world bank document€¦ · 1/ the sri lanka rupee, which had been linked to the u.s. dollar from...
TRANSCRIPT
Report No. 1425-CE rip F fl- PV
Sri Link.a
%~,kJU I IIy L ... A JIl'J I IR.... I V PEA I IJI C1I IU UUI I I
February 28, 1977
South Asia Programs Department
%-I111 %-P II lI I - ONLY1.FOR OFF'C':L USEL I I
Document of the World Bank
This document has a restricted distribution and may be used by recipientsonly in the performance of their official duties. Its contents may nototherwise be disclosed without World Bank authorization.
Pub
lic D
iscl
osur
e A
utho
rized
Pub
lic D
iscl
osur
e A
utho
rized
Pub
lic D
iscl
osur
e A
utho
rized
Pub
lic D
iscl
osur
e A
utho
rized
CURRENCY EQUIVALENTS
End-Year Values Currency Unit Sri Lanka Rupee
Prior to 1967 US$1.00 = Rs 4.77Rs 1.00 = US$0.21
Rs 1 mn. US$209,644
1967 to 1971 US$1.00 Rs 5.93Rs 1.00 = US$0.17Rs l mn. = UbS$I68,6b4
1972 TTUSC1.0 = s 6.70
Rs 1.00 = US$0.15Rs 1 mrn = UIS149;254
1973 US$1.00 = Rs 6.75Rs 1.00 = US$0.15Rs 1 mn. = US$148,148
1974 US$1.00 = Rs 6.69Rs 1.00 = US$0..;5Rs 1 mn. = US$149,477
1975 US$1.00 = Rs 7.71Rs 1.00 = US$0.13Rs 1 mn. = US$129,702
1976 US$1.00 = Rs 8.86Rs 1.00 = US$0.11Rs 1 mn. = US$il2,867
Foreign Exchange EntitlemeyCertificate (FEEC) Rate -
1969 to 1971 US$1.00 = Rs 9.19 (55% FEEC)1972 US$1.00 = Rs 10.38 (55% FEEC)1973 US$1.00 = Rs 11.14 (65% FEEC)1974 US$1.00 = Rs 11.04 (65% FEEC)1975 US$1.00 = Rs 12.72 (65% FEEC)l /0 U;I1.UU = .L.OL 'cJ/, rnr.J
Trade Conversion Factors Used in the Report: To convert rupee values intodollars. for 1960 and 1965 a rate of US$1 = Rs 4.76 was used; for 1970. 197],1972, 1973, 1974, 1975 and 1976, the rates used were 5.95, 5.93, 6.00, 6.40,6.65, 7.05 and 8.43. The estimated rate used for 1977 was 8.72.
1/ The Sri Lanka rupee, which had been linked to the U.S. dollar fromNovember 6, 1971, was re-linked to the Pound Sterling from July 10, 1972 onwardat a parity rate of E 1.00 = Rs 15.60. Parity rates with all other currencieswere determined from time to time by the Central Bank. The rupee was delinkedfrom sterling on May 24, 1976 and linked toa weighted basket of currencies.
2/ This rate currently applies to about 35% of current receipts of foreignexchange and 60% of current payments.
This report was prepared by an updating mission composed of Messrs. M. van der Mel(_Chief of Missior,, K. S. TLateel an' . S. Lee. Thle -4-.-A.issi vis d Sri T-r.ka from
November 5 to 24, 1976 and the analysis is based mainly on information provided tothp missinn at that time.
FOR OFFICIAL USE ONLY
SRI LANKTA: COUNTRY ECONOMIC MfEMORAINTDUhM
TABLE OF CONTENTS
Page No.
List of Tables in the Text
Country Data
Map
I. BACKGROUND TO THE PRESENT SITUATION .... 1............. IIntroduction ........ ........................... 1Social Objectives and Achievenents .... ......... 2Agricultural Production ..... ................... 4Land Reform ........ ............................ 7Industrial Production ...... .................... 8Resource Use and Related Policies .... .......... 9
II. THE ECONOMY IN 1976 AND PROSPECTS FOR 1977 .11
DEVELOPMENTS DURING 1976 .11Broad Trends .11Production .11Public Finance .13External Trade and Payments .15
OUTLOOK FOR 1977 .19General Prospects .19Production .19Public Finance .20Other Budget Prooosals .22External Trade and Payments .22
III. ECONOMIC POLICY ISSUES .............. ................ 26Acririiltnirp - Trpp Crnn Srtnr ................t. 26
Agriculture - Food Crops .......... ............. 28Industrial Production andi PrivateP Sector Cl iTmnat 29
External Trade and Payments .... ................ 31Domestic Resource Mobilization .34
Monetary Stability and Price Controls .......... 34Unemployment o6-............ ,-- 35
Investment Planning and Project Preparation .... 35Conclusion ..........................
Statistical Appendix
This document has a restricted distribution and may be usd by reciobnts only in the performanceof their official duties. Its contents may not othorwisa be disclosed without World Bank authorization.
LIST OF TABLES IN THE TEXT
Page No.
Table A: GDP and Its Composition, 1966-1975 .... ............ 2
Table B: Economic Indicators, 1960-1975 .................... 5
Table C: Production, Imports, Total Supplyand Self-Sufficiency in Foodgrains .... .......... 7
Table D: Changes in GDP and Its Composition,1970-1976 ....................................... 11
Table E: Summary of Budgetarv Onerations,1974-1977 ....................................... 14
Table F: Balance of Payments, 1973-1977 .................... 16
Table G: Tree Crop Exports, 1970-1977 ...................... 17
Table H: Major Categories of Imports, 1970-1977 .... ........ 18
Table I: Financing of External Gap, 1977 .... ............... 24
Page 1 of 2 pages
COUNTRY DATA - SRI LANKA
AREA POPIUIATION 1/ DENSTTY65,607 sq km T13.8million (mid-1976) 210 per sq km (1976)
Rate of growth: 1.7 % (from 1971 to 1976) 554 per sq km of agricultural land (1974)
POPULATION ChARACTERISTICS (1974) HEALTH (1970)Crude birth rate (per 1,000): 27.3 Population per physician, 3,690Crtude death rate (per 1,000): 8.9 Population per hospital bed, 330Infant mortality (per 1,000 live births): 45
INCOME DISTRIBUTION (1973) DISTRIBUTION OF LAND OWNERSIIIP% of national income, highest quintile, 45 % owned by top 10% of owners
lowest quintile, 13 7/ owned by smallest 10% of owners
ACCESS TO PIPEDn tATSP (1971 ACCESS TO ELCRICITY (1971,°/ of population - urban 77 % of dwellings -total .. 9
- rural 5 -rural.. 3
NUTRITION (1973) EDUCATTON (1970)Calorie intake as % of requirements: close to 100 Adult literacy rate, 78%Per capita protein intake (grams per day): 45 Primary school enrollment, 89%
2/CNP PER ZAPITA in 1975: US $150
GROSS NATIONAL PRODUCT IN 1975 ANNUAL RATF. OF GROW, H (X.constant prices)
US$ Mn. % 1960 -65 1965 -70 1970-75
GNP at Market Prices 3,367 100.0 3.9 5.0 2.8Gross Domestic Investment 525 15.6 - 2.0 14.1 - 1.0Gross National Saving 354 10.5 - 1.2 13.2 - 8.]Current Account Balance - 186 - 5.5Exports of Goods, NFS 628 18.7 2.3 0.8 0.0Imaports of Goods, NFS 799 23.7 - 4.3 - 2.0 - 7.5
OUTPUT, EMPLOYMENT, ANDPRODUCTIVITY IN 1975
Value Added Em V. A. Per WorkerUS$ Mn. a Mn_ _ US$ ____
Agriculture 1,226 39.2 1.829 54,9 670 71Industry 3/ 507 16.2 0.367 11.0 1,381 147Unallcat 1,398 44.6 i.136 34.1 1,231 131TUnal located
Total/Average 3,131 100.0 3.332 100.0 940 100.0
GOVERNMT FINANCE
Central Government(RB. . ) % of GDP
1976 U9O-L2 1976
Current - 4,859 21.0 17.8Current Expenditure 5,333 23.1 19.6Current Surplus -27.1 17-8yCapital Expenditures 1,988 6.4 7.1External Assistance (net) 1.065 2.7 3.9
1/ Provisional estimates.2/ The per capita GNP estimate is calculated by the same conversion technique as the 1975 World Atlas. All other
conversions to dollars in this table are at the average exchange rate prevailing during the period covered.3/ Includes mining.4/ The sectoral distribution was assumed to be the same as for 1971.
not available
Page 2 of 2 pages
COUNTRY DATA - SRI LANKA
M.ONEY, CRFDIT and PRICES 1970 1971 1972 1973 1974 1975MT(Million Rs. outstanding end periodF
Money and Quasi Money 3,061 3,379 3,917 4,093 4,504 4 712Bank Credit to Public Sector 2,571 2,724 2,900 2,679 2,532 2,828Bank Credit to Private Sector 1,617 1,760 2,186 2,164 3,235 3,403
(Percentages or Index Numbers)
Money and Quasil Money as ofo GDP 26.0 28.3 30.5 27.1 21.0 19.7General Price Index (1963 5 100) 127.0 130.4 138.6 152.0 170.7 182.3
Annual percentage changes in5General Price Tndex 59 2.6 6.3 9.6 12.3 6.8Bank credit to Public Sector 9.6 6.0 6.5 7.6 - 5.5 11.6Bank credit to Private Sector 10.0 8.8 24.3 - 1.0 49.6 - 14.2
BALANCE OF PAYMENTS MERCHArNDISE EXPORTS 1976
1974 1975 1976'- US S Mn. X(Millions UJSS)
Exports of Goods, NFS 572 628 629 Tea 249 44.5Imports of Goods, NFS 735 799 657 Rubber 106 18.9Resource Gap (deficit = -) -163 -171 -28 Coconut Products 44 7. 9
Interest Payments (net) -16 -15 -18 All Other Commodities 161 28.7i'ori ers' Remittances - - - Total 560 100.0
Other Factor Payments (net) -Net Transfers - - _Balance on Current Account -179 -186 -46
Direct Foreign Investment 1 - - EXTERNAL DEBT (US $ Millions)Net MILT Borrow-ing 44 87 78 December 1974 December i975
Disbursements (70) (126) (112) (provisional)Amorcization (26) ( 39) ( 34) Total Outstanding 867.8 997.4Subtotal 4i 87 78
Capital Grants 42 77 49 Total OutstandingOther Capital (net) 101 21 -15 and Disbursed 579.4 600.7Other items n.e.i. -1 -3 -Increase in Reserves (+) 3 +8 -4 +66 DEBT SERVICE RATIO for 1975-/ 20.3%
Gross Reserves (end year) 78 58 92Net Reserves (end year) -80 -84 -18
RATE OF EXCHANGE IBRD/IDA LENDING, December 31 1976 (Million US$):
1967 - 1971 Foreign Exchange Entitlement IBRD IDAUS $1.00 - Rf.5.9
3Certificate (FEEC) Ratef
Rs 1.00 = US$0.17 Outstanding & Disbursed 36.0 43.61968 uS$1.00 a Rs 8.54 (44% FEEC) Undisbureed 7.8 36.9
End 1972 1969 to Outstanding including1971 US$1.00 - Rs 9.22 (55% FEEC) Undisbursed 43.8 80.5
US$1.00 = Rs 6.70 1972(end) US$1.00 e Rs 9.92 (55% FEEC)Rs 1.00 - US$0.15 1973(end) US$1.00 - Rs11.12 (65% FEEC)
1974(end) US$1.00 - Rsll.04 (657. FEEC)1975(end) US$1.00 D Rs12,72 (65% FEEC)
End 1973 19 7 6
(end) US$1.00 - Rsl4.62 (65% FEEC)
US$1.00 = Rs 6.75
Rs 1.00 = US$0.15
End 1974
US$1.00 = Rs 6.69Rs 1.00 - US$0.15
End 1975
uS$1.00 a Rs 7.71Rs 1.00 - US$0.13
End 1976
US$L.OO e Rs 8.86Rs 1.00 a US$0.11
1/ Preliminary estimate as of mid-February 1977.2/ Repayable in foreign currencies and with a maturity over one year.3/ Includes errors and omis8ions.4/ Ratio of debt service to exports of goods and non-factor services.
South Asia ProgrD:ams DepartmentFebruary 28, 1977
IBRD-3839Reo- r9 r9 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~JULY 1974
KrznkescnturSi _~
rCS +\\ ~~SRI LANKAI0 t > > ) 9 -~~~~~~~~~~~~~~~~~~~~--District boundaries| |
< S ) )~~~~~~~~~~~~~~~~~~~~~~~- Ag'ro-,chmatIc zone j
A I L F tN A 17\-fl-uto 1,n Cr.ml/
Tal21rnonNNJr / l t;jX N C_ \ / ) ~~500 -3000
) NVAVUNIYA |tvr500-
il@ 0 oS / H ' j| / j3 ~~~~~~~~~~~~~~~~~~~0 S 10 3p 4 4 6 f
S , lavumy/aN 1X1/1 ''; L X I~~~~~~~~~~~~~~~~MLE
| I;7 A N U i 3/R H A: A r yF S
/ n dQ/ IC7 n k /\\o\ tFULv PiNNARUWA \
X } N <;lo~~~~~~~~~~~~~~~~~~~~~~~Bialoa
\ 7\ I A Kuruneg:r 0Mgll .? m a/t
AACUB\lT,TRLAW E t>0h,T)PA; egom6 < J AMPARAI |
nB xdwn Foun 01 dGl ZO~~~~~~R Ab 10"'VfiU 41<
-vl@We¢x.dinall2=lt 8sM \ < t \> tOpo~~~~~~~~~~~~~~~~ ~~Nah / s> 3 d \ XIlieiljflilliiilliiILggl eVtXRY ,A -Brgili,ulilil~ ~ ~ ~ ~~ ~~~~`-a ii,i:lii!jllliFl;lllll MONARAMl LAW t X
/nd/on 9 Oreon il e,o' e^ eja l~~~~~~~~ _~l '
I. BACKGROUND TO THE PRESENT SITUATION
1. introduction. Sri Lanka's chronic economic difficulties can betraced principally to two basic characteristics of the country's economicand social system: the structural over-dependence on three primary exportcommodities (tea, rubber and coconuts) and a political commitment to far-reaching welfare and redistributive objectives not matched by a sufficientgrowth in output. The difficulties have been compounded by steadily deteri-orating terms of trade and, especially in recent years, severe droughts.Substantial efforts have been made by successive governments to diversify theeconomy by stimulating domestic food production and by expanding industry.But these efforts have been inadequate to offset the effects of various ad-versities and to transform the economy from a state of semi-stagnation to oneof more dynamic growth.
2. The progress in social fields has been considerable. The commit-ment to social objectives has for the past quarter century found, in varyingdegrees, its expression in the supply of mass consumption goods, such astextiles, at low prices and the distribution of a minimum quantity of foodfree or below cost. The provision of public services, mainly education,health and transport, has also been free of charge or substantially sub-sidized. Another factor contributing to reduced income differentials hasbeen a relatively high statutory minimum wage level.
3. The main financial basis of these social policies has been the earn-ings of the export sector. Unfortunately there has been a nronounced weaken-ing in the market for tea and rubber since the mid-fifties. The effects onthe earnines of the traditional export scrtor toopthpr with tho inqliffiripnt
progress in establishing new sources of growth, seriously affected the abilityto generate savings and foreign exchange Thic 4in turn, was one nf the main
reasons for inadequate capital formation and economic growth in the past twodpradpe. Tn addition, the rcnsu1mption ratio, having declined in the secondhalf of the 1960's, moved up during the 1970's (Table A), at the expense oftheo donmtc capabii;ty ton f4nance capital formation. A consequence of Fhis
pattern is the high unemployment rate, about one-fifth of the labor force,much of wrh4ich is concentrated aLg the younger among "-e younger age groups. Between 196i970
and 1974-75, real GNP growth averaged 2.7% per annum, compared to the annualpopulation growth rat-e of I!. 7%.
4..LLLOL Aa UnLIbckroULU Uof LoW inLLLUUcm e LU adIaLmot saLgnatir,g oJLuctLiv-
ity, in 1973-75 the country had to face the shocks generated by the oil crisisan.U thLe subsequent worLdUwiLUe iLiidLioU anU recession. Sri Lanka was among thegroup of developing countries most seriously affected by these events and inI n,,. I . I IA A1974 experienced a four-fold increase in its balance of payments dericit oncurrent account. In this period the Government took a series of measuresto reduce the burden on the budget of subsidies on food and transport andadjusted prices of key consumer goods such as petroleum products. But theresults were minor in relation to the magnitude of the problem and 1975 sawanother large external current account deficit. Although the terms of exter-nal borrowing in 1975 were more favorable than in 1974 and there has been
- 2 -
some improvement in the balance of payments and terms of trade in 1976,the need for structural economic adjustments, discussed below, remains urgent.The difficult economic situation has created at times elements of tension,reflected in recurring strikes and sporadic social unrest. This in turn hastended, in the view of the Government, to reduce the room for maneuver.
Table A: GDP AND ITS COMPOSITION, 1966-75(percent)
1966 1970 1972 1974 1975
GDP at market prices (Rs mn) 8,371 12,812 13,789 21,430 23,878GDP 100.0 100.0 100.0 100.0 100.0External Resources (net
imports of goods & NFS) 3.5 2.2 1.3 4.8 5.0
Total Resources Available = 103.5 102.2 101.3 104.8 105.0Total Use
Consumption, 89.2 82.0 84.8 90.9 89.5of which, private 75.3 69.1 70.9 77.9 78.9
Gross Fixed Capital Formation 14.2 18.4 16.0 13.9 15.5Public 7.3 8.0 6.1 5.4 6.4Private 6.9 10.4 9.9 8.9 9.1
Changes in Stocks (incl. residual) 0.1 1.8 0.5 0.1 0.1Grossqq C.qnita1 Fornition
(= Use of Savings) 14.3 20.2 16.5 14.0 15.6Domestic Savings /a 10.8 18.0 15.2 9.1 10.5
a Not adjusted for effects of dual exchange rate system (see footrnote,page 6). With such adjustments, the savings ratio would be lower.
Source: Table 2.3
5. Social Ob4-ctives and Ach.evemLLenls. AS statcd above, successive
Sri Lankan governments may rightfully claim substantial accomplishments int1h l fedL .I n omeU * ItUM Lb ILILoe evenly d istrziuted tha in mzany developing
countries, social services have been provided on a substantial scale and pop-ulation growthi [las been reuuceu considerably. In addition, in conformitywith the desire to obtain more direct control and with the philosophy thatthe benefits of economic progress should be shared by all, public ownershipand operation have been extended to large parts of the economy. The mainshortcoming of social policies has been that they have tailed to provideadequate employment for the expanding labor force.
6. Statistics on income distribution are available only through 1973(Table 2.4). They indicate that during the decade from 1963 the share beforetaxation received by the top 10% income earners declined by almost one-quarterto 30% whereas that of the lowest 40% rose from 12 to 15%. Minimum wages inthe private sector from 1974 have risen substantially in real terms and are
- 3 -
now about 20% above the level of 1970 (Table 6.1). Regulation of prices,tax and subsidy measures, labor legislation and the provision of public sectoremployment all remain key elements of the incomes policy pursued. To protectlow income earners, price controls have recently been substantially expandedand since late 1975 prices of the main subsidized food items, rice, flour,bread and sugar have been reduced. To assess the full impact of income re-distribution measures, account should also be taken of the provision on acountry-wide basis of health care and education free of charge and of publictransport on a subsidized basis.
7. Health measures have been combined with population control to pre-vent an acceleration of population growth resulting from better health con-ditions. The natural rate of population growth, which stood at about 2.8%in 1960, has fallen to below 1.9% per annum in recent years and taking ac-count of net outward migration the increase in population has been even lower(Table 1.1). The family nlanning Drogram. introduced in 1967 as an integralpart of maternal and child health care, the high literacy, the good healthstandards nnd nnsshihv nthpr fnrtcrs- rnmhined to effpet s sianificnnt dec-line in the birth rate, which had begun in the early 1960's 1/. Unfortunately,there iA imminpnt danger that an acute shortae nf finanrinl rpnsirceps may
lead to some reduction in health standards. Recently, a sharp increase hasbeen reported in incidence of malaria insome parts of the island, butthis is mainly a technological problem. 2/ Nutritional deficiencies areminor.
8. To A"rv living st.-andard -an .po,ti rural ara,the rov-iMS .ttIJ W-o xv a~aiitu _I - iL CU 4C.LSJC utO C&I.. ~LL I.u x at'a LLC S-V
ernment has followed several approaches, including the Divisional DevelopmentCounciLsL \JJLJD D IC prograru, the duecentraitizedu capiLta'L expendUiiture uuudget and thLe
introduction of various forms of cooperatives, the latter in part associatedwith settl emerit schl'emes. Thie JeDDC program, starteu in 1971, [Ias Deen expandedgradually and by mid-1976 almost 1,700 small projects were in operation,mostly in industry and agriculture. The program was reorganized in 1975and a DDC now exists for each of the 145 parliamentary constituencies (elec-toraLes). The decentralized capital budget was introduced from 1974 ana
1/ in spite of reduced population growth, present overall populationdensity at about 210 per square km is one of the highest for astill predominantly agricultural economy. The dry zone, whichcomprises 77% of the land area and contains 40% of the population,has a higher natural population growth rate than the more urbanizedwestern wet zone. Part of the explanation of the decrease in thebirth rate is the trend towards later marriage, a reflection ofhigh unemployment. Infant mortality at 45 per 1,000 live birthsis still high and has remained stationary for about a decade.
2/ This is due to growing mosquito resistance to DDT.
-4-
focuses on local infrastructure requirements 1/. After the Land Reform in1972, the management of a substantial share of the lands taken over was en-trusted to cooperatives; these have also been established for many settlementschemes, on both newly irrigated and former tree crop lands.
9. Successive governments have also built up an extensive public enter-prise sector, by successive nationalizations and the establishment of newpublic sector units. In recent years, the most important expansion of thepublic sector has resulted from the nationalization of estates, described be-low. Altogether, about one-half of the value added in manufacturing, virtuallyall of the tree crop estate sector, all public utilities and almost all bankingservices are now in public hands. However, the Government on various occasionshas also reaffirmed its belief in the useful role of private sector units,in particular smaller ones, in agriculture, industry and the services sector.
10. Agricultural Production. During the 1960's, considerable progresswas made in increasing food self-sufficiency, on the basis of an enlargedacreage and rising productivity. Paddy production was substantially modern-ized by the growing use of fertilizer, improved seeds and machinery. Incontrast, production of the tree crop sector, accounting at the time formore than 90% of the value of merchandise exports, was virtually stagnant,rising by only 1% per annum. In volume terms, rubber exports expanded, butthose of tea remained stagnant and those of coconuts declined. Altogether,during this period GDP went up by about 4.5% per annum, based on annualgrowth rates for food production of more than 5% and for total agriculturaloutout of some 3"O (Table B).
11. Tn the first half of the 1970's, howpver, npddv nutnut has hben
declining. As conditions in the tree crop sector deteriorated further thetotal annual real growth rate of agriculture was reduced to about 1%. Thestagnation and, in some years, substantial drop in paddy output was mainlycaused by recurring drought conditions. Subsidiary foodstuff production,which was specially stimulated from 1973, on the whole fared better. Intree crops, declining production of rubber was added to continuing adversetrends for tea and coconuts (Tables 7.1 and 7.5).
I/ Actual employment generated by the DDC program since its inceptionthrough September i976 was 31,100; target empioyment (inciuding proj-ects not yet implemented) was 62,000. The program is supported by bud-get allocations (Rs 50 million in 1976 and Rs 75 million in 1977).DDC projects are intended to be financially viable. The decentralizedcapital expenditure budget in 1974 started at a level of Rs 175 mil-lion. The budget allocation for 1977 is Rs 300 million, almost 12%of the total capital expenditure budget (see Table 5.6).
