Sri Lanka : From Peace Dividend to Sustained Growth Acceleration

Following the cessation of hostilities in May 2009, the Government of Sri Lanka has announced a suitably ambitious macroeconomic vision to capitalize on the peace dividend. Its goals include growing at 8 percent or more per year and lowering government indebtedness from around 80 to 60 percent of GDP by 2015. This paper's main finding is that while some post-conflict bounce is only to be expected, sustaining high growth presents significant challenges. A substantial rise in the national investment and savings rates will be needed to sustain growth rates of 8 percent even when accompanied by a significant rise in total factor productivity growth. With the government's balance sheet constrained by its desire to lower public indebtedness, private investment will need to become the engine of growth. This places high priority on better infrastructure, clear signals about the relative roles of the public and private sectors, and hard budget constraints and competition both to strengthen the investment climate and spur technological upgrading in pursuit of faster productivity growth.

Bibliographic Details

Main Authors:	Fonseka, Daminda, Pinto, Brian, Prasad, Mona, Rowe, Francis
Language:	English en_US
Published:	World Bank, Washington, DC 2012-09
Subjects:	ACCOUNTING, ADVERSE EFFECTS, AGRICULTURE, ALTERNATIVE INVESTMENTS, BAILOUT, BALANCE OF PAYMENTS, BALANCE SHEET, BANKING SYSTEM, BASIS POINTS, BOND SPREAD, BORROWING COSTS, BUDGET CONSTRAINTS, CAPITAL ACCOUNT, CAPITAL ACCOUNTS, CAPITAL GROWTH, CAPITAL SHARE, CAPITAL STOCK, CENTRAL BANK, CLOSED ECONOMY, COMPARATIVE ADVANTAGE, COMPETITIVENESS, CONSUMERS, COST OF CAPITAL, COUNTRY CREDIT, COUNTRY RISK, CREDIBILITY, CREDIT HISTORY, CREDIT RATING, CURRENCY, CURRENT ACCOUNT DEFICIT, CURRENT ACCOUNT DEFICITS, DEBT BURDEN, DEBT CRISIS, DEBT RATIO, DEBTS, DEVELOPING COUNTRIES, DEVELOPMENT ASSISTANCE, DEVELOPMENT POLICY, DEVELOPMENT STRATEGY, DIMINISHING RETURNS, DISBURSEMENT, DISBURSEMENTS, DIVESTMENT, DIVIDEND, DOLLAR DEBT, DOMESTIC DEBT, DOMESTIC INFLATION, DOMESTIC MARKET, ECONOMIC DEVELOPMENT, ECONOMIC GROWTH, ECONOMIC LIBERALIZATION, ECONOMIC REFORM, ECONOMIC RESEARCH, ECONOMIC THEORY, ELASTICITY, EMERGING ECONOMIES, EMERGING MARKET, EMERGING MARKET COUNTRIES, EMERGING MARKETS, ENABLING ENVIRONMENT, ENTERPRISE PERFORMANCE, EXPENDITURE, EXPENDITURES, EXPORTERS, EXPORTS, EXTERNAL DEBT, EXTERNAL INDEBTEDNESS, EXTERNAL TRADE, EXTERNALITIES, FINANCIAL CRISIS, FINANCIAL INTEGRATION, FINANCIAL LIBERALIZATION, FINANCIAL SECTOR, FINANCIAL SECTOR LIBERALIZATION, FINANCIAL SYSTEM, FISCAL BURDEN, FISCAL CONSOLIDATION, FISCAL