Sri Lanka: State of the Economy 2002


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The report includes an in-depth review of agriculture policy in Sri Lanka during the period 1985 – 2000. The introductory section on “Policy Perspectives and Performance” reviews policies implemented in 2001-2002, analyses the macroeconomic performance of the country, and discusses developments in the international environment that impacted on the Sri Lankan economy during the period under review. Section Three looks at leading issues in the development process: the problems and prospects of small and medium enterprises (SMEs); issues and options in poverty alleviation initiatives; wage bargaining in the plantation sector; and the role effective governance plays in economic performance. The section on “Policy Briefs” summarizes some key topics in the current economic policy debate: sovereign ratings, the Indo-Lanka Free Trade Agreement, war risk insurance, tradeable environment credits and the Sinharaja forest, a multi-sector utility regulator, and the recently introduced VAT.

Table of Contents

•  Policy Perspectives
•  Macroeconomic Performance –A Medium- Term Perspective
◊  Introduction
◊  Output Growth
◊  Savings and Investment
◊  Fiscal Policy
◊  Debt
◊  Inflation
◊  Monetary Policy
◊  External Sector
◊  Conclusion
•  International Environment
◊  Introduction
◊  Developed Countries
◊  Emerging Markets
◊  Trade and Capital Flows
◊  Doha Development Agenda
◊  Implications for Sri Lanka
•  Domestic Agriculture Policy Review, 1995-2000
◊  Introduction
◊  Profile of Domestic Production and Imports
♦   Paddy
♦   Other Field Crops
◊  Profile of Policies and the Regulatory Environment
♦   Import Policy
♦   Credit Subsidies
♦   Fertilizer Subsidies
♦   Irrigation Subsidies
♦   Seed Policy
♦   Investment Incentives
♦   Interventions in Agricultural Marketing
♦   Other Policies
◊  Constraints to Investment in Agriculture
♦   Infrastructure Constraints
♦   Legal and Regulator Constraints
◊  Policy Recommendations
•  Case Study: Agricultural Policy Implementations on Sri Lanka’s Coconut Industry
◊  Introduction
◊  Lack of Competitiveness of the Sri Lankan Coconut Oil Industry
◊  Impact of Tariffs Changes on Edible Oil Imports
◊  Impact of the Expanding Desiccated Coconut Industry
◊  Policy Recommendations
◊  Conclusion
•  Small and Medium Enterprises: Problems and Prospects
◊  Introduction
◊  Defining SMEs
◊  SME’s Role in the Economy
◊  Institutional Support
♦   Government Incentives
♦   Financial Support
♦   Technical Support
♦   Production and Marketing
◊  Problems Facing the SME Sector
♦   National Policy
♦   Infrastructure
♦   Financial
♦   Business Development Services
◊  Policy Recommendations
◊  Prospects
•  Poverty: Issues and Options
◊  Introduction
◊  Tracking Poverty
♦   Poverty Indicators
♦   Incidence of Poverty
♦   Issues with Poverty Indicators
♦   Changes in Poverty Incidence
◊  Reasons for Unsatisfactory Poverty Reduction
◊  Poverty Reduction Strategy-Design, Implementation and Monitoring
◊  Challenges for the Future
•  Wage Bargaining in the Plantation Sector
◊  Introduction
◊  Wage Setting and Wage Forms in the Plantation Sector
◊  Factors Influencing Wage Negotiations
♦   Living Standard of the Workers
♦   Wage Rates in Competing Occupations
♦   Employer’s Ability to Pay
♦   Trade Unions in the Plantation Sector
◊  Problems with the Collective Bargaining Process
◊  Policy Implications
•  Effective Governance
◊  Introduction
◊  Role of the Government
◊  Role of Civil Society Organizations
◊  Role of the Private Sector
•  Sovereign Ratings
◊  Introduction
◊  The Development of the Sovereign Ratings Business
◊  Credit Rating Agencies
◊  Determinants of Sovereign Ratings
◊  Should Sri Lanka go for a Sovereign Rating?
◊  Crying for Argentina – Lessons for Lanka?
•  Indo-Lanka Free Trade Agreement-An Update
◊  Current Status
◊  Impact of the Indian Budget – 2002/03 on the ILFA and on Sri Lanka
◊  Outcome of the ILFTA Joint Ministerial Committee Meeting
•  War Risk Insurance
◊  What is a War Risk Premium?
◊  How it was Applied
◊  How it was Abused
◊  Economic Impact
◊  Double Standards After September 11
◊  Moving Ahead
•  Tradeable Environmental Credits and the Sinharaja Forest
◊  Introduction
◊  What are Tradeable Environmental Credits?
◊  Models of Debt Swaps
◊  The Global Scorecard – the Good, the Bad and the Ugly
◊  The Sri Lankan Context and Controversy
◊  The Bottom Line
•  A Multi-Utility Regulator: Balancing Economies of Regulations and Diseconomies
    of Political Interference
◊  Introduction
◊  What’s in and What’s Not
•  VAT it was and VAT it is
◊  What is VAT?
◊  Measurement of VAT
◊  Vat vs. a Cascading Tax
◊  Why VAT? A Comparison of GST and NSL with VAT
◊  Revenue Implications
◊  Legal Challenge to the VAT Bill
◊  The Supreme Court Amendment
◊  Concluding Remarks
•  Prospects
•  Diary of Events July 2001 – June 2002
•  Appendix A: Macroeconomic Indicators
•  Appendix B: Capital Market