- 5 -
Table B: ECONOMIC INDICATORS, 1960-1975
Output (Annual Average Growth Rate) /a1960-61 to 1969-70 to1969-70 1974-75
Real GDP 4.6 2.7Agriculture 3.2 1.4Manufacturing production 6.4 1.7Paddy (bu.) 5.7 -1.5Food 5.2Tree crops and minor agricultural products /b 1.3 1.8
Trade (Current US$: Annual Averaze Growth Rate)1960-61 to 1970 to1969-70 1975
Exports -1.3 10.3Imports 0.9 14.1Agricultural exports -1= 7 Ic 6=.9Agricultural imports 2.2 /d 17.4
Prices, Foreign Trade (1969-70 100)190tf 1975
LIExports 104 169LIAU I VLUt .LVUJ
Imports 61 316m r m i~~~~~~~~~~ 1,t~~~r c1Lerms of irade I17 53
/a At 1959 factor costs.
/b 1960 to 1970, and 1970 to 1974-75.
/c 1960 to 1969-70.
/d 1963 to 1970.
Source: Department of Census and Statistics, Central Bank of Ceylon, andExternal Resources Division, Miinistry of Planning and EconomicAffairs.
12. The disappointing production trends in the tree crop sector, al-though also influenced by droughts, were primarily the reflection of in-sufficient profitability, in turn caused by declining export prices, a high
- 6 -
tax burden (including the application to tree crop exports of the unfavor-able non-FEEC exchange rate 1/) and sharp mandatory increases in the wages ofplantation workers in 1974 and 1975. There was also the growing prospect ofnationalization which reduced incentives for investment or even maintenance.More general factors which had an adverse effect on both tree and foodcropproduction were insufficient foreign exchange allocations for important inputssuch as spare parts, tractors and trucks and weaknesses in supporting govern-ment services and their coordination.
13. To arrest the deterioration of the tea sector, towards the endof 1973, the Government introduced a number of additional incentives, in-cluding higher subsidies for fertilizer, tea chests and replanting 2/. Thiswas followed, more recently, by an increase in replanting subsidies and lowerexport duties for rubber and by the total removal of export duties for coco-nuts. Despite these measures, replanting rates of all three tree crops haveremained substantially below expectations.
14. The disappointing output trends in the agricultural sector havemade it necessary to continue large-scale food imports (Table C). Togetherwith the adverse movements in the terms of trade, this caused a sharp con-traction in the value of the traditional surplus of major tree crop exportsover food imports. This stirnlus, which between 1960 and 1970 hnd alre2dvfallen from $203 million to $133 million, fell to $45 million in 1975. Morerecently, there has been a nartial recoverv becriis nf a dpclinp in fnnd imn-
port prices (see Tables G and H below).
1/ A dual exchange rate system has existed since May 1968. Under thissystem, certain imports require the purchase from the Central Bank ofFEECs (foreign exchange entitlement certificates), whereas the exportof certain items gives entitlement to the receipt of FEECs. Since1973, the FEEC rate has been 65% of the value of the transaction.The rate currently applies to about 60% of import payments (mostly forgoods and services other than food and fertilizer) and about 35% ofexport receipts (mostly from non-traditional items, including services).
2/ Earlier incentives included more limited subsidies for fertilizer andreplanting, a factory development subsidy scheme, low-interest creditand tax concessions. About two-thirds of the tea bushes are morethan 50 years old.
Tabie C: PRODUCTION, IriPORTS, TOTAL SUPPLY ANDSELF-SUFFICIENCY IN FOODGRAINS
('000 metric tons)
19761960 1970 1972 1973 1974 1975 Est.
A. Rice Production 612 1,098 890 892 1,089 784 855
B. Imports, total 688 955 740 780 823 992 9141. Rice 541 534 270 343 302 457 4252. Wheat (Flour) /a 147 421 470 437 521 535 489
C. Total Supply(A+B) 1,300 2,053 1,630 1,672 1,912 1,776 1,769
D. Self-sufficiency
(%)Rice (A/A+B.1) 53 67 77 72 78 63 67Rice and
Wheat (A/C) 47 53 55 53 57 44 48
/a Including flour produced locally from imported wheat.
Sources: Table 2.10. Vol. I of IBRD Renort No. PA-134a- Aerirtlttilral SectorSurvey of the Republic of Sri Lanka for 1960 and 1970, and ExternalResources Division; Ministry of Plnnnine and Eronomic Affairs.
15. Land Reform. Land reform was rArried out in two phases, the first
under the Land Reform Law of 1972 and the second under the Land Reform (Amend-ment) TLw of 1975. The first phase was limited to holdings of individuals;it reduced the maximum size of private paddy holdings to 25 acres and that ofmixed holdings to 50 acres; incileding a paddy component of not more than 25
acres. In this phase, implemented in 1973 and 1974, about 560,000 acres werevested with thte Lan"d Reform. rom-issioner. Some 60% of hese 1-anAs were u.dertree crops and 30% were jungle and uncultivated lands. The State PlantationCorporation (SPC) was given about 40 of the larger well=maintalned tea andrubber estates, covering about one-tenth of the tree crop land taken over.
16. The management of a large share of the remaining lands was placedin the hanAs o f cooperativeLs. TLh tLhre UU.L±.LUL groups L cooperaLives arethe electorate level cooperative societies, which are now in charge of about30%V. ofLL uthe acreage talken overUL LLLe 1972 Law, cooperative settliements(Samupakara Janawasas; 9%) and the Upcountry Estate Development Board(Usawasama; 12%). Cooperative societies belonging to the first group areconfined to an electoral unit; a board of directors, chaired by the localmember of rarliament, is responsible for tne proper management and developmentof the land. The Janawasas came into existence by the conversion of severalestates, particularly in the coconut area, into cooperatives; their workers
- 8 -
became the members. Usawasama manages on a cooperative basis a number of
mostly upcountry tea and rubber estates. Beyond the four major organizations
the lands nationalized under the first phase were assigned to some 15 other,
mostly small, groups including 20,000 acres distributed among villagers.
17. The second phase of the reform covered another 415,000 acres. It
involved the nationalization and allocation of the holdings of public compa-
nies, consisting of rupee and sterling companies. Contrary to the experience
under the first phase, there has been relatively little fragmentation of these
holdings. About 160,000 acres have been assigned to SPC and over 230,000 acres
to the newly established Janatha Estates Development Board (Janawasama).
The Land Reform Commission appointed the Agency Houses which were managing
the estates prior to takeover as statutory trustees for a maximum period of
two years. To ensure continuity of management, the Government guaranteed,
until the end of 1976, superintendents and other staff of plantations the
same terms and conditions as existed prior to vesting. Marketing continued
to be handled by the Agency Houses. Janawasama received an initial capital
grant of Rs 10 ml111ion, in addition to access to bank credit.
18. Negotintinns over the terms of comDensation of foreign-ownedplantations (sterling companies) were concluded in 1976. Under the agree-
ment, payments totalling Rs 82.5 million (about $10 millinn) will be made
over five years, starting end March 1977. Installments will be tailored to
past remittances of dividends plus head office expenses= Negotiations nn
compensation have just started for rupee companies. The process of com-
pensatlon is also underway for lands taken over under the first nphse of
the reform. 1/
19. Industrial Production. Manufacturing output expanded at about 6%1 1~~~~~~ 1ntn-7rA k..-
during the period 1960-61 to 1670 but, as in thUe case of agriculture,
there was a marked slowdown during the first half of the 1970's. Activity
in the organized private sector has beern depressed. In the public sector,
many corporations have suffered from low utilization of capacity and in-
sufficient profit generation, reflecting a variety of problems. During the
period 1971-75, according to Central Bank survey data, total employment in
manufacturing industry declined about 3%i, due mainly to a decline in employ-
ment in the food, beverage and tobacco industries. Excluding these indus-
tries, manufacturing employment during this period rose by over i6b.
20. The private industrial sector comprises about 2,300 registered
units of widely differing size; the average employment is about 35 persons.
This sector has been beset by a high degree of surplus capacity, in part
1/ A Compensation Board has been set up to negotiate with the former
Sri Lankan owners affected by the first phase of the reform. So far,settlements have been arrived at in about 800 of the total of 5,400
cases. Payments totalling Rs 25 million have been made to some
200 former owners. Owners are also entitled to accept land reform
bonds as compensation.
- 9 -
because of inadequate foreign exchange allocations. Investment has beenlow because of uncertainties on the part of entrepreneurs about governmentintentions regarding the future of the sector. In the 1976 budget speech,a number of measures were outlined to stimulate private industrial investmentand to improve confidence, and these measures appear to have met with somesuccess. In the public sector, many corporations have had difficulty inobtaining approval to adjust product prices in line with increased productioncosts. Another widespread problem has been overstaffing. Efforts have beenmade to increase the efficiency of corporations by such measures as more fre-quent nperformance reviews; more rigorous aiiditing nrocediires and the tight-ening up of reporting requirements, but results have been limited.
21. On the positive side, efforts to promote non-traditional exportshave met with considerable success. Between 1970 and !Q75 thsce expotC in-creased three-fold at current prices and their share in total exports doubledfrom 12% to 24 c (Table 9). The rise in exportvalue -was due to oth prilce
rises, and substantial volume increases. This progress in the non-traditionaleApolU I .1 Ctl I..a&t US n LL.e LLtJuted 1 CLa
6rgJ LU U1feC oltt CL ern
6VL a paca
6c ge £ fiOscll
and exchange incentives. During the earlier part of the period gems werethe r.ost 'i.portarnt item. contrib-uti-ng to export growthl, bLut rmore rec-ently otherLile LIU~L .LIpLLIL .LII L LL UUi1 LU CUL L _L WL1 UL h LLL iI1 ULitC
non-traditional items, including coconut by-products, spices and a range ofmanuLactureu prouucts, also [have recordueU large risfes.
-eelate' Po`cies. During the 19U's, the share
of domestic output devoted to consumption rose rapidly, from 82% of GDPin 1970 to around 907% in 1974-75; domestic savings declined corresponaingly.Gross fixed capital formation went down steeply, from over 18% in 1970 tobelow 14% in 1975, followed by a partial recovery to 15.5% in i975 (Tabie A).The fall in domestic savings would have necessitated an even more severedrop in investment were it not for the massive use of external resources in1974 and 1975, amounting to about 5% of GDP in both years. The rising trendin the share of consumption occurred only in the private sector and was par-ticularly sharp in 1974 and 1975. The relative fall in investment over theperiod affected both the public and private sector (Table 2.3). 1!
23. The rise in the share of private consumption was particularlymarked in 1974 and 1975. This shift was probably due in considerable partto the steep rise in import prices, which drove up the price level of domes-tic consumption.2/ Over a longer period of time, private consumption hasalso been stimulated by the Government's income redistribution strategy, des-cribed above. Within this strategy, tax, subsidy, price, wage and foreign
1/ Public finance data (Table 5.2) indicate for 1975 a higher capitalexpenditure ratio than national accounts data (Table 2.3). The dif-ference is explained in part by the inclusion in the former of capitaltransfers and net lending. The recovery was based exclusively onborrowing; public savings were negative.
2/ For this reason, there was no real improvement in the standard ofliving of the average Sri Lankan.
- 1n -
exchange policies all played their part. Income redistribution through bud-getary means since the 1960's essentially has been accomplished by the useof tax revenue from the tree crop sector and higher income groups to finance
oca l l 1 . t.; aI Su bsi Udi L o t n m er . g.oos..O , l. -A t A. . i.n the ; LL
end wiping out public savings. Price controls and minimum wage legislationsqueezeAd profits anA in conequnc --he savng of both puli-ndpivt5 qeLL~th p i A.t.L~ .iU £LL Uu~tU LL z L[_ ~Ca V ~LlIr tJ I. Li CL.L L PUU .L.L%. aILLL J)1. CLV a
sector enterprises. The dual foreign exchange rate (FEEC) system since thelate 1960's gave rise to all implied tax OLI the e APULL ctor, by denying itthe more favorable exchange rate, and to a concealed subsidy on food imports,wIILl'i benefitted irom the low import exchange rate.
24. The disappointing trend of public investment after i970 has beendue for the most part to the lack of public savings. The latter have alsosuffered from the fact that the substantial investments in public sectorenterprises since the 1960's have made an insufficient contribution to outputand public revenues. in the private sector, the decline in investment wascaused primarily by the lack of confidence of entrepreneurs in their futureand, in the tree crop sector, by lack of profitability.
25. Over time, the need to continue importing large quantities of foodin combination with stagnant or declining real export earnings has progres-sively reduced the capacity to import essential inputs and capital goods.From 1973 onwards the drastic deterioration in the external terms of tradecaused by world wide inflation, the oil crisis and recession further squeezedseverely the import capacity of the country based on its own export earnings.The sharp rise in the availability and use of external resources in 1974 and1975, noted above, cushioned the adverse effects on the economy. In addition,the Government put into effect a number of unpopular and politically sensitivemeasures to reduce consumer subsidies and increase prices which resulted inslightly reducing the growing gap between national production and use ofresources. 1/
26. The high levels of foreign aid in recent years have provided abreathing spell to adjust the economy to fundamentally changed external cir-cumstances. Economic developments in 1976 and the outlook for 1977, examinedin the second part of this memorandum, do not alter the conclusion of earlierBank missions that maior policy actions are needed to strengthen the vinhilityof the economy. The major economic policy questions which have to be addressedare reviewed in the third part nf the memnrandiim= The essential requirementis to reorient policies towards the achievement of a faster rate of growth inoutnipt; hasd in turn on higher investmont and dTnestin csir-ngs rates. Con-tinued foreign aid and technical assistance on highly concessional terms areneeded to supporvt thisc transformation. The_ countr cantutanfoeg------- t -hi.. -...tdLil. 7l_ liL I.OO O Liii C.L6L1
borrowing on non-concessionary or commercial terms at recent high levelswithout accumulating unacceptably high levels of external debt accompaniedby a mounting debt servicing burden.
1/ These measures included reductions in the rice, flour and sugar rationsandshrp lncrease in the price of flour, bread, sugar, and petroleum
products and in bus and railway fares. The price increases were cushionedby wage increases for iower-paid workers. Also, the official procure-ment price paid to farmers for paddy was raised twice.
- 11 -
II. THE ECONOMY IN 1976 AND PROSPECTS FOR 1977
Develonments during 1976
27- Broad Trendse Economir growth was sluggish last year, with a real
per capita growth rate of less than 1%. A major reason was the continuingdrought, wThich affected both paddy and tree crop production. Tn industry,output in the large-scale private sector rose modestly but that of the publicsector very little. The Covernment's budget position deteriorated markedly;
current revenues fell below estimates, in part because of lagging imports,and expenditures ran substantially higher than assumed in the budget. Monreysupply increased 25% during the first eight months, mainly because of therise in external reserves anu the 'L inancLciLg of part Of the bUd geAet df4
through money creation. To counter inflationary trends, private creditexpanslon was tightened. The olficial cost of living index rose only some2%, but the true extent of price increase must have been considerably higher.Price controls spread in 1976 and black market activities reportedly grew.On the other hand, the balance of payments on current account showed a muchsmaller deficit than forecast earlier and external reserves rose signifi-cantly. Imports fell greatly short of expectations; tree crop exports weredown in volume, but this was offset by higher prices. With tea and rubberprices improving strongly over the year and the price of food imports falling
sharply, Sri Lanka's terms of trade in 1976 fared better than they had inseveral years.
28. Production. The growth in real GDP in 1976 was 2.5% compared with3.6% in 1975. The slowdown in overall growth was due mainly to the severedrought. For the first time since 1971 growth fell below 3%. Natural pop-ulation growth at less than 1.9% was about the same as in 1975, but repatria-tion to India was higher (Table 1.1). The real value added in agriculture
Table D: CHANGES IN GDP AND ITS COMPOSITION, 1970-76(at constant factor cost)
Annual Change (percent) Percent of GDP1970-71 /a 1970-71Average 1974 1975 1976 Average 1974 1975 1976
Gross DomesticProduct 2.2 3.2 3.6 2.5 100.0 100.0 100.0 100.0
Agriculture 3.3 5.0 1.2 -3.8 34.3 33.1 32.2 30.3
Manufacturing 4.6 -4.1 7.5 1.3 13.9 12.6 13.1 13.0Mining 10.3 -28.2 29.8 58.5 0.7 1.8 2.2 3.4Construction 4.8 7.1 -9.0 5.2 5.7 5.1 4.5 4.6Services 2.5 5.3 4.6 4.5 45.4 47.4 47.9 48.7
/a Change over the average for 1969-70.
Source: Table u .1
- 12 -
declined by 3.8%. The increase in total manufacturing output was much lowerthan in the previous year because of the fall in tea and coconut processing.The value added in mining, however, showed a record rise, mainly in gem produc-tion; construction activities also gained strength as cement and other build-ing materials became more abundant.
29. In spite of the drought conditions, paddy output in 1976 (fromthe main winter Maha crop plus the summer Yala crop) was 60 million bushelsagainst the previous year's level of 55 million. The better than expectedoutcome was ascribed to the availability during the Yala season of ade-quate water from tank irrigation in three of the main rice growing easterndistricts. Fertilizer use rose sharnlv in resnonse to the increase inthe subsidy rate to 50%. Drought-stricken farmers were granted specialcrrdit (Rs 300 npr acre for on to 3 nrl-&. for land pnrpn2r2tion fprtili7pr
and seed paddies. Paddy procurement by the Paddy Marketing Board increasedsubstantiallv in 1976, helped by the removal of the ban on transport ofpaddy and rice. Acreage and production of subsidiary crops appear tohave changed little. The output of chillies, onions and potatoes rema-inedat high levels and profitable, supported by the continued ban on theirimports. The availability at 1-wer prics- of i-ported flour appears to have
had some depressing effect on the production of close substitutes such asmaize and sorghum. To stimulate output, these two crops were brought underthe guaranteed purchase price scheme.
30. In the tree crop sector, tea production in 1976 was down 9% andatu th"e lowest level fPor Ile 19070's I evere drough t a g a in was the 1ri. ain 1 -a us e ,
but the changeover in management after the land reform also played a role.Ie dUrop in output was sharpest in the mid-elevation tea areas wfhich were
most poorly managed before the land reform. The production of rubber roseuy J/. DotLli Ltd dllU LUu'uer benfLiLLeU d 1'roUms LsalLntially Iligiher prices.
The coconut sector, on the other hand, continued to suffer from both dec-liniLug output (uLi% below ;975), mainly again due to the weatner, and iow
prices.
31. The output of state industrial corporations remained largely stag-nant; weaknesses in management, government pricing policies, scarcity otforeign exchange, absenteeism and competition among trade unions continuedto be major problems. Government pricing policies resulted in a profitsqueeze and, in some cases, losses. The petroleum corporation, which accountsfor more than one-half of the output of state industrial corporations, in-curred losses in 1976; it continued to sell kerosene below cost. 1/ The tex-tile corporation operated at a loss for the first time; while average pro-duction costs were up 30%, selling prices remained unchanged. The mineral-based corporations (ceramics, cement, graphite and mineral sands), whichusually do relatively well financially, had to cut production due to dec-lining export demand. On the other hand, the oils and fats and leatherproducts corporations improved profitability.
1/ This item is used by large segments of the population for lightingand cooking purposes.
- 13 -
32. The private industrial sector on the woile a1d better WiLH a IRUoesL
increase in gross real output, as in the previous year; gross output at cur-rent prices rose by an estimated 16%. Some sectors, such as food and beverages,benefitted from higher foreign exchange allocations and better availability oflocal raw materials. The various relief measures and tax concessions grantedlast year seem to have contributed to some improvement in the general businessclimate, reflected in an almost doubling of investment applications to over1,200. But actual approvals were no more than about one-third, owing to thepoor quality of many proposals and the insufficient government machinery avail-able for their processing.
33. Public Finance. The budget data can be presented in two ways, inaccordance with the official classification of items (as used in the budgetdocuments and the budget speech) and on the basis of a reclassification. Inthe official classification, substantial amounts included under capital ex-penditures are current in nature and some current items (for a much smallertotal amount) in reality represent capital expenditures. For this reason,the Central Bank undertakes a systematic reclassification of the budget.To calculate the true current account position, some additional adjustmentsare needed (for full details, see Statistical Appendix). The most import-ant one is to eliminate the FEECs which the Government charges on its ownforeign debt amortization payments (this practice inflates the current accountsurplus; the amount involved is increasingly important, Rs 160 million in1977 alone). The following comments and Table E are based on reclassifiedand adjusted data. 1/
34. The overall budget picture for 1976 deteriorated considerably.Revised estimatps nf revenile wprp down frnm the originnl (apprnved) Pt-imitesand current and capital expenditures (the latter including net lending) wereup, Consequently, the originally estimated small current account surplus ofRs 19 million turned into a deficit of Rs 474 million and the total cash de-fic4t- boref fina-nian 4it-ema roas byr about- Re A650 millirn, to- PC , 497 million=
35. The increased cash defici- Twas expected to h financed in nprt from
larger external assistance. In addition, contrary to initial expectations,expansionary financing (money creation on behalf of the Government) was fore-seen in the amount of Rs 440 million. The actual deficit covered by moneycreation during the first 10 montIs of the year on the basis of Central Bank
data amounted to Rs 407 million.
1/ It would be useful to include in the annual budget speech a table showingreclassitied and adjusted budget data. A more basic step towards improve-ment of the budget presentation would be a revision of the budget docu-ments themselves.
- 14 -
Table E: S'UNMARl Y OF BUDGETARY OPERATIONS, 1974-77 //a(Rs million)
1974 1975 1976 1976 1977Budget Revised Budget
Estimates Estimates Estimates
Current Revenue 4,275 4,535 5,054 4,859 5,351(20.1) (19.1) (18.6) (17.8)
Current Expenditure /b 4,232 4,840 5,035 5,333 5,438(19.9) (20.4) (18.5) (19.6)
Current Surplus 43 -305 19 -474 -87(0.2) (-1.3) (0.1) (-1.8)
Capital Expenditure andNet Lending 1,181 1,925 1,798 1,988 1,967
(5.5) (8.1) (6.6) (7.1)Cash Deficit 1,133 2,227 1,774 2,427 2,032
(5.3) (9.4) (6.7) (8.9)
Financed by:
Foreign Grants and Loans (Net) 476 838 785 1,065 /c 1,078 /cDomestic Non-Market
Borrowing (Net) -54 379 - 60 70Domestic Market
Borrowing (Net) 686 827 993 863 884Borrowing from Banking
System (Net) -15 153 - 440 -Use of Cash Balances 39 31 -4 - -
/a The fiscal year corresponds to the calendar year. The figures inbrackets show ratios to GNP.
/b Including advance account payments.In These data are based on budaet estimates presented to the National
Assembly in October 1976, and are, therefore, not comparable with theu-da ted balaonce of p-ent- mao hoS- 4- T-i-l r -- A A --- J4__ 3 lo LA .- --- - ,° -S LLAU j jJMLILUA 1dU .b
3.1 and 3.12.
Source: Table 5.1
36. The main reasons for this severe worsening of the 1976 budgetsituatior. inculue th-efloigLU~L.LLI JALLLLU LI kuiJUW.LL1r,
- a substantial 'a'ld l in ievenue from FEECs because of iowerthan expected imports, a rise in the import share of non-FEEC items and higher payments of FEECs on non-traditionalexports;
- the disappointing financial performance of public sectorcorporations;
- increase in the net food subsidy by about Rs 55 million(see Table 5.5). The imports of rice cost less than
- 15 -
initially expected because of lower prices, but an originallyexpected profit on flour turned into a loss (the sellingprice of flour was reduced in July 1976 from Rs 1.10 toRs 0.86 per pound and that of bread from Rs I to Rs 0.80per pound);
expenditure on drought relief (Rs 165 million) and avariety of other unanticinated sunnlementaries.
37. External Trade and Payme.tsI Thte balance of payments positioneased considerably in 1976, with the current account deficit falling from$186i millinn in 19Q7S tn n ectImatoed $46A million (Tabea F)a Thisc wasc nnprtlydue to a better export performance than had earlier been thought possible.But the primary factor was a much lower level of imports than had beenenvisaged in the original import program, caused by the factors describedin pa. ra 4- beJlow. 1ALsoci'ated witL thILiS 10w impp[ort J Le.Lve-L was a conLtract-LonL inaid disbursements. The overall result was a significant increase in externalreserves.