DEFICIT, FISCAL DEFICITS, FISCAL EFFORT, FISCAL POLICY, FIXED ASSETS, FOREIGN BUYERS, FOREIGN CURRENCY, FOREIGN EXCHANGE, FOREIGN EXCHANGE RESERVES, FOREIGN INVESTMENT, FOREIGN INVESTORS, FOREIGN PORTFOLIO INVESTORS, GDP, GDP DEFLATOR, GDP PER CAPITA, GLOBAL MARKETS, GOOD GOVERNANCE, GOVERNMENT BOND, GOVERNMENT BORROWING, GOVERNMENT BUDGET, GOVERNMENT DEBT, GOVERNMENT DEBT MARKET, GOVERNMENT GUARANTEES, GOVERNMENT INDEBTEDNESS, GOVERNMENT INVESTMENT, GOVERNMENT POLICY, GOVERNMENT REVENUES, GOVERNMENT SAVING, GOVERNMENT SAVINGS, GOVERNMENT SUBSIDIES, GROWTH RATE, GROWTH RATES, HOLDING, HUMAN CAPITAL, HUMAN CAPITAL DEVELOPMENT, INCOME TAX, INCOME TAXES, INFLATION, INFLATION RATES, INFLATION TARGET, INFLATION TAX, INFRASTRUCTURE FINANCING, INSTRUMENT, INSURANCE, INSURANCE CORPORATION, INTEREST COSTS, INTEREST RATE EFFECT, INTERNATIONAL BANK, INTERNATIONAL ECONOMICS, INTERNATIONAL INVESTMENT, INVENTORY, INVESTMENT CLIMATE, INVESTMENT DECISIONS, INVESTMENT HORIZONS, INVESTMENT RATE, INVESTMENT SPENDING, INVESTORS IN GOVERNMENT SECURITIES, ISSUANCE, JUDICIAL INSTITUTIONS, LABOR MARKET, LAND OWNERSHIP, LEVEL PLAYING FIELD, LIQUIDITY, LOCAL CURRENCY, MACROECONOMIC ENVIRONMENT, MACROECONOMIC POLICY, MACROECONOMIC UNCERTAINTY, MACROECONOMICS, MARGINAL PRODUCT, MARKET EFFICIENCY, NATIONAL INVESTMENT, NATIONAL OUTPUT, NATIONAL SAVING, NATIONAL SAVINGS, NEW MARKETS, NOMINAL INTEREST RATE, NOMINAL INTEREST RATES, OPEN ECONOMY, OUTPUT PER CAPITA, PER CAPITA INCOME, PERSONAL INCOME, POLITICAL STABILITY, PORTFOLIO, POTENTIAL INVESTMENTS, PRICE INCREASES, PRIVATE CAPITAL, PRIVATE INVESTMENT, PRIVATE INVESTORS, PRIVATIZATION, PRODUCTION FUNCTION, PROFIT MARGINS, PROPERTY RIGHTS, PUBLIC DEBT, PUBLIC FINANCES, PUBLIC GOOD, PUBLIC INVESTMENT, PUBLIC INVESTMENTS, PUBLIC SAVING, PUBLIC SAVINGS, PUBLIC SPENDING, RAPID GROWTH, RATE OF RETURN, REAL EXCHANGE RATE, REAL EXCHANGE RATES, REAL GDP, REAL INTEREST, REAL INTEREST RATE, REAL INTEREST RATES, RETURN, RETURNS, RISE IN INFLATION, RISK MANAGEMENT, RISK PREMIUM, SAVINGS RATE, SAVINGS RATES, SHORT-TERM EXTERNAL DEBT, SOCIAL DEVELOPMENT, SOFT BUDGET CONSTRAINTS, SOVEREIGN BOND, SOVEREIGN RISK, STATE BANKS, TAX, TAX BREAKS, TAX POLICY, TAX RATES, TAX REVENUES, TOTAL DEBT, TOTAL FACTOR PRODUCTIVITY, TOTAL FACTOR PRODUCTIVITY GROWTH, TOTAL OUTPUT, TRADE REGIME, TRADE TAX, TRADE TAXES, TRADING, TRANSACTIONS COSTS, TRANSITION COUNTRIES, TRANSITION ECONOMIES, TURNOVER, VALUE ADDED, WEALTH,
Online Access:	http://documents.worldbank.org/curated/en/2012/09/16707582/sri-lanka-peace-dividend-sustained-growth-acceleration https://hdl.handle.net/10986/12040
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