 202 227 198 273 Other Doestic Exports 100 111 105 117 10h 100 110 137 Domestic Exports 1,7h8 1,588 1,692 1,775 1,681 1,766 1,,706 1,812 Re-exports 80 9h 62 __2 $2 h2 26 3h TotalExport R ,82 I ,8 ,7 1R,83 1,733 - R 1,q8 i , 76 P7A Pe-centage ,fDoP si Exports Tea 64.1 64.3 61.8 61,7 66.3 65.1 66.9 62.0 D-u,bber 17. 1n.9 n 1 7. 2 - nl 13 -15. 16C-ii' . n 1501 -15.,7 -i.V. ±.'7 ±r v C- -L-.) L- .) ±-U L;;L L.?± ± ( Major Coconut Products 12.5 9,8 14.4 10.h 12.0 12.8 11.6 14.9 Other Domestic Products 5,7 7,0 6.2 6.6 6,2 5.7 6.h 7.-h Domestic Exports 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Source: Ceylon Customs Returns. Table XXIII Cosition of Imports Average 1956-1956 1959 1960 1961 1962 1963 1964 Consumer Goods n.a. 1,203 1,195 972 979 919 1,172 of which Rice 283 242 217 248 250 283 Flour 106 65 69 89 85 100 Sugar 75 79 78 60 125 174 Nli lk, milk products 78 72 66 76 77 94 Meat, fish, eggs 99 l15 77 62 65 74 Grams, pulses, curry stuffs 94 113 113 117 112 139 Beverages, Manuf. tobacco 15 14 16 5 5 3 Textiles 179 196 172 149 83 165 Tires, tubes 9 9 7 8 5 4 Drugs 32 32 27 25 20 26 Others 233 2-8 130 140 92 110 Intermediate Goods n.a. 396 397 383 409 372 h10 of which 61 58 57 60 68 78 Petroleum prod. 135 124 127 126 119 106 Chemicals 39 40 38 48 42 49 Paper, cardboard 31 35 32 32 27 35 Others 130 140 129 143 116 142 Investment Goods n.a. 389 355 339 337 324 305 of which Building materials 88 100 89 100 77 93 Transport equipment 146 118 100 92 100 58 Machinery, other equipment 155 137 150 145 147 154 Unclassified 17 13 9 8 13 10 Total 1,495 2,005 1,960 1,703 1,733 1,628 1,897 S6urce - Ceylon Customs Returns, Central Bank of Ceylon. Table XXIV Index of Terms of Foreign Trade (1958 = 100) Average 1954- 1956 1957 1958 1959 1960 1961 1962 1963 196b Export Prices 110 10 100 1 oh I0) 95 93 93 93 Tea 117 101 100 99 97 9 92 91 91 Tihhpr 119 11i 100 11; 110 1o 10h 98 91 Coconut Products 88 89 100 117 103 80 82 90 93 Import Prices 103 108 100 102 102 101 95 105 107 Terms of Trade 106 94 100 102 102 94 98 89 86 Source: Central Bank of Ceylon. Table XXV Ex,-ort ''unntitp.,sandi P-rj,ces Dessicated Tea Rubber Copra Coconut Oil Coconut Mlill. lbs. Rs/lb. Mýill. lbs. Rs/lb. Th./cw,,t. Rs/cwt. Thi./!cwt. Rs/c-wt. Th./(-,Dt. Rs/,2wt. 1954-1956 357 3.14 202 1.53 1,148 44.06 1,673 62.30 1,179 52.55 (average) 1957 368 2.78 209 1.44 695 47.95 1,081 62.80 978 56.08 1958 411 2.75 207 1.25 554 52.97 887 69.80 1,135 63.72 1959 384 2.72 206 1.45 852 60.52 1,389 84.41 1,050 71.45 1960 410 2.67 23.5 1.61 583 55.23 1,110 71.83 1,099 65.23 1961 426 2.62 197 1.32 1,100 43.47 1,837 58.16 967 49.23 1962 452 2.54 224 1.29 1,448 40.74 2,043 54.97 981 57.23 1963 456 2.50 209 1.23 862 45.55 1,621 61.04 967 61,72 1964 456 2.51 253 1.15 1,162 47.44 2,351 65.42 1,080 59.47 Source: Ceylon Customs Returns. Table XXVI Official Grants and Loans (Rs. million) 1960 1961 1962 1963 1964 1965 -_ _(estimato Grants Canada 6 7 8 6 14 18 Europe - - 5 1 - - Sterling Area 1 4 - 6 3 1 U.S.A. 46 29 24 22 25 1 China (Mainland) and others - 1 - 9 34 6 53 41 37 44 76 66 Loans IBRD 9 17 27 23 15 19 Canada - - - 2 1 8 China (M1ainland) - - - - 5 - Fed. Republic of Germany - - 1 11 L 16 France - - - - - 3 United Kinvdom - - 9 8 6 6 U.S.A. 17 6 3 1 U.S.SR. 1 1 5 17 33 12 Others -- 4 1 5 27 24 h6 68 66 69 Total Grants and Loans 80 65 83 112 142 135 Renauments 6 5 6 6 11 31 Net Total 170 77 6i0 131 104 Net Total in % of Resource an '48 9 59 71 Source- Cental~ -3ank r%f'l.ArIn Table XXVII Gross and Net External Asset (Rs. million) End of Year 1953 1959 1960 1961 1962 1963 1964 Government Institutions and agencies 281 280 245 232 242 243 243 108 Central Bank 591 539 387 165 169 136 99 118 Commercial Banks l/ 109 114 102 112 105 102 105 107 Balances due to Ceylon under various bilateral accounts 3/ 81 n.a. 1 27 16 23 15 18 Gross Assets 1062 933 735 536 532 504 462 351 Less: Balances due from Ceylon under various bilateral accounts 3/ n.a. 28 n.a. n.a. 22 11 50 116 IMF Liability - - - - 54 110 111 113 Other Central Bank Liabilities 4/ 3 4 6 1 6 4 3 4 Commercial Bank Liabilities 1( 26 27 29 29 22 25 25 Sterling Loan Sinking Funds 87 95 79 84 91 97 104 46 Total Deductions 109 153 112 114 202 244 293 304 Net Assets 953 780 623 422 330 260 169 47 (changes between periods) (-222) (-173) (-157) (-201) (-92) (-70) (-91) (-122) (Footnotes on next page) (Tabl XVIT continued) I/ Consists almost entirely of' sinkLng fund investments for sterling loans and domestic public debt. 2/ Working balances only, comprising foreign currency on hand, "balances due from banks abroad, and export bills purchased and discounted. / 195?-.60 data are net, and include only China prior to 1960. 1961-64 data comprise balances due to and from Ceylon under accounts with Czechoslovakia, USSR, China, Rumania, Bulgaria, UAR, Hungary, Poland, Iran, GDR, Yugoslavia, Burma and France. / Excludes counterpart funds. Source: Central Bank of Ceylon,,