38. EXPOL ts recorueu haruly any growth in 1976. Tree crop exports dec-lined in value by over 5%, their share in total exports dropping to 71% (TableG). All other exports recorded an 18% increase, due largely to a major expan-sion in gem and industrial exports.
39. Tea exports declined by 9% in value due to a sharp drop in thevolume of exports. Tea prices, expressed in dollar values, were 19% down inthe first half of 1976 from the first half of 1975. Prices, however, recoveredsharply during the second half of 1976 to the levels prevailing in early 1975.This is attributed to a modest growth in world production, rising coffee pricesand strong expansion of domestic consumption in India and Indonesia. Butaverage unit value realization for the year as a whole is down 4%. 1/
40. Earnings from rubber exports were up 14% in 1976 despite a sizabledrop in the volume exported. This reflected a steady improvement in rubberprices through the year, with average unit value realizations up 33% over 1975levels. Coconut exports fell 20% in 1976, due both to lower prices and adecline in volume.
41. The increase in exports other than tree crops is partly explainedby a continuing boom in gem exports which rose from $26 million to $31 mil-lion, despite the withdrawal of various tax incentives. The emergence ofHong Kong in the official statistics for 1976 as a major buyer of Sri Lankagems confirms, it is believed, the virtual elimination of smuggling activi-ties. Industrial exports other than petroleum, minerals and cement improvedon their 1975 performance, recording an impressive 63% growth rate. Thiswas mainly due to exports of seafood and ready-made garments, reflectingadditions to capacity, and in the case of seafoods. higher unit values.Petroleum exports recorded a 19% growth due to increased sales of aviationand bunkering fiuls. Enrnings from toutrisfm cnntinue to go up; for the year,a 34% increase, to almost $24 million, has been estimated.
I/ Ruipne earrings, howevr, wlll b11e highe because of the depreciaton ofthe rupee.
- 1 6 -
Table F: BALANCE OF PAYMENTS, 1973-77(current US$ million)
1973 1974 1975 1976 Ia 1977 /aEstimate Projection
CURRENT ACCOUNTReceipts 435 586 644 634 687
Merchandise, f.o.b. 367 511 555 560 608Services 68 76 89 74 79
Payments 1473 765 830 680 880Merchandise, c.i.f. 413 701 757 618 814Services 60 64 73 62 66
LNlet Current ccoun-38 -179 -186 -46 -193
r'AnTmrAT ArrcnT7muU,L L LtLJ flV bV'4U L 1
Receipts 254 391 431 358 294 /bGran,s 13 42 77 49 44Loans 52 70 126 112 166Suppliers' Credit 38 65 52 51 39Short-term Credits 122 126 103 108 45IMf Drawings 21 57 52 33 - f/L
Others 8 31 21 5 -
Repayments 200 204 249 246 167Loans 23 26 39 34 3iSuppliers' Credits 15 32 60 69 39Short-term Credits 101 118 M11 106 62
IMF Repurchases 26 24 24 24 16Others 35 4 7 13 i9
External Assets, n.i.e. id -16 -8 4 -66 /c
(- = increase)Unfinanced Gap (Residual) - - - - 66
/a Official estimate and projection as of mid-February 1977.
/b Estimates based on likely disbursements from existing commitments anddisbursements expected from new commitments.
/c No account has been taken of a possible change in external reserves,including IMF position.
/d Includes errors and omissions.
Source: Table 3.1
- 17 -
Table G: TREE CROP EXPORTS, 1970-77
1970 1973 1974 1975 1976 /a 1977 /aEsti-mate Proljection
VAlUE ($ million)
Te QQ I a -7 o A I -7/ /. n 9 A
Rubber 74 92 111 93 106 117Coconut A/ ' _) 22 cn CC /1 A L
Total /c 302 311 374 422 399 416
V U LU 1iL
Tea (miliion lbS) 459 454 Jo8 469 441 420Rubber (million lbs) 354 354 281 366 302 330Coconut /b (millionnuts equiv.) 873 417 466 845 803 600
/a Official estimate and projection as of mid-February 1977./b Coconut oil, dessicated coconut and copra./c Figures in brackets show the proportion of the total value of
merchandise exports.
Source: Table 3.2
42. Imports declined by 19% due entirely to a saving of $146 million(39%) in food imports (Table H). This is due to a sharp drop for the secondyear in succession of the prices paid for rice, flour, sugar and wheat imports.Food import volumes were slightly lower in 1976. The aggregate value of food,petroleum and fertilizer imports declined 26% in 1976, their share in totalimports falling from 71% to 63%. These three items absorbed 70% of merchandiseexports earnings as qgainst 95% in 1975. All other imports rose from $215million in 1975 to $226 million in 1976, a 5% increase in value, implying adecline in their volumes. This reflects the slow pace both of import licensingand license utilization, which is attributed to three factors: (a) the combi-nation of an extension of price controls and rising rupee import cost due bothto a depreciating rupee and world inflation; (b) administrative bottlenecks,particularly in the Ministry of Industries; (c) uncertainty about actual avail-ability of foreign exchange because of the practice of allocating it in in-stallments.
43. Total aid flows declined, from $202 to 9161 million, due mainlyto a decline in the value of food aid following the fall in world food prices.Aid dishi1rcment on onth rommodtitv nd pronect aid account were higher than in
1975 (see Table 3.12). But dependence on short term and suppliers' creditsremained high, reofllecting the persistent shortage of free foreign exchange.Net drawings on the IMF were substantially lower. Net international reservesin the first nine months of 1976 rose by $6" mIllion to -$20 million, reflect-ing the relatively comfortable overall payments situation.
- 18 -
Table HI: MAJOR CATEGORIES OF IM1PORTS 1970-77
1970 1973 1974 1975 1976 /a 1977 /aEstimate Projection
VALUE ($ million)
A. Food /h 179 204 311 377 231 271
B= Fertilizer 14 17 33 29 24 27
C. Petroleum 10 46 1 3i 194 137 147
D. Subtotal (A+B-C) 203 267 480 530 392 445
E. Oter consum,er
goods /c 42 32 34 27 (
F. 'ther raw materials(
and capital goods 144 125 171 188 (
Total Imports 389 424 685 745 618 814
A as percent of totalimports 46 48 45 51 37 33
D as percent of totalimports 52 63 70 71 63 55
F as percent of totalimports 37 29 25 25 n.a. n.a.
Volume: /d '000 metric tons
Rice 534 343 302 457 425 442Flour 377 371 448 462 385 575Wheat (grain) 55 83 96 93 128 140Sugar 244 194 43 62 47 68Fertilizer n.a. 307 358 183 225 288Petroleum(million barr.) 13.4 /e 12.7 11.0 10.8 10.6 10.5
/a Official estimate and projection as of mid-February 1977. Not strictlyconsistent with 1970-75 data which for values are based on customsstatistics.
/b Including all kinds of foodstuffs./c Including small amounts of unclassified imDorts./d Volume and value data are not fully comparable because of different
sources./e 1971.
Source: Tables 3.5 and 3.6.
44. Official foreign exchange rate policy changed fundamentally during1 976. The rupe was allUowe' lo lioat -Lo-w. Withl a wA-ak po-und seling d ing
the first half of the year. But when sterling continued to weaken, Sri LankaUC`eU'U readlisLiLcally tU Uelll'k WitLhs btelJing, as 01. Ma1ry L71U dllU LU Lto
its exchange rate in terms of a weighted undisclosed basket of currencies.W'nile the depreciation of tne rupee as a result of the link with sterlingwas beneficial to that part of external trade specified in non-sterling cur-rencies, exporters preferred the stabiliity offered by invoicing in sterling.The economy was thus faced with a situation in which three-quarters of ex-ports were invoiced in sterling and, therefore, did not benefit from the de-preciation of the rupee against stronger currencies, while nearly three-fourthsof its imports were invoiced in stronger currencies. Thus the inflationaryimpact on the domestic economy of the rupee depreciation was quite markedand contributed to the spread of price controls, while the export sectorfailed to benefit.l/ The break with sterling is expected to reduce the ten-dency among exporters to invoice in sterling. The Central Bank is stimulatingthis by urging exporters to invoice in the currency of the importing country.Exports to strong currency areas will now benefit more fully from the 22%depreciation of the rupee vis-a-vis the US dollar during January-September1976 (in comparison with the same period of 1975).
Outlook for 1977
45. General Prospects. Growth prospects for 1977 greatly depend on rain-fall. If the rains are favorable, paddy production should move up very sub-stantially.2/ Over the past several years, the groundwork has been laidfor higher output levels through better inputs and extension and investment.The tree crop sector would also benefit from better weather, with the exceptionof coconuts which will continue to suffer from the after effects of drought.The outlook for industrv is mixed. hnti- given normnl weather, t-hp grno ntionn21
product will increase somewhat faster in 1977. The 1977 government budget, aspresented, is in balance without exDansionarv financin; buti trhis nicture may
be optimistic. There is a danger that the budget estimates will not be real-iz-ed and thflnt tho buidAot- will again fuel inflationary pressures suppressed tosome degree by extensive price controls. The new rise in oil prices placesadditionnal hi,rdnR on the budget. On thebalance of payments side, the current
account deficit is considerably above the 1976 level, because of higher importsof food anA t-atilas, arnA incranse other imprts on government account. How-ever, the Government expects a high level of disbursements from the aid pipe-line.Th.e extern.al payments situation in 1. 77, th- eref L ore, appears malthough new aid commitments are needed to prevent a depletion of the pipeline.
46. Production. The growth of GNP in 1977 is expected to be about 4%ass-uming that thiIe weather wouLU all.ow a nonmal level of agricultural output.
1/ Except to the extent that commodity prices specified in sterling roseto compensate for its depreciation.
2/ The latest expectations are for a record paddy crop (see footnote topara 68 below).
- 20 -
As noted above, the pre-conditions for a higher level of paddy productionexl st andA w4ith gooA weather it .might Ile possible to raseotp4toa mc~AtO L aiIU W -L c CLIC I LJ -JJOL.L CL LaxOC ~UU ULpL L'. LO LILUCLLi
as 90 million bushels (Table 7.3). Mfahaweli water for double cropping cancontrbute5 milionbush ls t t[his hiL±hL output target .
47. With normllal weather arid present price trends, prospects are alsofavorable for reaching higher output targets for tea and rubber (Table 7.5).Under state ownership, the flow of fertilizer and repianting rates are ex-pected to improve. The coconut sector, however, will continue to suffer fromthe aftermath of drought. The high prices of tea and rubber provide welcomefinancial relief to the estate sector, making it possible to concentrate onurgent tasks of consolidation of the management structure, rehabilitation ofproduction facilities and replanting.
48. The prospects for industrial production in 1977 are mixed. Mloreforeign exchange is expected to be available for the import of industrial rawmaterials and spare parts. Output and employment in the public sector shouldalso benefit from additions to capacity or renovations in a number of sectors,including paper, textiles, ceramics and leather. But negative factors remain,including the increasing squeeze on profit margins due to price control andpoor labor discipline, manifesting itself in labor unrest and absenteeism.
49. Public Finance. The 1977 budget on the basis of the officialclassification is in balance without expansionary financing and includes acurrent account surplus of Rs 124 million. But according to reclassifieddata there is a current account deficit (dissaving) of Rs 87 million (seeTable E). Capital expenditures plus net lending are expected to remainvirtually unchanged after the sharp increases of 1975 and 1976 associatedin part with the non-aligned conference. Altogether, the cash deficit woulddecline by about Rs 400 million to slightly over Rs 2 billion.
50. Although it is too early to express firm views, it would not besurprising if the initial 1977 budget estimates again would turn out to betoo optimistic, even apart from the impact of the new rise in oil prices.No additional revenue measures have been proposed. The estimsted incrrpnp inrevenue of about 10% is vulnerable to a shortfall in the import program, aswas the case in 1976. On the current exnpndirtirp side, salnries nlnonere to
rise by about Rs 200 million (11%) almost entirely by an increase in staff (asan emnlovmpnt measurPe the Gnvernment intends to crrate about !9,000 additionaljobs, mostly by hiring college and high school graduates); no upward revisionof s21laries has been assumed.
51. The provision for food subsidies in the 1977 budget is Rs 1,000 -il-lion. However, as can be seen from Table 5.5, the latest estimate of the FoodCommissioner comes to Rs 1,124 m-illion. The difference of nearly Rs 125 mil-lion is due almost entirely to the decision, taken after the budget submission,
jXL ML vlL L vL L 1£ 111 L 7 1 I L L0I11 L4UU 0 UL 0 JL ,/, UUU
tons (domestic rice now costs substantially more than imported rice, on whichno FEECs are chargeable).
- 21 -
52. At budget time the Finance Minister announced three measures affect-
ing the size of the food subsidy, which however could be largely accommodated
within the assumed ceiling of Rs 1,000 million because of a decline in wheat,
flour and sugar import prices. These three measures were:
- Increase of the sugar ration from 3/4 pound to
one pound per person without price increase;
- further reduction of the price of flour from
86 cts to 80 cts per pound; and
- reduction in the price of bread from 80 cts to
75 cts per pound.
53. The key problems of public finance can be summarized as follows:
Public savings have become - through 1976 -increasingly neantivu! whatever nubllc invest-
ment takes place, therefore, depends entirelyon public borrowing;
the food subsid- burden remains very largre,
amounting in size to well over one-half of
Ucapital expenditure and net. lending
public sector corporations require large
amounts for investment, but produce insuf-ficient profits; some even need currenttransfers from the Treasury to cover losses;
the capital expenditure program could allocate
resources in a more optimal way and be bettercoordinated 2/;
i/ The basic weekly rice ration now is one pound per person; before October
1973 it was two pounds (one measure) per person. This ration is free,
except for income-tax payers (not more than about 1/ of the population).
An additional ration of two pounds at Rs 1.00 per pound is provided to
residents of Colombo and other deficit urban areas and of one pound at
Rs 1.00 elsewhere. In November 1975, the rice ration price was reduced
from Rs 1.10 to Rs 1.00 per pound. Since March 1975, flour has been
freely available to consumers and prices have been reduced twice as
indicated in the text. The price of the sugar ration is Rs 0.72 per
pound, against an off-ration price of Rs 6.00 per pound.
2/ It is the practice, based on experience, to adjust in the budget speech
the estimates for capital expenditures (other than sinking fund contri-
butions and amortization payments) by an under-expenditure provision of
as much as 25%. Over time, the Government, in making firm budget allo-
cations, has been handicapped by uncertainties about its financial
resource position (see also paras 92 and 93 below).
- 22 -
the debt service burden has been rising rapidly; and
in 1976, the budget was a source of inflationarypressure; this could happen again this year. Thelatest increase in oil prices accentuates thisthreat to financial stability.
54. Other Budget Proposals. In addition to the measures affecting foodsubsidies and a planned increase in imports of yarn and textiles, mentionedabove, the November 1976 budget speech included the following proposals:
Withdrawal of Commonwealth tariff preferencesfrom lIarch 31, 1977 (estimated revenue Rs 10million);
- Snprcial stp reiduce-'0 tax nar (byixr RsC Inn
million);
- extra funds (Rs 50 million) for the Land ReformCommission, to accelerate implementation of theland reform and to pay the first installment ofcompensation to thle national-ized sterlinIg Clom pianieSi
- permission for citizens living rLUadU LU open Loreign
currency accounts with Sri Lankan banks on attractiveterLis; andU
- nationalization of the branches of three British banks(the branches of other foreign banks, including Indianand Pakistani, were not affected).
External Trade and Payments. The official balance ot payments pro-jection for 1977 (rable F) assumes a deterioration in the current account de-ficit to $193 million from the unexpectedly low level for 1976. Exports areprojected to grow by nearly 9% to $608 million. Tea exports are expected tomake up only some of the ground lost in 1976, rising by 6%. The projectionsfor tea assume a decline in volume and a somewhat optimistic 12% improvementin prices. Rubber exports are expected to make further gains in 1977, risingby 10%, due entirely to a growth in the volume exported. The growth of thetree crop sector as a whole is depressed by the delayed impact on coconutoutput and exports of the drought in early 1976. Non-tree crop exports areto grow by 19%. This assumes a major 44% expansion in industrial exports,and a more modest, but significant increase in gem and minor crop exports.
56. The import program for 1977 projects an ambitious total of $864 mil-lion; actual imports, however, are not expected to exceed $814 million. Thisjudgment is based on the Government s experience in 1976 when imnorts other thanfood, fertilizer, and petroleum fell well short of the provisions made underthe import program for that year. This estimate still imnlies a heftyv 12jump over 1976 levels, which raises some doubts about the prospects of its
- 23 -
realization. There are four major reasons for the sharp increase. First,the estimated value of food imports is up by $40 million (17%). The volumeof rice imports proposed is up 4% over 1976 levels. Flour and wheat importvolumes have been stepped up sharply (by 49% and 19% respectively) in res-ponse to a major increase in the offtake of flour from the public distributionsystem. This follows two reductions in its nrice in the course of 1976 (seeparas 36 and 52 above). The volume of sugar imports is also up, by 45%. Thisreflects both the need to rpstnrp inventory levels in thp npihlirc ditrihi,tionsystem and the increased demand arising from the increase in the sugar rationannounepd in t-hp 1Q77 hbudgt.a Seon, - tho netrnaoleum i*mnprt bill is in u vy $10million (7.3%) following the rise in crude oil prices, without any increase inthe vAl man imported. Third, the import program for 1977 contains a very largeprovision for the textile sector ($83 million). This comprises both finishedtextiles ($11 million) and raw materials for an ailing handloo00m sector, aconsequence of a budgetary promise to increase employment and compensate forthe poor perform.ance of ILthe publi4c sector textile unit. Finlly th i,l-r~ ~S.' ~1LL~ J Lite UU .-L. ~LLLALJ LL L. £LidLL._y , LIe LLILjJU .LL
program is predicated on a major increase in project aid disbursements (from$50 millio 1oon n in 1976 L .10 UhiiiOl ii n 7)7ii. 7ls is aue mainly to sizaDledisbursement levels for two projects: the urea fertilizer plant ($23 million)anu tLe Ie A agricultural development credit ($i5 million). The level ofimports is, therefore, vulnerable to any slippage in the disbursement scheduleof either of these projects.
537. The above analysis suggests a heavy bias in the import program infavor of current consumption. The food import program is large, despite theimprovement expected in domestic food production in 1977. This may reflect adesire to insure against the monsoons, which in recent years no doubt havebeen a major element of instability. But it is also a result of the concernover inflationary pressures, which themselves tend to be stimulated by theincreased subsidization of food. The volume of rice imports is large againstthe background of the expected rise in domestic output and procurement ofpaddy. The large projected flour and wheat imports reflect the price in-duced stimulus to consumption and tend to move the country away from greaterself-sufficiency in food. Similar considerations of safeguarding consumptionand controlling prices dominate the unusually high level of textile importsin the program. Thus, much of the very sharp increase (63%) in imports otherthan food, fertilizer and petroleum, will boost current consumption ratherthan investment. There is therefore little in the import program to demon-strate that Sri Lanka has managed to take advantage of the slight improvementin its terms of trade and better harvest prospects to gear this program morefirmly towards medium term development objectives.
58. On the basis of an import level of $814 million, the gross foreignexchange requirements in 1977 are estimated at $360 million (Table I). TheGovernment is expecting a very high level of disbursements from the aid nipe-line: $91 million from an estimated commodity and food aid pipeline of around$150 million at the end of 1976. and $78 million from an estimnted nroiert aidpipeline of just over $250 million. Taken together with already committedcommercial borrowingj dishursements- frnm Piatirncg commitmenrts are estimated at$206 million, leaving a gap to be financed from commitments made in 1977 of
- 24 -
Table I: FINANCING OF EXTERNAL GAP, 1977 /a(US$ million)
Current Account Deficit 193
Debt Repayment 167Loans 31Short-term credits 62 /b
Supplers' redit 39
IMF Repurchases 16Others 19 I/
Gross Foreign Exchange Requirement 360To be financed through:
Commodity and food aid 91Froj ect aidA 70
Other aid 4Slhort=term credits 11
Suppliers' credit 22
Additional Foreign Exchange Required 154 /d
Disbursements anticipated by Government fromnew aid and credits 88
Commodity and food aid 29OPEC Special Fund 8Short-term credits 34Suppliers' credits 17
Uncovered gap 66 /e
/a Official projection as of mid-February 1977./b Includes down-payments./c Bilateral balances and commercial borrowings./d Does not take into account any possible change in
reserves including IMF facilities./e Nearly all of this is expected by the Government
to be available from the Aid Group members.Source: Ministry of Planning and Economic Affairs.
$154 million. Against this gap, the Government anticipates disbursements fromnew commodity aid commitments of $29 million (of which $11 million is in theform of food aid), $8 million from the OPEC Special Fund, and $51 million fromfresh commercial borrowing. This still leaves an uncovered gap of $66 million,some of which may disappear in the event of a shortfall in the import programover and above that already assumed. The projected level of aid disbursementsin 1977 is estimated to total $210 million (see Table 3.12), not taking intoaccount the uncovered gap of $66 million. This compares with $161 million in1976. Most of the increase over 1976 is accounted for by the proiected rise inproject aid. All but $13 million of the $78 million project aid disbursements
- 25 -
are to come from Aid Group countries. The project aid pipeline at the end of1977 will be substantially below the end-1976 level unless new commitmentsgreatly exceed the $20 million committed in 1976. This almost certainly wouldaffect adversely the level of project aid disbursements in 1978 and 1979.The main constraint here is the absence of a well prepared shelf of projectsawaiting assistance (see paras 92 and 93 below). This is an area where AidGroup countries are beginning to help, but could do much more. Commodity andfood aid disbursements in 1977 are estimated at $120 million; S25 millionabove 1976 levels. Almost all commodity and food aid disbursements anticipatedin 1977 nre from Aid Group sources. here again- unless fresh commitments areconsiderably larger than they were in 1976 ($129 million), the aid pipelinewill habcomn uincomfortanlyl lown oevn pnncidaring thnt mulch nf Cri T.nka'scommodity and food aid tends to be quick disbursing.
59. There will be continued though diminished reliance on commercialborrowi n g i .n 109J7*7. The build up i Cn reserves in 1097 provides the r- V-----twith an opportunity to reduce even further its resort to this type of borrow-
: :A1o :_ 4 s 4, _ A_4 1_ 1- - - - - - - - i1 vA _ _F_ o_JL Wll LI W1 M L 1al. s~ J_ OU 1 U| |U L UL1C 0L1a&LFP W C W L UL| 11U1C W U L
service ratio from 12% in 1974 to 20% in 1975 and 1976. At the beginning of19716, duebt ofL one to ----- year rCltut acoute fo ,O fottadn x
1~IU, U~U UL U1i .LU LVt- YULL 1IUdLUL_LLY dLLUULYULtU LUJL 7/. UJ. UuLbLdLI-Luing ex-ternal public debt (including undisbursed) but as much as 58% of debt servicepaytneuits. ihe latter payments rose by 9)0 mii±IU11 Lo 91$12 mI.LiLUII in 197J;
almost all of this increase was on account of debt service on loans of one tofive years maturity (Tables 4.2 and 4.3). Recourse to such borrowing in tnepast reflected a persistent shortage of foreign exchange to finance what theGovernment perceived as essentiai imports.
60. In conclusion, after the unintended build-up in external reservesin 1976, the external payments position in 1977 looks more manageable thanit has been during the last several years. If the shortfall in the importprogram remains within the margin assumed by the Government, any uncoveredgap in the balance of payments could be cushioned by a drawing down in exter-nal reserves and larger recourse to short-term credits. It should not beoverlooked, however, that despite the recent improvement, net external re-serves are still negative and that it is undesirable to increase recourse toshort-term credits for the reasons mentioned above. Moreover, as pointed out,the present projections of disbursements do imply a substantial drawing downof the pipeline of both project and commodity aid which is bound to haveadverse future effects. To prevent this, fresh commitments need to exceedthe relatively modest levels of 1976. The heavy emphasis in the 1977 importprogram on consumption is not conducive to strengthening the momentum of longterm economic development. An import program geared to a well conceivedmedium-term investment strategy has a good prospect of attracting support fromthe Aid Group that would reduce the country's dependence on expensive short-term borrowing and help reduce the debt service burden.
- 26 -
III. ECONOMIC POLICY ISSUES
61. The key economic problem over the years has been that, for socialand political reasons, consumption was given priority over savings, invest-m.ent and growth. This has resulted i-n the dwindling of publi4c savings,inadequate levels of investment, growing dependence on foreign aid, a rise inpul,1 ; 4c5 Aeb IburW Aes anA@ T1-gl rnemploymnt Ths roblm ae 1neen comounA f_AAjiUL .L .LW t.LIJ i U. uL U 1t A UCLIC ai'. Lit
6.. ILICUjJ.1. LV) IUCII U.u * iso U IO t ul l lClUOa 110 V C LI CCII LUWpSJI IUCIA-s
by a deterioration in the external terms of trade, mostly gradual, but steepin J 1973-J, I diU, inI LrecetL yeaLO, eVteLC ULUUg,htL. Llie rtey LrOUspons LU L11Cth
adversities should be vigorous efforts to stimulate production, especially inagriculture, through investmernts which are relati-vely less capital intensiveand have short gestation periods. Also, industrial exports and tourism shouldbe promoted vigorously to diversify the export base. These efforts, however,can have only limited results unless they are supported by an appropriategeneral policy environment. In this year, a review of the various policyissues appears particularly in order to arrive at a program of action for theGovernment after the elections; the latter are to take place not later thanfour months after the expiration of the term of the present National StateAssembly on May 22, 1977. in the following paragraphs, a briet overview isattempted of major economic policy questions which have to be addressed.These questions are both sectoral and general economic ones. Accordingly,the paragraphs below examine first the more important issues arising in theagricultural (tree and food crop) and industrial sectors, and next a numberof issues in the areas of external trade and payments; domestic resource mo-bilization; monetary stability and price controls; unemployment; and invest-ment planning and project preparation.
62. Agriculture - Tree Crop Sector. This sector, after the 1972 and1975 land reforms, is in a state of transition. As might have been expected,difficulties have emerged, but the takeover has been orderly and, by andlarge, the productive capacity of the sector has been preserved. Among itsmajor problems and issues are the fragmentation of management arrangementsafter takeover; related poor management conditions on a substantial numberof estates, especially those run by cooperatives; the need to preserve effi-cient management of the most important organizational units, in particularthe State Plantation Corporation and Janawasama; the backlog of maintenanceand investment because of deliberate neglect by previous owners anticipatingnationalization; the diversification of nroduction on marginal est2tes; andthe need to draw up a comprehensive master plan for the tea, rubber andnposihlv cronnit sectors, which would encompass these various acn~ts and
expound the strategy for the sectors as a whole.
63. For lands taken over in 1972, management was dispersed over a largenumber of groups. In some i
nst.ance, n.ot-ably 4i h-e case of -- t -r by__
ILUULi.t ii 5tLiU O* tIILJLlL..LLU .01t.O nt.. L Lit tL& LIA L-CIOC Ul. C.DLC LtC:O LULL U)'
cooperatives, this has resulted in weak management and a relative neglect ofcommerci.al principles. N'lo easy solutions are ii sight but Lih Go-vernment isgiving increasing attention to this problem and there are positive develop-
ments LI J ~_ 11 L-- L -ments- SpeciLically, a plan hdas Ueeri drawni up for the amalgamation of alarge number of estates now poorly managed by electorate level cooperativesocieties with SPC, Janaw-asama anu a thira Large group, cooperatively managed,the Janawasas. This could be a positive step towards arriving at a more effi-cient pattern of management. Tne pressures for furtner dispersion of lands
- 27 -
to villages and landless farmers seem on the whole to be contained and thedispersion which already occurred seems in most cases not to have lead toloss of highly productive lands on major estates. After the 1975 takeover,existing management and services of agency houses were retained and prevail-ing salaries and perquisites continued until the end of 1976. A commissionhas been looking into the salary structure of managers. The hope and expec-tation is that a salary structure will emerge which will induce experiencedSri Lankan managers to stay on. The role of agency houses is expected togradually decline; both SPC and Janawasama have plans to take up marketingthemselves.
64. The nrohlems of nrodi,rtion- maintpnAnre; Investment and diversifi-cation can best be dealt with in the context of a master plan as mentionedabove. Preparatory work for a nlnn for the tea sertor will Atart this yearand one for rubber is expected to follow in due course. However, preparationof these plans is bound to take considerable time, in part because of a lackof basic information; action should therefore not await the completionof p.lans. SPC ar,d - arnawa coma have ir. t decentralized ULar.agement an arein the process of drawing up plans for rehabilitation and investment. Therelatively Lhi'gh' prices of tea andu rubber should h-elp in aoidng UdirectL Ld.VL 1L,iji Ui d U L" I~J LIU LU L L n)41 avo..uLI .LU.C'.U
government funding, which the Government would like to prevent. Janawasamarecently has realized substantial profits. S-PC so far has done less wellfinancially and has also been losing staff in the wake of uncertainties.
65. The diversification of low-yielding tea and rubber plantations touses such as food crops, spices, pasture and forestry wiii nave co beapproached with caution. Diversification and related settlement have inrecent years taken place mostly on an ad hoc and cooperative basis, ottenwith less than optimal economic results. One problem has been inadequatecoordination between project administration and service units. Needed area more systematic study of the desired extent of diversification and itseconomic viability. Tree crops, especially tea, continue to have a compara-tive advantage over alternative land use as earners of foreign exchange, interms of yield per acre, on even relatively low-yielding plantations. Teacultivation has the additional advantage of being very labor intensive.
66. Diversification of marginal lands to other uses, thereby reducingtea and rubber acreage, makes it all the more necessary to emphasize rehabil-itation of existing acreage, to maintain output levels and the country'sshare in world markets of these products. In 1976, the effective acreageunder tea was 14% below the registered 598,000 acres because of other usesand delays in replanting; the latter, at 2,200 acres, was the lowest for the1970's. In rubber, during the past several years only about 8,000 acres havebeen replanted annually against a target of 15,000 acres; out of the totalacreaRe of 560,000 under this crop, about 230,000 is presently considereduneconomic. A stronger replanting effort in rubber should include small-holders, who are in need of better advisory services. Rehabilitation isalso an urgent task for the coconut sector, which consists largely of small-holdings. In addition to the effects of droughts and low nrices. this cropin particular has suffered from land reforms. As a contribution to arrestingthe derlinoe- in 1976 a sihubidv srheme was intrrodiured for replanHtng of 106AOOO
acres over seven years. This scheme, under which two-thirds of replanting
- 28 -
costs are reimbursed, is the first one for this sector. A second initiallymodest scheme to be introduced shortly on a trial basis provides for subsi-dies, also of two-thirds of planting costs, for the planting under coconuttrpps of roffee. cocoa and Denner. To increase the effertiveness of repnlnt-
ing subsidies in tree crops, a closer control is needed over their actual use.
67. As an element of general agricultural strategy, and in the lightof constrained financial resources, a careful balance will have to be struckbetween the expansion of food and tree crop production. An important con-siderationis that at the margin the yields per acre in foreign exchangeof tree crops remain much higher than those for many food and subsidiarycrops. However, +,-h-.ere are somUe notab-le ceptions, such as cllls,
onions and potatoes.
68. Agriculture - Food Crops. As a result of past efforts, especiallyover L1te 'dDL severa yeadL rs L1e uasis Id s l ueeii estaLdVU L ishel UL d L il I
paddy production by improvements in irrigation works, institutions, pricing,seed varieties, fertilizer and pesticide availability, rural roads, etc. Aznoted elsewhere, it is considered possible that with optimal weather condi-tions output of paddy this year could reach 90u million busilels. This oflcialforecast may be too optimistic, but even if one assumes 80 million bushels itmeans that domestic production would meet about ou/0 of consumption needs (ex-cluding flour).l/ The removal in October 1975 of the ban on private tradingin paddy and rice reduced the price differentiais in various parts of thecountry. Subsequently, official procurement rose and at 12.5 million bushelswas in the first ten months of 1976 up 16%` from the corresponding period of1975. The procurement in 1977 of 375,000 tons (27 million bushels), theofficial target, in relation to an 80 million bushels crop would require aprocurement ratio of about one-third, which is not unduly high. However,although existing tank and expanded other irrigation facilities provide somedegree of insulation, the impact of the weather on production remains large.
69. The import substitution program in subsidiary crops, which was re-vitalized in 1973 and initially met with substantial success, has lost momen-tum more recently. One reason is the availability of relatively cheap subsi-dized imported wheat and flour, the consumption of which has shot up recently.This is a highly undesirable trend in relation to longer-term developmentobjectives. Maize and sorghum are among the major crops whose output isaffected adversely by the rising imports of wheat and flour. To maintainincentives to produce, these crops have been brought under the governmentprocurement scheme in existence for paddy. The State Flour Milling Corpora-tion started substituting sorghum for 10% of wheat flour and the Paddy Market-ing Board has been purchasing maize at the guaranteed price. The production
1/ As of end February 1977, the prospects for the winter Maha crop werevery good. It was estimated that this cron would yield at le2st 55million bushels which compares with an earlier achieved highest levelof 53 million in 1974. A minimum summer Yalq crop would be 25 millionbushels. A total output level in 1977 of at least 80 million bushels
isb thrfr igl iey
- 29 -
of chillies, onions and potatoes remains at high levels and profitable, sup-ported by the ban on imports. The supplies of these crops are now sufficientfor domestic consumption. For other subsidiary crops, no special supportprograms exist.
-70. Because of the contiun great depedenc Aon-A-- __4C rainall futerI U. J1 Ld L1) LAI ~ L. .LJ LLU.LL
6rA. ~_ L. U VI U ~LL%ACL% 'LL L Ca LLL.Ld. LL, I UL. LLIL
programs to reduce this dependence, especially in producing paddy, shouldbe pursued. The country is fortunate in that a large potential remainsfor expanding irrigation based on surface water, both by improvements inexisting facilities and by irrigating additional lands. Tne groundwaterpotential on the basis of existing knowledge is small. In selectingareas for additional irrigation, those where tanKs alreaay exist deservespecial consideration. Minor irrigation in the form of improvement ofexisting tank irrigation and drainage facilities, enabling additional out-put and settlement, is in general less costly and has shorter gestationperiods than more capital intensive additional irrigation projects. Never-theless, important additions to irrigation will also have to come from newschemes, especially the further extension of the Mahaweli Scheme as planned.
71. Despite substantial progress, scope exists for further improvementin the delivery of inputs and supporting services. Even though fertilizeris now available at lower prices, there is need for improving transport facil-ities for timely availability and better extension services for fertilizerapplication. Increases are also needed in storage facilities which are belowrequired capacity for paddy. Lack of adequate tillage power, in part relatedto shortage of spare parts, is another standing problem, addressed by the re-cent IDA Agricultural Development Credit. The agricultural credit defaultrate, at one half, remains high and the agricultural credit scheme is currentlyunder review by a working group on rural credit in the Ministry of Agriculture.
72. Water management also needs substantial improvement. The LandBetterment Charges Act of 1976 empowers the Government to impose annualcharges on irrigation and drainage schemes taking into account such factorsas amount and dependability of irrigated water, increased agricultural pro-duction, cropping intensity, and capital, operating and maintenance costs.Detailed regulations for implementing these charges are under preparationand will hoDefullv be enacted this year. Work is also underway to revise,update and prepare the land registers necessary for the administration ofthese charges. The Government intends to increase charges graduallv toultimately recover full operating and maintenance cost and an appropriatenort-ion nf cnnstruction outlays.
73. Industrial Production and Private Sector limnate. During thepast decade, the structure of the industrial sector changed greatly withthe establishm-ent and expansion of a substantial number of public sectorindustrial corporations. Consequently, the relative importance of privatesect.or inA y - ec ACllneA. As late as 1965 the.J prvate sector accounted for
90% of the value added in industry; in recent years this share has been nomore than aUbout JuO.. Tihe public sector elJUoyeU prL eLrtLil t rtIet LLLLLILIL nL
the approval of investment proposals and the allocation of local finance
- 30 -
and foreign exchange. New industries were set up primarily for purposes of
import substitution, but inadequate attention was paid to economic efficiencyand comparative advantage. They were mostly basic and heavy industries and
their production structure tended to be capital intensive and heavily depen-dent upon the use of imported raw materials and foreign technology. In some
instances, the small size of the domestic market led to the establishment of
plants too small to benefit sufficiently from economies of scale; they were
thus uneconomic from the beginning. 1/
74. The state corporations as a whole are in need of substantial improve-ments in operating efficiency. Management still needs upgrading, despiteefforts made. The effects of price-wage policies on profits, productivity and
unit costs should be analyzed and excessive distortions rectified. In parti-rn. t-h merhts of keeping an excess work force employed under the Termina-
tion of Services Act are questionable. This practice has resulted in lack of
labor discipline and encouraged high absenteeism.
75. More successful and rapid industrial growth of the state industrial
corporations also requires, wherever feasible, a more export-oriented develop-ment strategy and the need to take fuller advantage of the rontry's cnaeinal
factor endowments. The need to earn additional foreign exchange from indus-
trial exports is urgent. Also, international competition is needed to bringabout improvements in product quality. Despite progress in providing back-
wardU linkages in thLe inuustrLaL sector, tLhe state corporations coulUd play a
more important role in this area. The pattern of output, inputs and tech-nology should also take more audvaritage of the abundant supply of educatedlabor available. It is worth noting that among the successful state indus-
trial corporations have been Ceylon Ceramics, Ceylon Mineral Sands and State
Graphite; all of these have been operating at near-full capacity while using
locally available raw materials, have access to export markets and tend to
be labor intensive.
76. It is encouraging that in granting approval for new industrialprojects, increasing attention is being given to the application of these
various principles; recently, the principal criteria for granting approval
for new projects have been the ability to export, the use of locally avail-
able raw materials and employment generation. A number of incentives have
been provided for the development of exports and the Government activelyencourages foreign collaboration. Despite these trends, the country stilllacks a truly coherent program for industrial development. The machinery
for appraisal of large-scale projects is weak and needs to be based on more
1/ A case in point is the Ceylon Steel Corporation. Despite its small plantsize, capacity substantially exceeds domestic consumption. Capacityutilization, especially of the rolling mill, consequently has been low(Table 8.1). The inputs of this corporation are almost entirely imported,but its output tends to be more expensive and of lower quality than im-ported comnarable nroducts. Additional investment is underway for the
production of steel billets, to replace imports. But this cannot solvethe problem of scale.
- 31 -
systematic appraisal techniques and criteria. A successful industrial policya I Qrequires assured and adequate allocations of foreign exchanep for indiIs-
trial raw materials and spare parts in the foreign exchange budget; such allo-cations have been lacking in the past.
77. As noted above, the priv,at -ectr, although its rle h As delinead
still accounts for about one-half of value added in the industrial sector.IT, Le private sector climate -a[ p-ospect - to -- L--- J Isoew --- A
during the last year. The extensive set of tax and other measures to stimu-late private sector activity, announce in the NovemberI 975 budget speec
and involving a change in the Government's previous attitude towards thissector, appears to nlave muet With so uLi success. LI/ Yet, uncetaintiin IUdLi
and the signals are still unclear. The existence of the Business AcquisitionAct remains a potential deterrent and tne procedures under it tend to deiaycompensation for property taken over longer than is desirable. The feelingstill prevails in business circles that it may be dangerous to become big.Official policy continues to favor joint ventures with foreign capital but asyet these have not been forthcoming on a substantial scale. Z/ The ForeignInvestment Guarantee Law, one of the measures proposed last year, has notmaterialized. This by itself may have increased uncertainties, althoughit is difficult to judge how effective the law would have been in a pre-election year. The recent nationalization of three foreign banks is unlikelyto improve the climate.
78. External Trade and Payments. As noted earlier, the steep declineof the preceding three years in the external terms of trade was arrested in1976. But any improvement last year must have been modest. On the exportside, the gains in rubber unit values in 1976 were offset by losses in teaand coconut; there were, therefore, no gains for the tree crop sector as awhole. The main improvement was on the import side with both food and fert-ilizer prices down sharply. The savings on food account alone in 1976amounted to about $100 million. This was partially offset by increasedcosts of imports other than food, fertilizer and petroleum. A further declinein food prices is not likely in 1977; fertilizer and petroleum prices andthe cost of other imports are certain to rise. On the export side, the gainsexperienced by rubber in 1976 are expected to slow down in 1977, while teaprices may record a modest improvement. Any improvement in the terms oftrade in 1976 will, therefore, in all probability be reversed in 1977. It
1/ These measures include, among others, the continuation of lump sum depre-ciation, the development rebate and tax holidays; the abolition of incomeceilings and compulsory savings; the reduction of the highest marginalincome tax rate from 65% to 50%; certain reductions in income tax ratesrelated to investment plans; nrodurtion anti Penort nperfnrmane-e and t-he
creation of employment; and a selective increase, up to 15%, of theshare of export nrocepds which pvnorters are allowd to retatin asconvertible rupees.
2/ Since the White Paper on this subject issued in 1972, 24 projects wereupproved involviong . total (foreign plus local currency) ir,vestment ofunder $20 million.
- 32 -
implies that on balance no relief is in prospect from the drastic deteriora-tion in the past (the index for terms of trade on the basis 1967=100 droppedfrom 148 in 1960 to 46 in 1975). This stresses the urgency of reducingdependence on tree crop exports, a policy direction that has already metwith some success in industry and tourism.
79. As noted earlier, during the 1970's industrial exports have made animportant contribution to the rapidly rising share of non-traditional in totalexports. Gem exports rose from a very low base to $24 million in 1973 andthen more slowly to $31 million in 1976. Manufactured goods exports (exclud-ing petroleum products, minerals and cement) between 1971 and 1976 increasedabout four-fold to $36 million. Further efforts are vital if the momentum ofexport growth in these two key sectors is not to lose its vigor.
80. In gems. the existing mines are still far from exhausted and newareas are constantly being opened up. There is, therefore, as yet no sign ofspinnlv constraints. Demand for Sri Lankan gems remainR hbnvnnt thbough thereis some concern among exporters that unit values may suffer from an expandingvoltime of exports. There is. however, considerable room for increasing unitvalues through the improvement of mining methods, now largely traditional, andthrough improved cutting and nolishing. There is also much scone for addingvalue to gem exports through the export of jewelry, particularly in the caseof the smaller lowi quality gems. Two manor constraints here are the lack ofgold and other precious metals for the manufacture of jewelry and the lack ofdesign capabilities geared to the constantly changing requirements of the re-tail trade in affluent countries. A modest effort is being made to overcomethese difficulties; but it is as yet inadequate. Given the high employmentpotential of this industry (the State Gem Corporation estimates present em-ploym.ent in gemu.ming opera-tions alomne at 150,000) it dsre greateVLr attentiLon
from policy makers.
81. The task of sustaining high growth rates in manufactured exportsis5 mure UifficuL-L. rIucu UO the growLL over the past Live years has Deen infood, beverages and tobacco, in textiles and in chemicals. These three sectorsaccount for three-fourths of the value of manufactured exports (excludingpetroleum, cement and minerals). Within these broad categories, the twolargest items are marine products and ready-made garments. Another featureis the high degree of concentration among exporters. A little over threedozen firms, including public sector units and organizations each with exportsof over Rs 1 million, account for about four-fifths of manufactured exports.There is, therefore, a strong case for identifying both existing and potentialgrowth sectors, and within those sectors, the individual firms most likely tobe involved in export expansion in order to determine the policy responsesneeded to ensure future export growth. In some sectors capacity alreadyappears to be a constraint to export growth, such as rubber products, seafoods, wooden and coir products and fatty acids. In other sectors, whilecapacity may be sufficient, the firms most likely to become efficient ex-porters may not be presently geared to exports, or may require furtherinvestments to become export oriented. These sectors need export-orientedinvestment if growth is to be sustained. This is where government attempts
- 33 -
to attract foreign investment could play a decisive role, given the crucialcontribution this could make to export marketing. This policy has so far hada modest response from potential foreign investors. There has been a modestspurt in 4ndustrial approval-s geared to ex ports: -JtO of these -4-Je-ts
have been in ready-made garments where Sri Lanka, as a late entrant, facesfew mrarket restrictions in OECD countries. This industry is one of greatpotential. The export potential for marine products is also very promising.Trawler capacity is being substantially expanded, but remains as yetinadequate.
82. Apart from capacity constraints, manufactured and processed goodsexporters are currently facing rising freignt costs, increasing shipping un-certainties and shortage of agricultural raw materials, particularly fruitand coconut products. The first phase of the Export Credit Guarantee Scheme,providing coverage for pre-shipment risks with a two-thirds guarantee, cameinto effect beginning 197/; this will overcome one major constraint on exports.
83. Administrative procedures affecting industrial exports have beenstreamlined last year and this has contributed to the success of the exporteffort. Present export promotion efforts, however, suffer from an unnecessarymultiplicity of authorities both at the level of policy formulation and im-plementation. There is an urgent need for greater coordination and concen-tration of these efforts, to evolve a medium-term export strategy thatidentifies priority firms or corporations--and to ensure that the policiespursued by implementing agencies and other government departments are con-sistent with such a strategy.
84. Last year's change in the exchange rate regime was a step forwardin that it introduced a needed element of independence and flexibility. Thepotential danger with the system of periodic rather than daily or weeklyadjustments is that other than purely economic considerations might be broughtto bear on them. A related exchange rate issue in the context of longer rundevelopment remains, however, the existence of the dual exchange rate system.The substantial discrimination against the tree crop sector which is deprivedof the benefit of the FEEC rate seems particularly difficult to justify in aneconomy where the sector discriminated against is now largely in public hands.The current review of incentives in the tree crop sector being undertaken bythe Government provides a welcome opportunity to review the dual exchange rateregime. The artificially low rates of return in rupees on investments in socritical a part of the economy are likely to prove self-defeating in the longrun. On the import side the price structure also continues to be substantiallydistorted with food items and fertilizer continuing to benefit from a rate 65%below that annlied to other imnort items. The need for basir exrhanpp refnrmtherefore, persists.
85. An encouraging development is the gradual winding down of mosthilateral payment agrempTnts. All transactions with Fct- Euironpen cointriec
already are or are expected to be specified in hard currencies. Many of thebilateral agreem.ents have outlived their usefulness. With some notable ex-ceptions, import prices were not competitive, while tree crop exports werediverted from much needed hard currency earnings. Durig 1970=76, in four
- 34 -
out of six years, there was a trade surplus with bilateral payments countriesexcluding China, which amounted to a resource transfer to those countries.This was because under the payment agreements import requirements could notalways be matched to availability. That this trade was being sustainedartifically is reflected in the fact that as the agreements are terminated,the value of trade with these countries is falling sharply. In 1975, itdropped by over half to $40 million. The share of these countries inSri Lanka's trade has fallen from 9% in 1972 to 3% in 1975.
86. These arguments are considered less relevant to the trade withChina. The rice-rubber agreements are, therefore, expected to continue.The usefulness of this arrangement, however, also needs to be kept underreview. There is no doubt that China provides Sri Lanka with an assuredsource of rice supplies and an assured market for rubber, both on favor-able terms. But this may well be cushioning Sri Lanka from difficultdecisions it needs to make on imnort substitution of rice and on the
need to diversify and add value to its rubber exports.
87. Domestic Resource Mobilization. Another basic issue of long stand-ing is the need to move un derisivelv the inuest-ment rat-in, which in t-rn
requires larger domestic savings, especially public savings. As followsfrom the preceding comments on the government budget, there has been noimprovement in public savings in recent years; instead, they have becomeIncre-asing-ly negative. A reducti-on of: the heavy burden of ood usde'..CO ..1
64 -L6 -C.L C -fl I f. U.LtL -i Lf&C ILcavJ u h Ut ai L U LU LLULU L tU± r_
therefore seems unavoidable. Moreover, there is no escape from the difficulttask of upgrad*ing thL'Le perLormLance of thLe public sector corporations. The
nationalized tree crop sector has added an element of financial uncertainty.If well managed, it might substantially increase budgetary resources; if not,it could become an additional drain on the budget. Tax reform, related tochanges in the external payments system, also remains on tne agenda. Thebroad strategy should be to shift part of the tax burden from exports toimports and domestic transactions and to increase the income elasticity ofthe system by gradually raising the tax burden on the fastest growing sectorsof the economy.
88. Monetary Stability and Price Controls. The need on economic devel-opment grounds for fiscal action to restore and strengthen public savings isunderlined by the emergence in 1976 of the budget as a substantial source ofinflationary pressure. Money supply showed a strongly upward trend, whichwas caused also by the increase in external reserves. The latter is bound tobe a temporary phenomenon, but budgetary trends in 1977 could well continueto pose a threat to financial stability. Since last fall, the authoritieshave initiated a policy of credit restrictions. 1/ This is ineffective,
1/ This has taken the form of a stricter enforcement of the statutory re-serve ratios in rupee deposits with the Central Bank for demand and fortime and savings deposits (12 and 5% respectively); other assets allowedto comply with this ratio are gradually being withdrawn. Also- a neilinghas been placed on credit for consumption purposes. Moreover, from lateJanuary 1977 the Central Bank has raised its lending rate to omnmercialbanks (the Bank Rate) from 6-1/2 to 8-1/2%.
- 35 -
however, in limiting expansionary financing of the public sector and, ifprolonged., might Llave the ur.desiraube effect of restraining u ate
sector activity.
89. A worrisome trend is also the rapid spread in 1976 of price controls.ILt was iopeu thiLat the Natlonal Prices CUmmib.Lssion, CLtaULbsLhU asb a staLLULty
body in late 1975, would devote its main attention to a systematic study ofthe price structure as a wnole, taking accounL OI une interdependencies 1n Ltne
system, and that this would lead to a reduction of the serious price distor-tions. Instead, it seems to be preoccupied entirely with the fixing or reviewof prices of individual items. Its recommendations are formulated in closeconsultation with the relevant parties, but are not binding on the Government.A very large part of the items entering the index of consumer prices is nowcontrolled, exceptions being services, rent and fuel. Regulation, therefore,seems to have gone well beyond the cushioning of the effect on prices of tem-porary scarcities. Enforcement of the many controls is a difficult task andblack market activities, although on the whole as yet limited, seem to havebeen growing.
90. Unemployment. The very high level of unemployment, with a high pro-portion of educated youths, remains a burning and politically explosive issue.According to the census of 1971 the rate of fully unemployed was about 18% ofthe labor force, the latter defined as including underemployed. The laborforce participation rate was about 32%. In 1975, as part of a land and laborutilization survey, new labor statistics have been collected (Tables 1.3 and1.4). The results of this survey are still under review, but the employmentsituation is unlikely to have improved. Recent data on the educational levelof the unemployed are not readily available, but the 1973 situation, when 37%of secondary school graduates were unemployed (Table 1.2), has probably under-gone little change.
91. Information on employment generation by sectors exists on only apiecemeal basis. Central Bank survey data indicate that industrial employmentduring 1972-75 declined by 13%. The declining trend in employment in the treecrop sector noticeable during the 1960's hag on the hnais of b,road indirctions
continued during the first half of the 1970's. The land reform is unlikelyto reveprsp this trpnd more than margina11v if irnpronomic ius o,f labor on
estates is to be avoided. Various settlement schemes, training programs andDDG nroniert in tiotal have created no more than about 75,000 Jobs in 1971-75.
The DDC program is being accelerated, but its overall impact on employmentwill rnmain limited. A promis4in 4e the M.ahaweli 4 o-ect; T
alone would provide full employment to about 35,000 cultivators now under-employ,ed for nearly half the year. Al together, the creation olf additi. onalemployment to at least match the future increment of the labor force looks likea diffiult task. Thel Ces-t potentials are i the food crop sector, -i--luU-ing
paddy and export crops, to a limited extent in tourism, and possibly in export-oriented manuf'actur'LULg iLnd ustr'Les.
92. Investment Planning and Project Preparation. Planning as a deliber-ate effort has been attempted for a long time, but without much success. Onemajor impediment has been the continuous tight financial resource position,
which made it necessary to take many decisions on an ad hoc basis and difficultto commM4- rmf4ly substantial sums for t-h-r thnn short-term requirementsUn-
certainties about the foreign exchange position, including the availability offoreign assistance over a longer t-imne period, w-e-re an importn--t- Inent i
this picture. Another and in part related phenomenon was the strong effecton the econoUly o'L externaLL Udeve'lopments, refLLecteLU lin partiLcuLar in thi'e steepdeterioration of the terms of trade after 1973. These have been major reasonswlhy guidelines urawn up b-y the planners could not be applied consistently atthe decision-making level.
93. Nevertheless, there is scope for the drawing up of a stronger andbetter coordinated public investment program for the next several years, basedon a consistent set of priorities and giving particular attention to proj-ects with short gestation periods and relatively large employment generation.Systematic studies of sectors and regions can provide important inputs to thiseffort. Some of these studies are already underway or have been proposed,such as those for paddy production, tree crops, animal husbandry, fisheriesand the energy sector. A related area where more work can usefully be doneis project preparation. A well-prepared investment program and pipeline ofprojects would also facilitate the effective mobilization and utilization ofexternal financial assistance. There is also scope for more research whichcan form the basis for the formulation of specific economic policy proposalsor alternatives. The newly established UNDP-financed planning unit in theMinistry of Planning is intended to assist in accomplishing some of thesetasks. Its staffing, however, is as yet inadequate and additional technicalassistance, provided it can be backed up by strong local participation andcommitment, may be helpful.
94. Conclusion. The preceding review of sectoral and general economicpolicy questions demonstrates that the issues to be dealt with are wide-ranging. Some are fundamental and of long standing. The achievement ofhigher production in the tree and food crop sectors, reorientation of theindustrial production structure and the creation of additional employmentlargely depend on measures which can produce results only gradually. Some ofthe basic issues in resnect of fiscal, foreign exchange and pricing nolicieshave important social and political ramifications. The necessary achievementof higher r2ten of s2vings, investment and Prnnomir growth is; therefore; a
difficult and delicate task and is bound to take time. This makes it all themore necessary to concentrate on the formulation and effective execution of arealistic action program incorporating the policy elements examined above.From the point of view of the Aid Group, there is particular need for amedium-term investment program which can attract the kind of financial supportand technical assistance w ich will h,CJjeJlp to stlrengthen the viability of the
economy.
STATISTICAL APPENDIX
Table No.
1.1 Population Estimates, 1963-76i.^ Unemploy-ment Rate by Educational LeveL, 1963 and 197,
1.3 Population and Labor Force, 1971 and 19751.4 Employment and Unemployment, 19,7 ana 1975
2.1 Gross Domestic Product, Its Composition and SectoralDeflators, 1970-75 (at factor prices)
2.2 Gross Domestic Product, Composition and Annual Change byEconomic Sectors, 1970-76 (at constant 1959 factorprices)
2.3 Total Resources and Uses, 1970-752.4 Percentage of Total income Received by Each Tenth of Income
Receivers, 1963 and 1973
3.1 Balance of Payments, 1970-773.2 Composition of Merchandise Exports, 1970-773.3 Value of Industrial Exports, 1972-763.4 Industrial Exports by Private and Public Sectors, 1972-19763.5 Composition of Imports, 1970-19753.6 Composition of Merchandise Imports, 1970-19773.7 World Price Indices for Major Commodities in Sri Lanka's
Foreign Trade, 1970-19763.8 Terms of Trade, 1960-19753.9 Sri Lanka - Status of Aid Group Assistance3.10 Terms of Aid Group Commodity Assistance (Total Commitments)3.11 Status of Non-Aid Group Countries' Official Assistance,
1966-19763.12 Sri Lanka Aid Disbursements, 1974-77
4.1 External Public Debt Outstanding Including Undisbursed asof December 31, 1975 with Major Reported Additionsthrough December 31, 1976 Debt Repayable in ForeignCurrency and Goods
4.2 Service Payments, Commitments, Disbursements and OutstandingAmounts of External Public Debt Proiections Based onDebt Repayable in Foreign Currency and Goods
4.3 Service Payments. Commitments, Disbursements and OutstandingAmounts of External Public Debt - of One to Five YearsMaturity
A Note on Government Account Statistics
S51 Summary of Budpetarv Onerations; 1970/71-19775.2 Budgetary Position, 1970/71-19765 3 Rudgetary Rpupnu,,p 1Q7n/71-19775.4 Current Expenditures, 1970/71-19775.5 FoodA ubsidyA 197n/71_1977
5.6 Capital Expenditure and Net Lending, 1970/71-1977.7 Fen.rall Gover,-.ment Budget Debt Service, 17a/71-1077
5.8 Government Enterprises, 1970/71-1977.. 9 C~furrent Transf4:ers to 'Dubli1_:c Corporatior,s, 19070/ 171-19a7-7
J. Y I. L. I 1LLLLL LU L UU.L.L )i ~ / t'~ -'
5.10 Budgetary Contributions by Public Corporations, 1970/71-1977r I IL4 U 1 -7A , _/ I 1 1 0o7 7J . | ff t_dpitaLd Transfers U U LL to Puli Corpora L_.wons, L 7 1 / 1 / L- L, I I
-2-
Table No.
5.12 a Public Corporations (Industrial), 1975-765. 1, b Publ4ic Corporations (Trading), 195-=76
5.12 c Public Corporations (Other), 1975-76
6.1 Minimum Wage Rate, 1968-766.2 Annual Percentage Change in Consumer Price Index for ColomDo,
1971-766.3 Interest Rates of Major Credit and Savings Institutions,
1971-766.4 Monetary Survey, 1971-1976
7.1 Volume of Agricultural Production, 1970-757.2 Volume of Industrial Production, 1971-757.3 Paddy Production and Rice Availability, Procurement and
Distribution, 1970-777.4 Acreage and Production of Subsidiary Food Crops, 1972-767.5 Tree Crops Production Statistics, 1970-777.6 Tea - Producers' Unit Cost Structure, 1971-77
8.1 State Industrial Corporations - Capacity Utilization, 1973-76
8.2 State Industrial Corporations - Foreign Trade Component
of Production, 1975
Table 1.1 : POPULATION ESTIMATES, 1963-76
Total Annual Natural Birth Death NetPopulation Growth Rate Rate Rate Migration(thousands: _
mid-year) (per thousand)
1963 10,646 2.58 34.4 8.6 -0.9
1968 11,992 2.41 32.0 7.9 -0.7
1969 12,252 2.23 30.4 8.1 -0.9
1970 12,516 2.19 29.4 7.5 -0.8
1971 12,699 2.24 30.1 7.7 -2.7
1972 12,951 2.17 29.7 8.0 -3.2
1973 13,130 2.01 27.8 7.7 -3.8
1974 13,393 1.84 27.3 8.9 -4.0
1975 13,603 1.89 27.4 8.5 -1.4
l97&-! 13,819 1.87 27.2 8.5 -4.0
1/ Provisional estimates.
Source: Central Bank estimates based on data supplied by theRegistrar General.
Table 1.2 : UNEMPLOYMENT RATE BY EDUCATIONALLEVEL, 1963 AND 1973
(As Percent of Labor Force in Educational Group)
Education Level 1963 1973
No Schooling (illiterate) 6.3 8.4
No Schooling (literate) 5.7 6.8
Primary 10.5 14.1
Secondary 23.0 37.1
Passed GCE/SSC ) 47.4)
Passed Adv. L/HSC ) 39.3 44.4
Passed Degree ) 16.2
Source: Central Bank of Ceylon, Survey of Sri Lanka'sConsumer Finances, 1973.
Table 1.3: POP'ULATION AND LABOR FORCE, 1971 AND 1975
1/ Labor ForcePopulation _ _ Labor Force- Participation Rate (l(thousands) (thousands)
Male Female Total Male Female rotal Male Female Total
1971 6,526 6,185 12,71.1 2,980 1,:107 4,087 45.7 17.59 32.2
1975 6,984 6,619 13,6C)3 3,490 1,467 4,957 50.0 22.2 36.4
Male and FemaleProportions (%)
197:L 51.3 48.7 10(0 72.9 27.1 100
1975 51.3 48.7 10(0 70.4 2'9.6 100
1/ Ages 15-59 years.
Source: The Census of Population, 1971. (The data appear in rhe Population of Sri Lanka, Department of Census
andl Statistics, 1974). The Land and Labor Utilization Survey, 1975 (Provisional survey results reported
in Central Bank of Ceylon Bulletin, April 1976, pages 269-270).
not applicable
Table 1. 4: EMP],OYM:ENT AND UNEMPLOYMENT, 1971 AND 1.975
Unemploy d __E__ /_e_ Unemployment Rate(thousands) (thousands) (%)
Male Female. Total Male Female Total Male Female Total
1971 (All Ages) 446 350 796 2,807 815 3,622 13.7 30.0 18.0
1971 (Ages 15-59 years) 419 329 748 2,561 778 3,339 14.1 29.7 18.3
1975 (Aiges 15-59 years) 500 485 985 2,990 983 3,973 14.3 33.1 1.9.9
Male arLd FemalePropor tiorLs (%)
1971 (All Ages) 56.0 44.0 100 77.5 22.5 100
1971 (Ages 15-59 years) 56.0 44.0 100 76.7 23.3 100
1975 (Ages 15-59 years), 50.8 49.2 100 75.3 24.7 100
1/ Including underemployed.
Source: The Census of Population, 197:L (The data appear in The Population of Sri Lanka, Department of Censusand Statistics, 19I74). The Land and ;Labor Utilization Survey, 1975 (Provisional survey resultsreported in Central Bank of Ceylon Bulletin, April 1976, pages 269-270).
.not applicable
Table 2. 1: GIROSS DOMESTIC PRODUCT, ITS COMPOSITION AND SECTORALDEFLATORS 1970-75 (at factor prices)
1970 1971] 1972 1973 197411 1975il/_
PRODUCTION (Rs inill:ion) _ % % %
Agriculture-/ 3,951 33.8 3,857 32.4 4,119 32.2 5,026 32.9 8,356 42.2 8,643 39.2
Mining 84 0.7 9:L 0.8 95 0.7 324 2.1 247 1.2 316 1.4
Manufacturing 1,425 12.2 1,480 12.4 1,728 13.5 2,017 13.2 2,475 12.5 3,217 14.6
Construction 744 6.4 75:1 6.3 711 5.6 802 5.3 1,011 5.1 1,018 4.6
Services 5,5C0 46.9 5,728 48.1 6,,154 48.0 7,096 46.5 7,717 39.0 8,B81 40.2
Gross Domestic Product 11,704 100.0 11,907 100.0 12,807 100.0 15,265 100.0 19,806 100.0 22,075 100.0
PRICES (Implicit deElators)
Agriculture2/ 100.0 100.4 102.1 127.9 202.5 206.9
Manufacturing 100.0 100.3 115.3 133.L 170.2 205.8
Construction 100.0 106.0 109.2 120.6 1]41.9 156.9
Gross Domestic Product 100.0 101.5 105.8 122.'2 153.7 165.2
_/ Provisional estimates.
2/ Includes forestry, hunting and fishing.
Source: Central Bank of CeyLon.
Table 2.2 GROSS DOMESTIC PRODUCT, COMPOSITION AND ANNUAL CHANGE BY ECONOMIC SECTORS, 1970-76(at constanit 1959 factoDr prices)
1970 1971 1972 1973 1974/ 19751/ 197Forecalst
GDP (its. Mill-ion) 9,771 i,792 10,1)02 10,426 10,755 11,142 11,426
2/ (As per cent of G3DP)Agriculture- 34.9 33.8 34.4 32.5 33.1 32.3 30.3Mining 0.7 0.,' 0.7 2.6/ 1.8 2.2 3.4MaLnufacturing 13.6 14.1 13.9 13.6 12.6 12.1 13.0Construction 5.9 5.6 5.0 4.9 5.1 4.5 4.6Services 44.9 45.8 46.0 46.4 47.4 47.9 48.7
Utilities 0.2 0.3 0.3 0.3 0.3 Cl.3 0.3Transpor-t/Communaications 9.3 9.4 9.8 9.8 9.8 9 .9 9.9Commerciial Services 14.3 13.4 13.1 13.3 13.5 13.5 1:3.5Financiail Services 1.2 1.-3 1.3 1.4 1.5 1.7 1.7Housing Services 3.1 3.1 3.1 3.1 3.2 3.1 :3.2Public Administration 4.7 5.0 5., 2 5.4 5.7 5.8 6.1Other 12.1 13.3 13.2 13.2 13.4 13.6 14.0
Total: 100.0 1l00. 0 100.0 100.0 100.0 100CI.0 10(.0
(Arnua:L per cent change)
GDP 4.3 0.2 3.2 3.2 3.2 3.6 2.5
Agriculture7-/ 3.8 2.8 5.0 -2.6 5.0 1.2 -3.8Mining 18.5 2.1] 1.4 294.4- -28.3 29 .8 58.5Manufacturing 5.7 3. '5 1.6 1.2 -4.1 7.6 1L .3Construction 14.4 -4.8 -8.1 2.2 7.1 -9S.0 5.2Services 2.8 2.2 3.7 4.1 5.3 4.6 4.5
1/ Provisional estimate.2/ Includes forestry, hunting and fishing.3/ The su,dden increase is due to the sharp rise in geam exports through legal channels following the intro-
duction of the Convertible. Rupee Account Scheme.
Source:: Central Bank of Ceylon.
Table 2.3: TOTAL RESOURCES AND USES; 1970-1975
(Rs millions at current prices)
1970 1971 1972 1973 1974 1975
GDP (at market prices)I/ 12,812 12,844 13,789 16,926 21,430 23,878
External Resources 278 180 180 135 1,030 1,203(net imports of goodsand NFS)
Total Resources Available 13,090 13,024 13,969 17,061 22,460 25,081( = total uses)
Consumption 10,505 10,639 11,697 14,246 19,471 21,358
Public 1,649 1,790 1,924 2,043 2,771 2,508
Private 8,856 8,849 9.773 12,203 16,700 18,850
Gross Fixed CapitalFormation 2,359 2,140 2,206 2,493 2,972 3,699
Public 1,021 860 836 894 1,153 1,521
Private 1,338 1,280 1,370 1,599 1,819 2,178
Changes in Stock (includingunidentifJied residual) 226 66 323 17 24
GDP 100.0 100.0 100.0 100.0 100.0 100.0
External BPsnirrPc 2=2 1=4 1-3 0=8 4=8 9-0
Total Resources Available 102.2 101.4 101.3 100.8 104.8 105.0
Consumption 82.0 82.8 84.8 84.2 90.9 89.5
Public 12.9 13.9 14.0 12.1 12.9 10.5Private 69.1 68.9 70.9 72.1 77.9 78.9
Gross Fixed CapitalFormat'Lon A18. 16.7 16.0 14.'7 1 .
iWiLLi~~~~~~LLUEI ~~~~~ -U. I -L0. ±L4 I -J. J;
Public 80 6.7 6.1 5.3 5.4 6.4Private 10.4 10.0 9.9 9.5 8.5 9.1
Changes in Stocks (includingunidentified residual) 1.8 1.9 0.5 1.9 0.1 0.1
1/ Defined as GNP minus net factor income from abroad.
Source: Central Bank of Ceylon, Annual Report, 1975.
Table 2.4: PERCENI'AGE OF TOTAI, INCOME RECEIVED BY EACH TENTH OFINCOME RECEIVERS, 1963 and 1973
Deciles Urban Rural Estates All Island
1963 1973 196319633 1963 1373 1963 1973
Highest 4.2.78 29.90 34.23 27.27 24.87 31L.70 39.24 29.98
Second 15.64 15.42 16.51 15.44 13.3]1 13.51 16.01 15.91
Third 10.77 12.17 12.35 12.72 11.21 11.12 11.46 12.65
Fourth 8.31 10.25 9.96 10.68 10.42 9.53 8.98 10.56
Fifth 6.64 8.68 8.11 9.16 8.71 7.99 6.82 8.75
Sixth 5.13 7.45 6.45 7.79 8.71 6.91 5.55 7.10
Seventh 4.28 6.25 5.04 6.42 7.33 6.16 4.51 5.70
Eighth 3.16 4.75 3.73 5.18 6.86 5.58 3.56 4.38
Ninth 2.00 3.42 2.54 3.53 5.56 4.61 2.70 3.17
Lowest 1.29 1.70 1.08 1.81 3.02' 2.89 1.17 1.80
Source: Central Bank of Ceylon, SuLrvey of Sri Lanka's Consumer Finances, 1963 and 1973.
Table 3.1: BALANCE OF PAYMENTS, 1970-77(USS million)
CURRENT ACCOUNT 1970 1972 1973 1974 1975 197b-1 1977 -Estimate Projection
Receipts 382 372 435 586 644 634 687
Merchandise, Exports, f.o.b. 339 316 367 511 555 560 608Port, Transportation and Insurance 19 26 28 26 29 )Foreign Travel 4 5 9 14 18 )Investment Income 2 2 3 6 7 74 79Government Expenditure 5 5 5 5 6 )Other Services 10 14 16 16 20 )Private Remittances 3 4 7 8 9 '
Payments 453 421 473 765 830 680 880
Merchandise, Imports, c.i.f. 392 359 413 701 757 618 814Port, Transportation and insurance 5 10 10 10 12 )Foreign Travel 3 2 2 1 2 )Investment income 23 21 20 22 25 62 66Government Expenditure 5 3 3 4 4 )Other Services 20 17 18 18 24 )Private Remittances 5 8 7 8 6 )
Net Current Account -71 -49 -38 -179 -186 -46 -193
CAPITAL ACCOUTTN
Receipts 203 243 254 391 431 358 2942/
Private Capital 1 2 1 2 1 - _Grants 13 17 1 13 42 77 49 44Loans 50 69- 52 70 126 11232/ 166Suppliers' Credits 14 9 38 65 52 51 39Short-term Credits 73 99 122 126 103 108 45IMF Drawings 23 27 21 57 52 33 -Borrowings from Banks 21 2 - 2 5 -Bilateral Credits - - 5 25 12 5 _Others 8 18 2 2 3 - -
Repavments 122 167 200 204 249 246 167
Private Capital 2 1 1 1 1 -Loans 19 21 23 26 39 34 31Suppliers' Credits 13 14 15 32 60 69 39Short-term Credits 47 95 101 118 119 106 62IMF Repurchases 27 28 26 24 24 24 16Borrowing from Banks - - 17 - - 4 -Bilateral Credits 13 2 - - - 9 13Others 1 6 17 3 6 - 6
External Assets, n.i.e. -10 -27 -16 -8 4 -66(- - increase)
Unfinanced Gap: 66
i/ Official estimate and projection as of mid-February 1977.2/ Estimates based on likely disbursements from existing commitments and disbursements
expected from new com-nitments.3/ Includes cash loan from People's Republic of China of $2 mn in 1972 and $3 mn in 1976.4/ Including errors and omissions.5/ No account has been taken of possible change in external reserves, including IMF position.
Sources: Central Bank of Ceylon for 1970-75 and Ministry of Planning and Economic Affairs for1976-77.
'Table 3.2: COMPOSITION OF MERCHANDISE EIXPORTS, 1970-77
VALUE 1970 1971 1972 1973 1974 1975 1976 1977Estimate Projection
-------------------------- US$ millions;
Tea 188 193 194 197 204 274 249 265Rubber 11 74 52 44 92 11.1 93 106 117Major Coconut: Products - 40 47 44 22 59 55 44 34
Sub-total 30.2 292 282 311 374 422 399 416Other Exports; -/ 40 36 53 98 148 136 161 192Total Exports 342 328 335 409 522 558 560 608
…------------------- Per Cent of Totail Export Value -- …
Tea 55.0 58.8 57.9 48.2 39.1 49.1 44.5 43.6Rubber 1' 21.6 15.8 13.2 22.5 21.3 16.6 .18.9 19.2Major Coconut Products - 11.7 14.3 13.1 5.4 11.3 9.9 7.9 5.6
Sub-total 88.3 88.9 84.2 76.1 71.7 75.6 71.3 68.4Other Exports 2/ 11.7 11.1 15.8 23.9 28.2 24.4 28.7 31.6
Total Exports 100.0 100.0 100.0 100.0 100.0 loci.0 100.0 100.0
VOL1UME
Tea (million lbs.) 459 456 419 454 389 469 441 420Rubber (million lbs.) 354 285 286 354 281 366 302 330Major Coconut Products - 873 1,01L0 1,248 417 466 845 803 600
(million nuts equiv.)
1/ Coconut oil, desiccated coconut and copra.
2/ Other exports include coconut by-products, spices, minor agricultural crops, precious and semiL-precious stones, manufactured goods;, minerals, and bunker oil.
Source: Sri Lanka Customs, as reported by the Central Bank of Ceylon for 1970-75 and Ministry ofPlanning and Economic Affairs for 1976 ancd 1977.
1/Table 3.3: VALUE OF INDUTSTRIAL EXPORTS 1972-76-
(ITJS m4 I 1 in-
1972 1973 1974 1975 1976
Food, Textiles, Chemicals and others
Food, beverages and tobacco 3.33 5.00 5.11 6.24 13.80
Textiles,wearing apparel and garments 1.17 3.59 4.96 4.96 9.20
Chemicals and chemical products 1.50 1.88 2.86 3.26 3.97
Wood and paper products, leather andrubber products 1.17 2.34 2.71 2.2/ 3.64
CerTmirA rand norrelainwnre - .31 1.20 1 .9 2.29
Ferrous and non-ferrous metal products 1.50 .63 .30 .43 .23
Base metal industries and machinery .33 .94 1.05 1.70 .56
Electrical machinery, appliances and 45 43 1.44supplies
Optical instruments, plastic goods, etc. - .47 .45 .57 .43
Subtotal 8.67 15.16 19.10 21.85 35.69
Petroleum- products, Minerals and Cement
Naptha - 3.59 12.18 11.49 12.46
Fuel oil - .63 1.05 - 5.41
Graphite 5.83 1.72 2.56 1.70 2.04
Ilmenite - .78 1.05 .71 .79
Rutile .31 .45 .99 .52
Cement - - 1.95 .71 .02
Subtotal 5.83 7.03 19.25 15.60 21.24
TOTAL 14.50 22.19 38.35 37.45 56.93
1/ Does not correspond exantly to figirpq in Tnhl1ble Ai4ip to roninlng off ofrupee value data.
2/ xrl iidinc bunkering and aviatorn fuel service-
Source: Ministry of Inrdustries and Scientific Affairs.
l/Table 3.4: INDTSTRIAL EXPORTS BY PRIVATF AND PUrBLIC SECTORS, 1972-1976
(US$ mi:llion)
1 9 7 2 I 9 7 3 1 9 7 4 1 9 7 5 L 9 7 6Public Private Public Private Public Private Public Private Public Private
Food, Beverages & Tolbacco .68 2.71 l.OQ 3.91 .89 4.26 1.42 4.80 2.74 11.06T'extiles, Wearing apparel
ancL Made-up garments - 1.14 .78 2.81 .08 4.89 - 5.01 .01 9.16Chemicals & Chemical
products .69 .76 .78 .1.09 .54 2.26 .55 2.67 1.05 2.93Wood & Paper Products &
Leather & Rubbier products .04 1.19 .31 .2.03 .27 2.48 .1.1 2.17 .19 3.46Nom-Metallic Mineral
products 2/ 5.83 - 7.34 - 20.08 .02 17.75 ,.01 23.70 .01Ferrous & Non-Ferrous
Metal products .001 1.42 .31 .31 .06 .29 - .40 - .23Base Metail Products &
Machinery - .40 -- .94 .05 1.02 - 1.64 .02 .54Electrical Machinery
Appliances & Suppl:ies - .03 -- - - .39 - .44 - 1.44MiscellaneouS Products,
Plastic Goods, Pens &Optical Instruments - .16 .16 .31 _ .41 .15 .48 .01 .26
TOTAL 7.24 7.81 10.77 11.40 21.95 16.02 19.98 17.60 27.72 29.09
1/ Does not correspond exactly to f:igures in Table 3.3 due to rounding off of rupee value data.2'/ Excluding bunkering and aviation fuel service.
Source: Ministry of Industries and Scientific Affairs
Table 3.5: COMPOSITION OF IMPORTS, 1970-1975
(US S million)
Item 1970 1971 1972 1973 1974 1975
Rice 53 33 27 42 108 151
Flour 44 35 32 71 129 142
Wheat and Meslin 2 4 7 10 18 19
Su2ar 29 41 41 sn 29 35
nairv Prodticts 9 8 10 11 11 19
Fis~h 11 12 14 8 8 6
Otther Food 23 17 24 8 5 12
ITmnfcue Toac 1 1 = = 1
Textile)/ 21 17 8 9 9 3
Medicinal andl PharmLaceutical 5 6 7 IC 7 1
Petro'Leum rProuucts 10U 4 0 46 i36 i24
Other Chemicals 11 12 17 35 16
Paper and Cardboard 8 8 7 6 10 10
Transport Equipment 21 13 18 15 14 16
Machinery and Equipment 46 34 30 35 28 46
Unclassified Imports 4 7 9 4 6 8
Other 79 83 81 69 97 104
Total Imports (c.i.f.) 389 344 344 424 685 745
1/ Includes clothing, yarn and thread
Source: Central Bank of Ceylon, Annual Report, 1974 and 1975.
Table 3.6: CONIPOSITION OF TERCIIANDTISE DTORTS, 1970-1977
1970 1973 1974 1975 1976 1977Estimate Projection
"ALI'E (US$ million)
rood- 179 205 311 377 231 271Petroleum 10 46 136 124 13/ 147Fertilizer 14 17 33 29 24 27
Sub-total 203 268 430 530 392 445
Investment Coods 92 50 41 62 )) 226 369
Other 94 106 164 153 )
Tntpl Imnorts 389 424 685 745 618 814
---- Perrcnt nf Total TInort Value----------
46.0 48.3 45.5 50s6 37.4 33.3'etroleum 2.6 10.8 19.9 16.6 22.2 18.1Fr414,c.r 3.6 4.1 4.8 3.9 3.9 3.3
Sub-total 52.2 63.2 70.2 71.1 63=5 54_7
7 -~~~~~~~17 112
nvet.en roods 23.7 118 60 83 ) 36.5 45.3Other 24.1 25.0 23.8 20.6 )
-otal- irmlorts 1,0 100 100 100 1\. 0.
.T4 l t ,_ zn 4\ -~Ll.'1L-Vvvv mUII[rLL a LUVLLZDJ
F,ood
Rice 534 343 302 457 425 442Flour 377 371 448 462 385 575Uheat (grain) 55 83 96 93 128 140Sugar 3/ 244 194 43 62 47 68
Fertilizer- n.a. / 307 358 183 225 288Petroleum (million barrels) 13.4.' 12.7 11.0 10.8 10.6 1(.5
1/ Include all kinds of foodstuff imported.2/ Not comparable with value data because of different sources.-I Within totals, there were changes in composition4/ 1971
Sources: Ministry of Planning and Economic Affairs for 1976 and 1977;Sri Lanka Customs (as quoted in Central Bank of Ceylon, AnnualReports) for value data, and Food Commissioner, State FlourMilling Corporation, Fertilizer Corporation and Petroleum Corporationfor volume dhta, in other years.
Table 3.7: WUORLD PRICE INDICES FOR MAJOR CO.MMODITIESIN SRI LANKA'S FOREIGN TRADE, 1970-1976(1967 - 1969 = 100, in current US')
1976Quarter Forecast
1970 1972 1973 1974 1975 1976 I II III IV 1977
Export Items
:_ea 100 96 97 128 126 140 120 132 153 156 141
Rubber 95 83 162 178 136 180 162 185 1.84 189 193
Copra 106 66 166 311 121 129 95 104 149 169 145
Import Items
Rice 73 76 177 274 183 128 131 124 127 132 151
Wheat 94 107 221 313 272 224 251 242 219 182 240
Sugar 76 155 179 514 421 237 291 286 215 161 247
Petroleum 100 146 208 751 825 885 885 885 885 885 -
Fertilizer 72 89 142 465 290 164 168 163 162 164 243(uirea)
Source: IBRD, Economic Analysis and Projections Department.
Table 3.8: TERMS OF TRADE, 1960-1975(1967 = 100)
ExDorts ImDorts Terms of TradeVolumc Price Volume Price
1960 87 122 133 83 148
1961 90 112 107 82 136
1962 97 109 108 77 142
1963 93 109 93 85 129
1964 102 111 114 105 105
1965 105 113 86 100 112
1966 96 107 118 98 109
1967 100 100 100 100 100
1968 103 117 101 126 93
1969 98 117 108 134 88
1970 102 118 102 140 84
1971 99 117 90 150 78
1972 97 118 88 158 75
1973 98 137 79 209 65
1974 85 213 56 370 58
1975 102 199 69 433 46
Source: Central Bank of Ceylon, Review of the Economy, 1975
-1/ Page 1 of 4 pagesTablie 3.9: SRI LANKA - STATIJS OF AID GROUP ASSISTAN(E -
(tlS $ million)
ad c I..: *
14 C tI ) U a a > a .u n El c o C.7 .i 0Z
a. r 1 'o a . J' i 1st Prcgramme-19165 a * c.i *: H i 5 a s u
Commitnients-/ 1.46 4.16 - - - 14.(0 2.67 - 4.99 - - 10.00 11.67 - - - - 48.95(1.0,6) (6.00) (7.06)
Disbursements 1.46 4.16 - - - 14.00 2.67 - 4.99 - - 10.00 11.67 - - - - 48.95(1.06) (6.00) - (7.06)
Amortization Payments - 0.02 - - - 3.93 2.67 - 5.26-- - - 1.79 1.23 - - - - 14.90Interest & Commitment payments - 0.06 - - - 2.08 0.13 - 1.08 - - 2.31 - - -- - 5.66
2nd Prc gramme-1966
Commitmient- 2/ 1.07 4.16 - - 7.70 6.25 - 4.99 - - 9.98 15.02 - - -- - 49.17
(1.76) (1.76)Disbursements 1.07 4.16 - - 7.40 6.25 - 4.95 - - 9.88 15.02 - - -- - 48.73
(1.756) 3;/ (1.76)AmortiZation Paynents - 0.04 - - 7.12 1.59 - 5.38-- - - 1.67 2.93 - - -- - 18.73Interest & Commitment paymients - 0.09 - - 1.45 1.01 - 1.09 - - - 2.98 - - - 6.62
3rd Prcigramme-1967
Commitmients'2/ 1.03 4.18 - - - 3.:38 6.67 - 4.99 - - 8.53 13.91 - 2.32 - - 45.01(1.17) (0.138) (2.32) (4.37)
Disbursement's 1.03 4.00 - - - 3.:31 6.05 - 4.99 - - 8.53 13.91 - 2.32 - 44.14(0.97) (0.131) (2.:32) (4.10)
Amortization Payments - - - - - 0.234 3.95 - 4.59 - - 1.09 2.57 - 1.35 - 13.89Interest & Commitment payments - - - - - 0.42 1.42 - 1.87 - - - 2.17' - 0.76 - - 6.64
4th Prcogramume-1968
Commitments-/ 21.75 4.18 - - 7.04 3.02 - 4.15 4.99 - - 8.37 21.17' - - 2.65 2.00 59.32(0.25')(0.47) (3.67) (2.65)(2.00) (9.04)
Disbursements 1.75 4.18 - - 6.95 3.02 - 4.15 4.89 - - 8.37 18.36 - - 2.65 2.00 56.13
(0.25:) (0.47) (3.66) (2.46)(2.00) (8.84)Amortization Paynents - - - - 6.01 0.11 - 1.47 1.11 - - 0.61 2.25 - - - 1.76 13.32Interest & Commitment payments - - - - 1.58 0.40 - 0.93 1.87 - - - 1.80 - 0 . 0 7 A/ 0.10 0.85 7.60
Table 3.9
-2- Page 2 of 4 pages
a a $.4 * a 0~~~~~~~~~~~~~~~ '& O0. D Z 3 C
5th Programne-1969 _ _ _ _ _ __ _ _ _2/
,omitments 1.14 4.40 2.72 - 9.22 3.58 6.67 1.26 5.49 - - 14.72 19.00 - 34.00 17.00 9. SO 129.10(0.22) (1.52) (34.00) 17.00) (9.90) (62.64)
Disbursements 1,14 4.40 2.65 - 8.32 3.58 6.22 1.26 5.48 - - 14.72 16.613 - 22.05 16.23 9.90 112.63(0.22) (]L.52) (22.05)(16.23) (9.90) (49.92)
Amortization Payments - - 0.09 - 5.51 0.18 3.33 - 0.70 - - 0.80 1.24 - 2.50 - 0.23 14.58Interest & Commitment payments - - - - 1.97 0.32 1.73 - 1.64 - - - 2.21 - 3.89 0.30 1.05 13.19
6th Programe-19702/
C omnitments 1.25 10.24 - 1.20 ().50 5.87 - - 8.60 - - 15.90 - - - - 6. 12 49.68(0.22) (4.57) (1.50) (6.1L2) (12.4L)
Disbursements 1.25 9.88 - 1.20 0.50 5.87 - - 8.49 - - 115.32 - - - - 5. 77 48.28(0.22) (3.12) ([.26) (5.77) (10.37)
Amortization Payments - - - - - - 0.34 - - - - 0.78 1.1:2:[nterest & Conmitment payments - - - - - 0.36 - - 2.09 - - - - - - - 1.09 3.54
7th Programme-19 71
Commitments' 1.06 6.70 3.01. - 6.55 0.11 7.20 - 11.59 - 1.58 15.37 15.43 - - - 8.01 67.6L(0,,18) (0.50) (8.01) (8.69)
Disbursements 1.06 6.70 3.01 - 5.16 0.11 5.99 _ 11.57 _ 1.58 15.34 15.24 - - - 4.39 61.105(0.18) (0.50) (4.:39) (5.07)
Amortization Paymrents -- - - - 1.07 - 1.07 - - - - 0.02 - - - - 0.18 2.34:Enterest & Commitment payments - - - - 1.02 - 0.71 - 1.63 - - - 1.67 - - - 0.15 5.183
8 th Programme- 1972
Com 2itments/ 2.25 4.99 - - 0.70 14.57 - - - - 0.79 0.57 10.00 - - 6.0C 13.90 53.77
(0-,21) (0,43) (13.33) (0n.57) (600) (13.90) (34-44)Disbursements 2.25 2.95 - - 0.64 14.57 - - - - 0.79 0.57 9.59 - - 4.17 3.24 38.77
(0.21) (0.43) (13.33) (0.57) (4.17) (3.24) (21.95)Amnortization 1Payrnenta .. - --- -_- - - -_ - 5/:Enterest & Commitment payments - - - - - 0.50 - - - - - - 5/ - _ 0.04 0.08 0.62
Table 3.9Page 3 of 4 Pages
-3-
a 0 a O M i X
9 th Prc gramne - 1973 __ _ __ __ _a a __ __a_ __
-.' a ..4 '-
co1 0i g r I H r w-9th1~~~rc~~~e-1973 ~$ - - - -- -Q co - - - - - -- - -
Commitments/ 3.29 1.0.37 - - 7.38 15.30 6.09S - 1.2.71 - 3.52 4.78 5.90 - - - 0.46 69.80(0.30) (6.24) - - (0.3,2) (1.34) (0.46) (8.66)
Disbursements 3.29 9.83 - - 5.24 15.30 5.08 - 12.71 - 3.5,2 4.27 5.25 - - - 0.46 64.95(0.30) (6.24) (0.312) (0.99) (0.46) (8.31)
Amortization payments - - - - 0.52 - 0.24 - - - - - - - - - - 0.76Interest & Commitment payments - - - - 0.55 0.48 0.1SI - 0.73 - - - 0.22 - - - - 2.17
LOth Progra me-1974
ComiLrnents 2/ 3.97 7.30 3.70 7.3,8- 8.52 4.70 - 1.30 :14.00 - 9.8E5 8.21 32.50 1.85 - 24.00 2.50 129.78(2.30) (0.96) (19.00) (2.50) (14.76)
Disbursements 3.97 5.91 0.49 7.38 7.72 4.70 - 1.30 1L4.00 - 9.8E5 4.49 28.47 1.85 - 15.70 - 105.83(2.30) (0.96) (D.70) (3.96)
Amortization payments - - - - 0.21 - - - - - - - 0.21Interest & Commitment payments - - - - 0.22 - - - 0.56 - - - 0.49 - - D.15 - 1.42
lth Progrmmne-1975
Commitnents~- 6.406-/ 16.30 - 5.166-/ 7.84 29.61 1.02 -_ 16.36 9.83 10.00 7.61 22.00 10.45 - 29.50 30.00 202.08(28.11)(1.02) (1.24) (29.50) (30.00) (89.87)
Disbursements 6.40 9.26 - 4.96 2.28 5.21 0.21 - 8.89 6.48 7.38 3.39 14.72 10.45 - 0.43 - 80.06(3.42)(0.21L) (1.24) (0.43) (5.30)
Amortization payments - - - - 0.01 - - - - - - 0.01Interest & Commitment payments - - - - - - - 0.05 - - - - - - - 0.05
12th Programe-1976
Commitinentst 2.DO 12.28 - 0.74 7.29 5.53 5.58 - L6.59 2.93 11.1]9 4.91 23.10 - - - 92.14( 6.15) (6.15)
Disbursements - - - - 0.17 - 0.20 - 1.03 0.82 - - - - - - - 2.22
Amortization payments - - - - -_ _ _ _ _ _ _ _ _ ,
Interest & Commitment payments
Table 3.9Page 4 of 4 pages
ah a
-4 15 a *4 4 0 141.4 n <3 0 cu 7 ud 0 .4 0
00 k 0 t. . -, .d .5 0 i-j a co.' ~ 'Grand Total. - U 3 F H 1 ) Z H , H
commitments 26.67 89.26 9.43 14.48 62.74 105.92 35.90 6.71 105.30 12.76 36.93 99.95 189.70 12.30 36.32 79.15 72.89 996.41(1.38)(21.85) (48.32)(11.02) (1.24) (2.62) (6.39) (3.67) (36.32)(64.15)(72.89) (1269.85)Disbursements 24.67 65.43 6.15 13.54 44.38 75.92 26.42 6.71 81.99 7.30 23.12 85.88 148.91 12.30 24.37 38.99 25.76 711.84(1.38)(14.05) (23.56) (0.21) (1.24) (2.62) (5.80) (3.66) (24.37)(23.99)(25.76) (126.64)Amortization payments - 0.06 0.09 - 20.45 6.15 11.26 1.47 17.04 - - 6.32 10.22 - 3.85 - 2.95 79.86Interiest & Commitment payments - 0.15 - - 6.79 5.57 4.18 0.93 12.6L - - - 13.93 - 4.72 0.59 3.22 52.69
Summary of Aid Group
Commodity Assistance
Commitments,- 25.3 67.4 9.4 14.5 62.7 57.6 34.9 6.7 105.3 11.5 34.3 93.5 186.0 12.3 - 15.0 - 736.4Arrivals ~ B/23.8 50.8 6.0 19.9 46.9 54.4 26.7 6.3 82.2 6.0 19.0 83.5 147.8 12.3 - 15.0 - 600.6of which 1965 1.5 - - - - - - - - - - - - - - - - 1.51966 1.0 2.7 - - - 6.2 1.5 - 4.6 - - 5.8 3.5 - - - - 25.31967 D.7 4.9 - - 4.6 5.9 1.1 - 4.2 - - 10.6 11.6 - - - - 43.t61968 1.0 1.9 - - 2.5 4.3 1.1 - 4.8 - - 9.8 18.2 - - - - 43.6,
1969 0.8 2.0 0.7 - 3.0 5.2 3.7 - 5.2 - - 9.6 20.1 - - - - 50.31970 0.9 8.1 1.2 - 4.6 0.8 4.8 1.7 4.8 - - 10.3 8.7 - - - - 45.91971 1.0 5.5 0.4 - 2.6 2.0 2.1 0.9 7.4 - L.6 14.4 8.6, - - - - 46.51972 1.1 4.1 0.2 - 5.8 4.2 2.4 1.8 5.5 - - 7.3 18.9 - - - - 51.31973 1.9 3.2 2.0 1.2 5.2 5.2 2.3 0.3 9.4 - 2.3 3.2 7.3 - - - - 43.51974 4.2 5.4 0.83 3.6 3.5 17.3 3.9 0.3 9.3 - 3.6 2.3 5.4 - - 4.7 - 64.31975 13.0 5.0 0.2 13.1 7.1 1.5 2.4 1.3 17.9 3.3 8.6 3.7 21.7 11.6 - 10.3 - 115.71976 (Jan. to Sept.) I.7 8.0 0.5 2.0 8.0 1.8 1.4 - 9.1 2.7 2.9 6.5 23.8, 0.7 - - - 69.1
Note: Figures in parentheses ref'er to projiect aid.
1/ Includes loans andi grants in respect Commodity Aid!, Food Aid, Project ALd and Technical Assistance.2/ Commitments" refers to Agreements signed.3/ Dollar equivalent if the amortization payments exceed the disbursements on the Yen credits due to changes in parity.4/ Represents commitmient and service charges on the Highways Development loan which has subsequently been cancelled.5/ Amortization and I:nterest Payments are shown under the 7th Programme as this loan has been consolidated with the loan
granted under the 7th Frogramme.6/ Includes emergency assistanc,e.7/ Commitments inclucle agreements signed up to October 26, 1976.8/ Based on Counterpatrt Fund records.
Source: ExternaL Resources Division, Ministry ofE Planning & Economic Affairs
'Table 3.10: TERMS OF AIT) GROUP COM[ODITY ASSISTANCETotal Commitments (ITS$ Mn.) Page 1 of 4 pages
Country Iteni Lst 2nd 3rd 4th 5th 6th 7th 8th '3th 10th 11th 12th
Australia Grant 1.5 1.0 1.0 1.7 1.9 0.9 1.1 2.70 3.0 4.0 6.4 2.0
Canada Loan 0.9 0.5 1.2 1.9 1.9 2.1 2.4 1. 0 1.0 4.3 12.0C 4.1
Grant 2.1 1.9 1.9 1.9 3.5 3.2 3.2 3.5 2.5 3.0 4.3 2.0
Denmark Loan - - - - 2.7 - 3.0 - - 3.7 - -
France Loan - '7.7 - 7.0 8.1 - 7.6 - 6.1 7.2 6.8 6.6
Grant - - - - 0C.8 0. 5 - 1.4 1.3 1.3 1.0 1.()
Germany Loan 8.0 6.3 2.5 2.5 2.5 4.1 - - 12.4 - - 2.7
Grant - - - 0.6 1.1 1.9 0.1 1.4 2.9 4.7 1.5i 2.9
Ind[ia Loan :2.7 - 6.7 - 6.7 - 7.2 - 6.1 - - 5.6
Italy Loan - - - 4.2 - - - - - - -
Graint - - - - 1.3 - - - - 1.3 - -
Japan Loan 5.0 5.0 5.0 5.0 5.0 8.0 1:L.6 - 12.1 14.0C 15.:3 15.65
Grant - - - - 0.5 0).3 - - 0.6 - 1.]1 0.8
Netherlands Loan - - - - - - - - - - -
Grant - - - - - - - - - - 4.1 2.9
Sweden Grant - - - - - - 1.6 0.8 3.2 7.6 10.0 11.2
U.IC. Loan 10.0 10.0 8.6 6,.0 10.6 12.0 6.4 - 3.4 7.2 - -
Grant - - - 2'.4 2.5 2.4 - - - - 7. 6 4.9
IT.S.A. Loan 7.5 7.4 - - 5.0 - - - - 8.( --
(PL 480) Loan 4.5 7.6 13.8 17'.5 14.0 _ 15.4 10.0 5.9 24.5 22.0 23.1
E.]E.C. Grant - - - - - 1.1 - - - 7. 4 5.2 0.8
I.D.A. Loan - - - - - - - - - 15.0 - -
U.N. Grant - - - - - - - - - 1.9 10.5 -
42.2 47.4 40.7 50.7 68.1 36.5 59.6 20.1 60.5 115.1 112.3 86.2
T'a1]eb 3.J]f(Containued) Page 2 of 4 pages
Interest Ralte ()
Country Item 1st 2nd 3rd 4th 5th 6th 7th 8th 9th LOth 11th 12th
Canada Loan
Denmark Loan - - - - -- - - -
France Loan - 6.0 - 5.5 5.5 - 3.5 - 3,,25 5.4-- 5.4- 5.4-
Gerimany Loan 3.r0 3.0 '3.0 3.0 2.5 2.5 - - 2.0 - - 0.75
India Loan 3.0 - 5.0 - 5.0 - 5.0 - 5,,0 - - 5.C
Italy Loan - - - 4.5 - - - - -- - - -
Japan Loan 5.5 5.5 5.25 5.25 5.25 5.0 4.72/ 45 4.0 4.0 3.5
Netherlands Loan - - - - - - - - -- - 2.5 -
U.K. Loan - - -
3/ ~~~~~~4/ 4/U.S.A. Loan 2.'-/ 3.5 - - 3. ( - - 3.0a--
(Loan 2 5/ 2 3/ 4/ 4 4 4/ 4/ 4/4/ 4(FL480))2.'i-/ 2.5'- 2.5-` 30 3. 3.0- - 2.0 3.(- 3. 0- 3.0-/ 3.0- 3.0C-
6/I.D.A. Loan - - - - - - - - - 0.75/- - _
1/ Represents simple average of the two public and private components of this loan.
2/ Rate of interesit during, grace period is 4.15%.3/ Rate of interes,t during grace period is 1%.4/ Rate of interest during, grace period is 2%.5/ PL 480 food assistance aga:Lnst local currencies.6/ Service charge.
Table _3.10(Continued)P
Grace Period (Years)P 4 pg
Country Item 1st 2nd 3rd 4th 5th 6th 71th ,8th 9th 10th 11th 12th
Canada ]Loan 10.0 10.0 10.0 10.(0 10.0 10.(0 10.0 10.0 10.0 10.0 10.0 10.0
Denmark Iloan - - - - 7.0 7.0 - - 10.0 - -
D Y~~~~~~~~2- 3. 25-- 3. 25-Fmrance ]Loan - 1. 5 - 0. 5 0. 2.0- - 1. 75-: 2. 2'/ 3.5/ .2-
Germany ]Loan 7.0 7.0 7.0 7.0 8.0 8.0 - 10.0 - - 10.0
India ]Loan - - 1.0 - 2.0 - :2.0 - 3.0 - - 3.0
I'taly Loan - - - 2.0 - - - - - -
JaparL loan 2.0 2.0 2.0 4.0 5.() 7.0 7.0 - 7.0 7.0 7.0 10.0
Nethe!rlands ILoan - - - - - - - - - 8.0 -
U.K. Loan 3.0 3.0 3.0 3.0 3.0 3.0 .7.0 - 7.0 8.0 -
r.S.A. Loan 5.0 5.0 - - 10.( - *- - - 10.0 - -
]Loan(PL480) 2/ 2.0 2.0 2.0 2.0 - 10.0 10.0 10.0 10.0 10.0 10.0
I.D.A. Loan - - - - - - -- - - 10.0 - -
1 / Represenl:s simple average of the public and private components of tlhis loan.
2/ See f ootnote 5, p. 2 of this tabl.e.
Table 3.10 (continued)Repayment Period After Grace Period (Years) Page 4 of 4 pages
Country Item 1st 2nd :3rd 4th 5th 6th 7th 8th 9th 10th 11th 12th
Canada Loan 40.0 40.0 40.0 40.0 40.0 40.0 40.0 40,0 40.0 40.0 40.0 40.0
Denmark Loan - - - 18.0 - 18.0 - 25.0 - -
I/ I l~~/ 1/ 1/ I/France Loan - 4.0 - 8.0 8.0 - 13.2 -_ 16b.0-/ 15. 5- 14.5-- 145-
Germany Loan 13.0 13.0 18.0 18.0 22.0 22.0 - - 30.0 - - 4.0
India Loan 3.0 - 9.0 - - 10.0 - 12.0 - - 12,5
Italy Loan - - - 12.0 - - - - - - -
Japan Loan 5.0 5.() 6.0 13.0 13.0 13.0 13.0 - 18.0 18.0 18.0 20.0
Netherlands Loan - - - - - - - 23.0 -
U.K. Loan 22.0 22.0 22.0 22.0 22.0 22.0 18.0 - 18.0 18.0 - -
IU.S.A. Loan 20.0 20.0 - 30.0 - - - 30.0 - -
3 3/ 3/ 3/(PL 480) Loan 2/ 19.(4/ l9.0- 1 9.0-/ 19.0-/ - 30.0 30.0 30.0 30.0 30.0 30.,0
I.D.A. Loan - - - - - - - -- 40.0 - -
1/ See footnote 1, page 3 of this table.2/ See footnote 5, page 2 of this table.3/ US$100,000 each during the first three years and tlhe balance in 16 equal installments.
Source: External Resources Divisicon, Ministry of Planniing and Econonic Affairs
1/Table 3.11: STATUS OF NON-AID GROUP COUNTRIESV OFFICIAL ASSISTANCE, 19 6 6 -19 7 6-'
(US $ million)German
People's Demo-Republic cratic Yugos- North Hun-
Prior to 1966 of China Republic Poland U.S.S.R. lavia Korea gary Others Total
Disbursements 7.9 0.7 17.8 1.2 - _ _ 27.6Amortization payments n 4 01 01 0. - 2 .8Interest payments - 0.4 - - - 0.4
1966
Disbursements 2.9 - 0.1 2.0 0.4 - - - 5.4Amortization payments 0.9 0.2 - 0.3 - - - 1.4Interest payments - - - 0.4 - - - - 0.4
1967
Disbursements - 0.3 0.2 0.3 0.2 - - - 1.0Amortization payments 1.0 - 0.1 2.4 0.3 - - - 3.8Interest pavments - 5 - - - - n,s
1968
fisbursements - 1.4 0.3 0.1 0.2 _ _ - 2.0Amortization payments 0.9 0.1 1.7 0.3 - - _ 3.0Interest payments 0.5 - - - - 0.5
1969Disbursements - 9.7 - - 0.1 - - - 9.8Amortization payments 0.9 0.1 0.2 1.6 0.3 - - - 3.1Interest payments - 0.1 - 0.4 - - - - 0.5
1970
Disbursements 8.2 0.4 - 0.1 0.2 - - - 8.9Amortization payments n 9 2.0 0.2 1.6 0.2 - - - 4.9Interest payments - 0.3 - 0.4 - - - - 0.7
1971
Disbursements 34.0 0.3 - - - - - - 34.3Amortization payments 34. 0 0.3 1 0.1 - - - 3.3InerstDamets1.7 2.0 0.2 1.7 0.1 - - - 5.7Interest payments - 0.4 - 0.3 - - - - 0.7
1972
Disbursements 11.2 1.7 - 0.3 - - - - 13.2Amortization payments 0.1 2.2 0.2 1.7 0.1 - - - 4.3Interest payments - 0.5 - 0.3 - -0.8
1973
Disbursements ,7 f 1 - 0.4 - 3.0Amortization payments 2 0.1 - 0.4 - - _ 6Interst paments2.0 2.1 - 1.8 0.1 - -- 6.0Interest payments - 0.4 - 0.3 - 0.7
1974
DisbursementsAmortizationrPayments 27.75 0.32 - 1.22 - - 0.11 - 29.40Amortization payments 4.05 2.09 0.03 1.72 0.05 - - - 7.94Interest payments - 0.37 - 0.24 - - - - 0.61
1975Disbursements 2Amortization payments 1.80 0.19 - 1.37 0.11 0.21 0.19 41.001/ 44.87Amoreti payments I 99 2.05 - 1.64 0.02 - 0.02 -_ 72
- - - 0.03 - - - 1.30 1.331976 (Jan. to Sept. only)
DisbursementsAmortization payments 3.48 1.60 - 3.32 - 0.50 0.17 18.60 27.67Interest payments - 0.42 - 1.19 0.01 - - - 1.62
- 0.22 - 0.04 - - - 1.30 1.56TOTAL
DisbursemnentsAmortization payments 99.73 16.01 1.30 26.91 2.41 0.71 0.47 59 .601' 207.14Interest payments 16.84 12.96 1.33 17.15 1.98 - 0.02 - 50.28
- 2.29 - 3.81 - - - 1.30 8.70
1/ Includes Government to Government assistance provided in the form of loans and grants.
2/ Of this,Iran contributed $32.0 million in 1975 in the form of an advance payment for tea:interest vavments on this amount to S1.3 million each year.
Source: Ministry of Planning and Economic Affairs
Table 3.12: SRI LANKA AID DISBURSEMENTS 1974-77
($ million)
1974 1975 1976 1977 -(estimate) (projection)
A. GRA.NTSA r oA?mmoA4 ' .r
C1LLA L.LLy aiu 6 1 4 20.4
Food aid 31.5 51.5 22.8 15 .7
Project aid 1.0 1.4. 3.5
Other aid 2.6 11.2 2.3 4.4
Total 42.4 76.7 49.5 44.0
B. LOANS
Commodity aid 36.4 41.9 40.5 43.8
Food aid 18.0 21.6 20.0 39.9
Project aid 15.2 32.5 37.3 74.8
Other - 29.7 -!' 14.2 8.1
Total 69.6 125.7 112.0 166.6
C. TOTAL AID (A + B)
Commodity aid 42.9 54.3 52.3 64.2
Food aid 49.5 73.1 42.8 55.6
Project aid 17.0 34.1 49.9 78.3
Other aid 2.6 40.9 16.5 12.5
Total 112.0 202.4 161.5 210.6
1/ These estimates are based on dishiirspment expected froru past and new credits,and assume an uncovered gap of $66 million.
2/ Consisted entirely of an advance payment by Iran for tea exports.
Source: Ministry of Plannina and Economi c Affairs
TABLE 4.1: SRI LANKA Page 1 of 2 pages
EXTERNAL PUB'LIC DEiBT OUTSTANDING INCLUDING 'UJNDIS]BURSED) AS OF DEC. 31, 1975WITH MAJOR REPORTED ADDITIONS THROUGH DECEMBER 31,, 1976
DEBT REPAYABLE IN FOREIGN CURRENCY AND GOODS(IN THOUSANDS OF 1U.S. DOLLARS)
TYPE OF CBEDITOR D E B T O U T S T A N D 1 N G MAJOR REPORTED ADDITIONSCREDITOR COUNTRY DISBURS]ED UNDISBURSED TOTAL JANIUARY 1, 1976 TO DECEMBIER31, 1976
SUPPLIERS CREDITSAUSTRALIA 17,068 9,235 26,303BABAMAS 3,344 - 3,344 -BEIGIUM 17') - 170 7,486CANADA 1,435 - 1,435 _CZECHOSLOVAKIA _ - 1, 304FRANCE 42,2316 7,169 49,405 20,188GERMANY, DEM. REP. OF 16') 24 184 -GERMANY, FED. REP. OF 9,113 - 9,113 -HONIG KON'G - - 2,501HUN'GARY 1S - 18 -INDIA 1,834 575 2,409 1,492ITALY 1, 448 - 1,448 : 2,140JAP'AN 8,571 - 8,571 5,338KUWIAIT 304 - 304 ;1,484PAKISTAN 407 - 407 _ROMANIA 1,361 11L,253 12,614 IL,413SINGAPORE 7,055 - 7,055SWITZERLAND 331 - 331 _THAILAND - - - 1,680UNITED KINGDOM 2,736 - 2,736 3,710UNITED STATES 5,066 - 5,066 L, 428USSR 2,821 113 2,934 21YUGOSLAVIA 194 10 204 -
TOTAL SUPPLIERS CREDITS 105,672 28,379 134,051 50,185
OTHER PRIVATE DEBTUNITED KINGDOM!{ 354 - 354 40
TOTAL OTHER PRrVATE DEBT 354 - 354 40
LOANS FROM INTERNATIONAL ORG.ASIAN DEV. BAN4K 21,304 47,949 69,253 -IBRD 36,209 11,250 47,459 -IDA 38,611 41,936 8C,547 -
TOTAL LOANS FROM INTERNATIONAL ORG. 936,124 101,135 197,259 -
LOANS FROM GOVE]RNMENTSCANADA 19,766 23,579 43,345 9,838CHINA, PEOPLES REP. OF 50,277 9,160 59,437 3,001DENM4ARK 5,976 3,738 9,714 -FRANCE 14,872 8,941 23,813 6,688GERMANY, DEM. REP. OF 9,716 9,116 18,832 -GERMANY, FED. REP. OF 68,210 28,495 96,705 2,535HUNGARY 253 7,827 8,080 -INDIA 12,925 15,161 28,086 5,706IRAQ - - - 19i,000
TABLE 4.1: SRI LkNKA Page 2 of 2 pages
EXTERNAL PUBLIC DEBT OUTSTANDING INCLUDING UNDISBURSED AS OF DEC. 31, 1975
WIT'H MAJOR REPORTED ADDITIONS THROUGH DECEMBER 31, 1976DE'BT REPAYAB'LE IN FOREIGN CURRENCY AND G3OODS
(IN THOUSANDS OF U.S. DOLLARS)
TYPE OF CRE:DITOR D E B T O U T S T A N D I N G MAJORL REPORTED ADDI]TIONS
CREDITOR COUNTRY _ DIS3BURSED UNDISBURSED TOTAL. JANUARY 1, 1976 TO DECEMBER 31 1976
ITALY 1,759 546 2,305 -
JAPAN 583,178 14,819 72,997 14,746KUWAIT - 25,497 25,497 _
NETHERLAN1DS - 4,463 4,463 8,183THirLAND - - - 2,172
UNITED ARAB EMIRATES - 11,957 11,957 -
UNITED KINGDOM 37,625 19,773 57,398 -
UNITED STATES 110,700 11,369 122,069 45,100
USSR ,3,311 72,732 8 1,043 -
YUGOSLAVIA 28 - 28 -
TOTAL LOANS FROM GOVERNMENTS 393,596 267,173 665,769 116,969
TOTAL EXTERNAL PUBLIC DEBT 600,746 396,687 997,433 167,194
NOTES: (1) ONLY DE]BTS WITH AN ORIGINAiL OR EXTENDED MATU]RITY OF OVER ONE YEAR ARE INCLUDED IN THIS TABIE.(2) DEBIT OUTSTANDING INCLUDES PRINCIPAL IN ARREARS BUT EXCLUDES INTEREST IN ARREARS.(3) THE' FOLLOWING UNCOMMITTED PARTS OF FRAME AGREEMENTS AND STANDBY'S ARE NOT INCLUDED IN THIS TABLE.
LOANS FROM GOVERNMENTSBULGARIA 4,047CHINA, PEOPLES REP'. OF 48,576CZECHOSLOVAKIA 6,071GERMANY, DEM. REP. OF 7,643KOREA, DEM. REP. OF 1,000POLAND 4,452USSR 11,670YUGOSLAVIA 11,514
TOTAL 94 9I
TOTAL UNCOMMITTED F]RAME AGREEMENTS AND STANDBYS 94,973
Source: EXTERNAL ])EBT DIVISION
ECONOMIC ANALYSIS & PROJECTIONS DEPARTMENTFIBRUARY 22, 1977
TABLE 4.2 - SRI LANKA
SERVICE PAYMENTS, CCPNITMENTS, DISEURSEMENTS AND OUTSTANDING AMCOUNTS OF EXTERNAL PUBLIC: DEBT
PROJECTIONS BASEI) CN DEBT OUTSTANDING INCLUDINiG UNDISBURSED ,4S OF DEC. 31, 1975
WITH MhTOit REOFTED ADDITIONS THROUGH D3MKBER 31, 1976DEBT REPAYABLE IN FOREIGN CURREN1;Y AND GOOIDS
(IN THOUSANDS OF U.S. DOLLARS)TOTAL
YEAPL : DEBT OUTSTANDING AT T R A N S A C T I O N S D U R IN G P E R I OD OTHER CHANGES: BEGINNING OF: PERIOD
…- - - - - :---- - - - -- --- ------ -…
DISBURSED: INCLUDING COMMIT-: DISBURSE- S E R V I C E P A Y M E N T S :CANCEL- : ADJUST-ONLY :UNDI SBIJRSEC MENTS : MENTS -------- :------: LATIONS : MENT *
PRINCIPAI INTEREST TOTAL(1) (2) (3) (4) 15) (6) : (7) : B8 : (9)
1971 310,626 517,970 L03,961 85,909 29,0811 11,028 40,109 20,,117 2,0121972 387,293 574,745 87,021 73,868 36,156 13,670 49,826 3,p738 -14,1111973 415,0Cl5 601,761 92,139 83,846 39,2131 15,515 54,796 8,347 20,3411974 477, 117 67;2,613 233,095 146,198 52,590 16,500 69,0910 1,519 16,2351975 579,402 867,834 286,199 160,412 106,672 20,605 127,217 530 -49,3921976 600,746 997,439
* * * * * * TF-E FCLLOWING FIGURES ARE PROJEC:TED * * * * * *
1976 600,146 997,439 167,1S4 218,625 1L10, 518 21,919 132,437 -1977 708,8137 1,053,360 - 126,327 99,146 22,016 121,16,2 -1978 736,C117 954,220 - 82,316 62,564 19,998 82,562 -1979 755,776 891L,666 - 52,611 48,565 19,356 67,921 -1980 759,823 843 ,103 - 29,525 49,3132 18,508 67,8E10 -1981 739,S£2 793,738 25,060 46,3!21 17,448 63,769 -1982 718,723 747,415 - 9,175 40,811 16,673 57,484 -1983 687,086 7015,606 - 5,161 43,338 15,529 58,8f67 -1984 648,913 663i,272 - 4,766 43,770 14,519 58,289 -1985 609,512 619,505 - 4,548 44,850 13,336 58,186 -1986 569,610 574,654 - 2,157 43,369 12,319 55,6818 -1987 528,399 5313,26 - 1,925 37,332 11,206 48,538 -1988 492,992 493,S54 963 37,365 10,522 47,8817 -1989 456,588 456,588 - - 35,920 9,565 45,485 -1990 420,669 420,669 - - 34,336 8,628 42,964 -1991 386,335 386,335 - 31,4810 7,739 39,219 -1992 354,858 354i,E58 - 28,368 6,952 35,320 -1993 326,481 326,,481 - - 26, 533 6,239 32,772 -1994 299,950 29;,950 - 25,146 5,553 30,69,9 -1995 214,806 274p,806 - 19,011 4,963 23,974 -
NOTE: INCLUDES SERVICE ON LL DEBT LISTED IN TABLE 1 PREPARED IWITH THE ExCEpTOm OF A FRNaCH GOVERNNPT DEBT OF $71i4 FOR WHICHTHE REPAY?MUT TiMS ARE NOT AVAILABL.
* THIS COIUMN SHOWS THE AMOUNT CF ARITHMETIC IMBALANCE IN THE AMOUNT OUTSTANDING INCLUDING LINOISEiURSED FROM4 ONEYEAR TO THE N4EXT. THE MOST CCMMIGN CAUSES OF IMBALANCES ARE CHANGES IN EXCHANGE IRATES AND TRANSFER OF DEBTSFRCIM ONIE CATEGORY TC ANOThER IN TFE TABLE.
SOURCE: EXTERNAL DEBT DIVISIONECONO4IC ANALYSIS & PROJECTIONS DEPARTMENT
FEBRUARY 22, 1977
Table 4.3 - SPI LANKA ONE TO) FTNfF Y"ARs
SERVICE PAYMENTS, CCAAMITMENTS, pISBLJRSrmENTS AND CUTSTANDIN(; AmOUNTS OF EXTERNAL PUBLIC DEBT
PROJECTIONS BAlSFn rON DEBT OUTSTANIDlNG INCLUDING UNDISBURSED AS OF DEC. 31, 1975
INCLIJOES OINLY DEBT COMMITTED JAN. 1 1900 - DEC. :31. 1975r)EBT REPAY,601F TN FOREIGN CURRFNCY AND GOODS
(IN THOUSANDS OF UJ.S. DOLLARS)TOTAL
YEAQ : nEFT OUTSTANDING Al : T R A N S A C T T n N S C U R I Nt G P E R I n D OTHER CHANG S! RCGINNING nF PERIOD :
D:SRURSFD: INCLUDING COMMIT-: DISBURSE- S E P V I C E P A Y M E N T S : CANCEL- : ADJUS--: ONLr :UNDISBURSED: MENrs : MENTS ------------ : LATIONS MFNT N: : : : : PRINCIPAL INT'ERESir TJTAL: (11 : (2) (3 : (4) (5) ( 16) (7) (8) (9)
1 971 1,548 1,r0?7 2,746 2,967 1,727 274 2,001 e83 1721$172 2,957 3,015 15,079 5,933 1,926 581 2,507 20 -50197 6.,905 7,098 21,137 21,028 2,946 830 3,776 - 8121974 25,805 26,101 129),503., 87,705 16,276 2,572 18,848 3 11,82915975 95,716 141,154 23,867 59,952 68,394- 5v444 73,838 1 81 -31,6331 976 8:5,024 92, 813
k * * * * * THE FOLLOIWING IFIGURES ARE PRIJECTED * * * * * *
1976 R3,024 92,813 - 9,789 63,199 4,858 68,057 - --7461977 28,;868 28,8E68 - - 20,240 1,897 22,137 - 21978 13,630 8,630 - - 7,948 4031 8,349 - -21 979 680 680 - - 553 30 583 - I19180 128 128 - - 128 5 133 - -
e THIS COLUMN SHIMS THF AMOUNT CF ARITHMETIC IMBALANCE IN THIE AMCIUNT OUTSTANDING INCLunING UNtISBURSED f POM EDNFYFAP Tn THF NEXT. THF MOST COMmoN CAUSES nF IMBALANCES ARE CHANGES IN EXCHANGE RATFS AND TRANSFFR OF DEBTSFPnM rNE CATEGORY TO ANOTHER IN THf TABLF.
SOURCE: EXTERNAL DEBT DI:VISIONECONOMIC ANALYSIS & PROJECTIONS DEPARTMENT
JANUARY 10, 1977
Page 1 of 2 pages
'm INUOTE OIN GOUVZALWPd N liNA1 UUUUTNI SItliILS
1. The detailed accounts of the budgetary transactions of theGovernment are published in the Estimates of the Revenue and Expenditureof the Government of Sri Lanka. However, the structure of the budgetmakes it difficult to analyze budgetary performance from the accountsshown in this source. The difficulty stems from three major factors.First. the administratively defined "central government" of Sri Lankacontains three entities which are de facto public enterprises, i.e., theDepnartment of Rnilwa,v the Depnartment of Ports, and the nepnrtment of Postand Telecommunications. The Department of Food Commissioner is alsoengaged in entrepnreneiria1 nctivitipe on an Pvt-ensQive cale. The riirrent
expenditures by these Departments, which consist mainly of operatingexnonscec are record in th1 he obdet on a Gross basis; the revenues fromtheir operations are also recorded on a gross basis as current revenue.Thus, the budgetary account statistics give an inflated image of governmenttransactions. Second, the capital expenditure figures in the Estimates
Inude governmLLent loans anAU thLle outlays for thL le acquisition ofli financialassets on a gross basis. Receipts from these loans and proceeds from thesaCs Uo i nania CII sset db ariLcl deL in "reveneUU.U 11T h VLrUe . 1 11 ree U, L u
and expenditure figures in the Estimates include intra-budgetary transfers,which do not rellect any resource tLansfers between the Governruent and therest of the economy. An example is the proceeds from FEEC's on the importsof government departments and those generated by government foreign debtamortization, which are counted both as budgetary revenue and budgetary out-lay. in the period from 1970/71 to 1976, about 40 percent of FEEC saleproceeds recorded in the Estimates directly originated from intra-budgetarytransactions. In the same period, the identifiable intra-budgetary transferreceipts of this nature amounted to between 8 and 11 percent of recorded taxrevenue. Furthermore, this ratio tended to rise over time.
2. The problem of FEEC's generated by foreign debt amortization ofthe Government had been pointed out by previous economic missions and thispart of FEEC revenue had been removed from revenue statistics in the govern-ment account tables. This adjustment is made because such FEEC revenue is notmatched by a fictitious current expenditure of the same magnitude, and inclu-sion of such FEEC's in revenue therefore distorts the current account position.The same argument applies to FEEC's and other taxes on items that enter thecapital budget.
3. In this report, the revenue figures are adjusted:
(i) to include the positive current surpluses of the Department ofRailway, the Department of Ports, and the Department of Post andTelecommunications, instead of revenue from gross operations;
(ii) to show government loans and the acquisition of financial assetson a net-of-repayment/sales proceeds basis as net lending, and
wNot nrt Gov't Acee?ntsEPage 2 of 2 pages
to exclude the part corresponding to negative net lendingfrom the revenue figure, in accordance with the suggestionof the GFS Manual; 1/ and
(iii) to exclude the FEEC's generated by government debt amortiza-tion.
1/ International Monetary Statistics, Draft Manual on Government FinanceStatistics, June 1974.
Table 5.1: SUMM,ARY C)F BUJDGETARY OPERATIONS, 1970/71 - 197711(Rs mill:Lon)
1970/71. 1]971)/72 1973 1974 1975 1976 _ 1977BudLget Revised Budget
Estimate Estimate Estimate
SL. Current Revenue 2,594 2,931 3,611 4,275 4,535 5,054 4,859 5,3512. C urrent Expenditure 2,865 3,008 3,519 4,220 4,906 4,935 5,233 5,4383. Advance Account Payments 78 143 78 12 -66 1.00 100 -4. Currtent Surplus (1-2-3) -349 -220 14 43 -305 19 -474 -875. Capital Revenue 2 1 2 5 3 5 35 226. Capital Expenditure and Net Lending 783 885 1,098 1,181 1,925 1,798 1,988 1,9677. Cash Deficit (6-4-5) 1,130 1,104 1,082 1,133 2,227 1,774 2,427 2,032Financed by:
Foreign Grants and Loans (Net) 280 353 268 476 838 785 L, 06 5 1,078Domestic Nonmarket Borrowing (Net) 141 199 243 -54 379 - 60 70Domestic Market Borrowing
from Nonbank Sources (Net) 492 442 623 686 827 993 86:3 884Borrowing from Banking System (Net) 94 22,6 116 -15 153 - 440 -Use of Cash Balances 123 -115 63 39 31 -4 - -
Memorandum: Intrabudgetary Receipts and Payments Included :in:Current Revenue (Line 1) 143 12:6 208 235 335 377 37.4 3402/Current Expenditure (Line! 2) 99 73 117 115 92 ]L03 145Capital Expenditure
and Net Lending (Line 6) 44 53 91 120 243 274 229
L/ Before 1971/72, the fiscal year was from October 1 to September 30. FY1971/72 covered Ea 15--moni:h period fromOctober 1, 1971 through DLecember 31, 1972. ALs from :1973, thie fiscal year correspondLs to the ca:Lendar year. Intlhis and the following tables, the data for 1971/72 have been pro-rated to a 12-month period.
:2/ Breakdown not available.
Source: Central Bank of Ceylon
Table 5.2: BUDGETARY POSITION, 1970/71 - 1976-1/
(per cent of GNP at market prices)
1970/71 1971/72 1973 1974 1975 1976n ev.:s -A
Estimate
BUDGETARY REVENUE 20.4 21.5 21.5 20.1 19.1 17.8
Taxes on Income and Profits 3.5 3.3 4.2 2.8 3.2 3.1
Taxes on Property andProperty Transfers 0.4 0.4 0.5 0.3 0.4 0.3
Business Turor.ver Tax 2.f 2-9 3.2 2.8 2.7 2.7
Selective Taxes on Goods 3.5 4.6 3.7 3.5 3.5 3.4
Taxes on Imports 2.2 1.9 1.3 1.3 1.4 1.8
Taxes on Exports 2/ 2.1 1.7 2.3 3.1 1.8 1.4
FEEC Sale Proceeds, Net- 2.8 3.4 3.5 4.1 3.9 3.4
Non-Tax Current Revenue 2.9 2.9 2.3 1.7 1.7 1.5
CURRENT EXPENDITURE 23.1 23.1 21.4 19.9 20.4 19.fZL'
Administration 4.0 4.2 3.4 3.9 3.8 3.1
Social Services 5.9 5.9 5.1 4.3 4.3 4.5
Economic Services 1.2 1.1 1.0 0.8 0.7 0.8
Interest 2.6 3.0 3.1 2.7 2.9 3.1
Transfers 8.5 7.7 8.2 8.0 8.8 7.5
Of which: Gross FoodSubsidies 4.8 4.2 4.2 4.5 5.2
Others 0.9 1.2 0.6 0.2 -0.1 36
CURRENT SURPLUS -2.7 -1.6 0.1 0.2 -1.3 1. 8/
CAPITAL EXPENDITURE 6.2 6.5 6.5 5.5 8.1 7.,3/
Administration 0.2 0.3 0.3 0.3 0.3 0.3
SoDciLa'l Services 0.8 18 0.6 0.8 1.2
Economic Services 2.4 2.7 2.5 2.5 3.3 3.3
Capital Transfers 2.5 2.2 2.6 1.9 3.2 3.3
Net Lending 0.2 0.3 0.2 0.2 0.3 0.6
Others - - - 0.1 -1
OVFRALT. DEFGTITT 8.9 8.1 6.4 5.3 9.4 8. 9/
i/ For fiscal years, see footnote 1/ to Table 5.1.
2/ Excluding FEEC's generated by foreign debt amortization.
i,/ Net of unaer-expenditure provisions i 1976 Of 0.4 percent of GNr Lor currenit
expenditure and 2.7 percent of GNP for capital expenditure.
Source: Computed from Tables 5.3, 5.4 and 5.6.
Page 1 of 4
Tabl,e 5.3: BUDGETARY REVENUFE"/
(Rs million)
1970/71 1971/727/ 1973 1974i 1975 1976 1977Budget Revised Budget./
Estimate
:1. Taxes on Net ][ncome & Profits 445 453 700 599 770 595 840 960Corporiate ]Lncome Tax 458 409 512 440 640Non-Corporate Income Taxc 41 4/ 246 19t) 258 155 200Adjustment -5 - -
2. Taxes on Property & Property Transfers5/ 5'0 60 77 69 93 69 80 77
:3. Taxes on Goods & Services 838 1,088 l,250 1,442 1, 75 1,718 ].,745. 1,864Busineiss Turnover Tax 326 394 536 603 646 635 740 685
Trad,e & Profession 16/ 6/ (79) (110) (115) (126) (140) (1i5O)Manu:Eacturing (457) (493) (5:31) (509) (600) (535)
Selective Taxes on Goodsz/ 451 624 628 750 831 990 914 1,084Liquor Excise8/ (1616) (267) (247) (216) (206) (259) (269) (306) -
Tobacco Tax (248) (313) :342) (373) (459) (563) (440) (520)Tea Tax, ad valorem9 / (37) (44) (39) (161) (166) (168) (205) (2-58)
Selective Taxes on Serv:Lcesl./ 15 16 29 31 34 32 34 34
Licensie Fees 46 53 58 59 64 61 57 61Business & Professional Licensesll/ (26) (26) (29) (32) (36) (37) (34) (35)Vehicle License Tax and Other (20) (27) (28) (27) (.28) (23) (23) (26)
Table 5.3E'age 2 of 4
1970/71 1971/72! 1973 19374 1975 _ L976 19177Budget: Revised Budgetj/
Estimate
4. Taxes on Imports 282 258 222 :277 336 458 500 5c35Customs Duties on:Vegetable Products 32 25 23 26 28 35 30 35Prepared F'oodstuffs, Spirits,Vinegar & Tobacco 70 37 34 20 60 68 140) 115
Mineral Products 16 20 3 6 4 4 8 8Chemical Products 31 31 34 61 52 65 55 60Papermaking Materials 8 12 11 18 18 40 23 25Textile & Textile Articles 35 34 32 38 37 52 50 50Base Metals & Base Metal Articles 16 19 16 23 25 50 40) 45Machinery, Equipment & Parts 23 25 21 23 34 60 42 65Transport Equipment 20 25 25 30 315 55 55 65Other 30 29 21 31 4L 28 54 55
License Fees on Aid & Gift Imports 1 1 1 1 L 1 3 12
5. Taxes on Exports 266 233 386 660 430 :313 367 427Coconut & Coconut Products 55 27 33 162 65 - 5 -Teali/ 162 164 172 156 178 L71 166 172Rubber2!/ 14 11 144 286 14:2 99 163 218Other 35 31 38 56 45 43 33 37
6. FEEC Sale Proceeds, net 350 467 585 ;866 930 1P474 924 1.L40From Outside Budgetl3/ 209 343* 379* 634* 877 1,L00 500 5S00From Budgetl3/ 14/ 141 124* 206* 232* 53 :374 424 640
7. Total Tax Revenue 2,231 2,559 3,220 3,914 4,134 4,627 4,456 5,0)03
Table 5.3Page 3 of 4
1970/71 1971/72'2/ 1973 1974 1L975 1976 1977Bud[get Revised Budget_
Estimate
8. Property Income 23.5 218 219 204 231 274 229 17.5Current Surplus of Gov't Enterprises 25 44 34 47 42 20 16 13
Colombo Port Commission (25) i(29) (22) (22) (50) (20) (16) (13)Post & Telegraphs Dept. (-) (-) (-) (25) (12) C--) C-) C-)Railway C-) (15) (12) (-) (-) (--) (-) (-)
Profits from 'Food Salesl5) 78 49 22 - - 1)6 - -
Profits of Advance Account Activities 26 11 10 11 4 16 10 10Interest, Dividend, Rent 96 104 144 138 174 125 188 137
Of which: Items Included irtVoted Expenditure (2) (2) (2) (3) (4') (3) (4) (5)
National Lottery 10 10 9 8 12 8 15 15
9. Other Non-Tax Current Revenue 128 1L54 172 156 170 152 174 173Proceeds from Nonindustrial Salesl6 / 24 56 47 38 49 33 39 33Administrative Charges & Fees]1 7/ 75 69 89 83 86 91 100 101Fines & Forfeits 10 12 14 15 12 9 9 9Contributions to Pension Schemne.8/ 18 19 2C0 20 24 .70 26 30
10. Non-Tax Current Revenue (8+9) 363 372 391 3 401 4:7 403 348
1.1. Total Current Revenue 2,594 2,931 3,611 4,275 4,535 5,054 4,859 5,351
1.2. Capital Revenuel9/ 2 1 2i 5 3 5 35 22
1.3. Total Revenue 2,595 2,932 3,613 4,280 4,538 5,059 4,894 5,373
Table 5.3Page 4 of 4
FOOTNOTES AND SOURCE
1/ Please see footnote 1/ to Table 5.1 for fiscal years.
2/ Figures are pro rata adjusted for a 12-month period.
3/ The 1977 budget speech did not include any new tax proposals.Item 1, however, includes Rs 100 million to be obtained from aspecial effort to collect tax arrears.
4/ Breakdowns not available.
5/ Revenue Heads 1.7 (excluding 1.7.5) and 10.
6/ Breakdowns not available.
7/ Tnrluding the nrofits of Arrark Mononolv and negligihbl revenuefrom match tax.
8/ Mainly profits of Arrack Monopoly through 1973, after which themonopoly was made independent of the Excise Dept. as the StateDistilleries Corporation.
9/ Levied on both exports and local sales.
10/ Mainly banks debits tax (Revenue Head 1.7.5), introduced in 1970/71.
11/ Mainly liquor licenses.
12/ Including the revenues from export duties under the Medical WantsOrdinance, which are earmarked for health services for estate workers.
13/ * Indicates approximate breakdowns.
14/ Excluding FEECs generated by government foreign debt servicing.
15/ Prior to 1971/72, profits were kept in the advance accounts. However,profits for this period are also indicated.
16/ Revenue Heads 5.3.4 and 6.1.
17/ Revenue Heads 6.2 and 8.1 excluding 8.1.2.2.
18/ Revenue Head 7.
19/ Revenue Head 9.
Source: Centraf Bank of Ceylon;General Treasury
Table 5.4: CURRENT EXPENDITURES, 1970/71 - 19771/(its million)
197D/71 _ 1971/72 1973 19174 1975 1976 1977(12 mths.) 13udget: Revised Bucdget
Estimate Estimate Estimate
Administration 505 580 579 83 0 V 903 803 849 919Social Services 747 800 856 912 1,021 IL,142 1,228 1,301
Of which: Education (483) (519) (563) (583) (655) (734) (792) (826)Health (238) (254) (262) (292) (324) (362) (382) (410)
Economic Services 152 145 166 165 165 204 205 238Interest 337 413 514 580 699 835 835 1,016
Domestic Debit (267) (324) (399) (461) (560) (671) (671) (786)Foreign Debt- 3 (69) (89) (115) (1.19) (138) (164) (164) (2!30
Gross Food Subsidy4/ 614* 575* 701* 952* 1,230* 1l,000 949 1,060-/Pensions 225 254 270 292 331 311 311 375Other Transfers to lHousehlolds 102 104 122 1.65 232 291 456 233Transfers to Local ILuthor ities 60 61 65 70 73 91 91 85Current Transfers to Public Corporations 24 23 166 164 147 164 164 3L55Other Transfer Payments 61 35 57 68 68 61 81 75Unclassified 20 18 10 11 17 127' 1276/ -Total Current Expenditure by Central Banlk Def:Lnition 2,846 3,006 3,508 4,209 4,887 .5,029 5,296 5,476Less: Undier Expendit:ure P'rovisions - - - - - -104 -113 -119Other Adjusements7/ 19 2 11 11 19 10 50 81Adjusted Total 2,865 3,008 3,519 4,220 4,906 4,935 5,233 5,438Plus: Adviance Accournt Payments 78 143 78 12 -66 100 100 -Total Current Expenditure 2,943 3,151 3,597 4,232 4,840 .5,035 5,333 5,438
1/ See footnote 1/ to Table 5.1 for fiscal yeaars.2/ Including Its 150 million special payment to state emplovees.3/ Including IEECs as follows: 197O /71 1971/72 1973 1974 1975 1976CPX 1976(RE) 1977(B)
24 32 44 45 52 63 63 894/ Figures with* irLclude. a part charged to acdvance! accounts.5/ Including estimated effect of increase in sugar ration (Rs 60 million) announced in budget speech.6 Including (i) Rs 85 million estimated as the ef'fect of wage increase and (ii) Rs 30 million estimated as the effect of
petroLeum cost increase.7/ Operaiting deficits of' Trading Enterprises.
Source: Central Bank of Ceylon
Page 1 of 2
Table 5.5: FOOD SUBSIDY 1970/71 - 1977 !
(Rs million)
197()/71 1971/72?V 1973 1974 1975 1976 1977
Budget Rev:Lsed Budget4/Estimate
Subsidly OrL Rice 555.2 491.3 522.21/ 680.4 744.9 791.7 606.0 726.4
Rice Distribution Expenses 48.8 35.9 41.8 52.7 37.9 129.6 125.6 155.4
Losses of Sale ofDhall 65.9 13.0 21.9 26.:1 - - - -
Red Onions 3. 3 - - - -
Ch:Lllies - 7 -- - - -
InfEant Milk Food - 2.6 4.0 8.5 11.9 6.0 20.2 24.0
Flour - 22.6 111.1 161.2 220.5 - 116.7-Ž' 200.7
Suga 5- - - - 26. 6 21,5.1 73.3 81.0 16.9
Less: Miscellaneous Receiplts :2.1 - 2.6 4.3 1.6 0.5 0.5 0.5
574.3- 700. 2.7!/ w~~~'2 10001.Gross Food Subsidy 612.3 / 70.8 952.77 .471
Profi t on Salel ofSugar. / 63.5 47.1 21.8 - - -- - -
Flour 5.1 - - - - 105.8 - -
Maldive Fish 8.0 1.3 - - - - - -
Plus: Ric e Subsidy Tax 2.7 0.7 - - - - -
Profits -79.5 49.1 21.8 - - 105.8 - -
Net Food Subsidy 532.8 525.2 679.0 952.7 1,230.4 894.3 9149.O ! l,12:.9 4/
Of which: Cost of FEECs on Sugar (135.0) (130.0) (221.0) (75.8) (177.1) ( -) (97.2) (67.5)
Source: Food Comissioner
Table 5.5Page 2 of 2
FOOTNOTES
1/ For- fical years, see footnote 1/ - -able 5.1
'' Figures are proC rata adjste- for m2r.onths.
_/Tncl uAir.g Ds 1.1 .m4illion of pa-ym,ent under -le Voluntary..J .LL~..5.AL.LL V, .L .L LILLLLJ.LJI J. p y L~I IU J LLLC V t.i.L JLJ
Family Allowance Scheme.
4/ Including post-budgetary adjustments.
5/ Including the effect of FEECs on imported sugar as shownin parenthesis under "Net Food Subsidy."
6/ includes Rs 18.1 million being loss on return of loanwheat to India.
7/ Including minor amounts of depreciation.
8/ According to a later estimate, the total subsidy amounts toRs 1,045 million, because of larger subsidies for rice, flourand sugar.
Table 5.6: CAPITAL EXPENDITURE AND NET LENDING, 1970/7L - 19771/(Rs million)
1970/71 1971/72 197:3 1974 19 75 1976 1L977Budget Revised Budget
Estimate Estimate Est:imate
Civil Administration 22 42 51 63 122 85 8,9 93
Social Services 103 133 133 122 19s9 308 321 232Educatiion 43 49 39 41 5'3 67 67 74Health 28 26 36 37 86 111 117 65Housing 14 26 42 28 41. 58 60 70other 18 32 16 16 1SI 72 78 23
'Economic Services 310 362 419 525 775 664 891 894Agriculture &c IrriLgation 132 133 160 253 305 287 377 419Fisheries 3 4 3 13 31. 36 36 30Manufacture & Mining 5 9 12 10 1CI 16 16 20Trade 19 15 7 3 7 15 20 15Communications 151 201 237 246 421. 310 441 411
Acquisition of Real Assets 435 537 602 710 1,096 1,057 1,302 1.,219
Capital Transfers 320 306 445 403 757 848 890 1.095Public Corporations 281 258 384 378 72Ci 822 861 1,048Other 39 48 61 24 36 26 29 47
Net Lending 26 36 42 48 62 144 166 15Gross Lending2/ 43 63 105 113 10El 213 213 125Less: Repayments -17 -26 -62 -64 -46 -69 -47 -110
lJnallocable Expenditure_3 2 6 9 20 1C0 353 353 303
Total Capital Expenditure & Net Lending byCentral Bank Classification4 / 783 885 1,098 1,181 1,925 2,402 2,711 2,632
ILess: Under Expenditure Provisions - - - - - -604 -723 -665
Capital Expenditure & Net: Lending 783 885 1,098 1,181 1,925 1,798 1,9988 1,967
1/ See footnote 1/ for Table 5.1 for fiscal years.2i/ Acquisition of financial assets.3/ Unallocated cost of FEECs except for 1976 and 1977 for which the figure includes Rs 350 million ancl Rs 300 million respectively
appropriated for decentralized 'budget.4/ More accurately, "Capital Expenditure" by the Central Bank of Ceylon definition less loan repayment: receipts. The
Central Bank does not use the term "Net Lending."
Sou--ce- Central Bank of Ceylon
Table 5.7: CENTRAL GOVERNHENT BUDGET DEBT SERVICE, 1970/71 - 19771/(Rs. million)
1970/71 1971/72 1973 1974 1975 1976 1977Budget Revised Budget
Estimate Estimate EstimateDomestic Debt
Amortizati,on 107 135 197 290 248 307 307 416Interest 267 324 399 461 560 671 671 786
Foreign DebtDebts held by, Sinking Fund
Amortization :2 2 2 2 38 - -
Interest 4 5 5 5 3 - - -
Foreign Gov't:s &International OrganizatiolIsAmortization 134 192 231 2,69 308 341 341 432Interest 6.5 84 110 1.14 135 164 164 230
Total Foreign DebtAmortization 136 194 233 271 346 34:1 341 432
of which: FEEC Cost (46) (69) (89) ('98) (125) (126) (126) (160)Interest 69 89 115 1.19 138 164 164 230
of whic:h: FEEC Cost (2-4) (32) (44) (A45) (5'2) (63) (63) (89)
1/ See footnote 1/ to Table 5.1 for fiscal years.
Source: Central Bank ofE Ce,ylon.
Table 5.8: GOVERNMENT ENTERPRISES, 1970/71 -- 19771/( Rs. mi:Llion)
1970/71 1971/72 1973 19I74 1975 1976 1977Budget Revised Budget
Estimate Estimate EstimateRailwaZ
Revenue 1165 142 150 186 196 204 205 211Recurrent Expencliture2/ 118 128 138 197 216 207 242 270Of which: Interest, Dividend, Rent Paid to Govt. (n. a.) (n.a.) (2) (3) (4) (3) (4) (5)
FEEC Cost3/ (n.a.) (n.a.) (7) (11) (7) (4) (n.a.) (6)Olther Paymlents to Government (n.a.) (n.a.) (26) (29) 32 (33) (34) (36)
Current Surplus (1-2) -2 14 12 -11 -20 -3 -37 -59Capital Expenditure 43 26 47 50 152 104 168 15'Of which: FEEC Cost3/ (n.a.) (n.a.) (11) (14) (52) (30) (n.a.) (49S;)
Port, Harbor, ljarehouse5Revenue 51 54 47 53 64 56 52 54Recurrent Expenditure2/ 2 6 26 26 31 34 36 36 40Of whiclh: FEEC Cost3I (n.a.) (n.a.) (neg.) (rneg.) (-) (neg.) (n.a.) (-)Current Surplus (1-2) 25 28 21 22 30 20 16 13Capital Expenditure 17 19 12 8 9 14 14 24Of which: FEEC Cost3/ (n.a.) (n.a.) (2) (1) (1) (2) (n.a.) (4)
Post and TelecommurticationsRevenue 9( 106 117 153 156 151 161 168Recurrent Expenditure2/ 107 108 128 128 144 158 174 19(Of which: FEEC Cost3/ (n.a.) (n.a.) (5) (9) (6) (7) (n.a.) (10)Current Surplus (1-2) -17 -2 -11 25 12 -8 -13 -22Capital Expenditure 7 21 29 30 46 50 50 59Of which: FEEC Cost3/ (n.a.) (n.a.) (4) ('13) (9) (15) (n.a.) (19)
1/ On a cash basis. For fisca:L years, see footnote 1/ to TaLble 5.1.2/ Based on the reclassifi,ed data used in the Central Bank Annual Report.3/ For each enterprise, th,e breakdown of FEEC costs into recurrent and capital expenditures is an approximation.
Source: Central Bank of Ceylon.,
Tab:Le 5.9: CURRENT TRANSFERS TO PUBLIC CORPORATIONS, ]L970/71 - 19771/(Rs million)
1976 19771970/71 197:1/72 1973 1974 197.5 Budget Revised Budgelt
Agriculture & IrrigationCeylon Fertilizer Corporation - - - 56.5 - - -- -
River Valleys Development Board. 9.7 12.6 9.2 - - - - -
Others 2/ 0.3 0.3 0.4 0.4 0.4 0.3 0.3 0.5
FisheriesCeylon Fisheries Corporation - 9.5 13.2 - 1.1.4 11.4 -
Manufacturing & MiningCeylon State Hardware Corporation - - 6.8 7.7 - 1]0.2 10.2 -
National Milk Board - 54.4 615.0 86.0 86.0 86.0 83.0Others 2/ 8.4 2.2 - 2.2 4.7 7.0 7.0 0.6
OtherCeylon Coconut Authority - - 19.6 2.2 - - 8.7 8.7 8.2
Ceylon Tourist: Board - - 6.0 - 9.6 10O.0 10.0 16.7Ceylon Transport Board 4.0 4.8 27.9 8.5 - - - -Port Cargo Cor poration - - 7.0 0.5 0.5 13.4 13.4 5.0State Engineering Corporat:Lon - - 16.2 4.8 0.2 2.1 2.1 -
Otheris 2/ 1.5 3.7 9.1. 6.5 45.6 14.9 14.9 40.9 -
Total 23.9 23.6 1L66.1 163.5 147.0 164.0 164.0 154.9
1/ Please see footnote 1/ to Table 5.1 for fiLscal. years.
2/ Ent:Lties which receive less than Rs 10 million. every year iLn the period covered.
3/ Includes a sum of Rs 35.0 million and Rs 1]3.0 million for 1L975 and 1977 respectively for whichbreakdown is not available.
Source: Ministry of Finance.
Table 5.10- BUDGETARY CONTRIBUTIONS BY PUBLIC CORPORATIONS, 1970/71-L9771/(Rs million)
1970/71 1971/72 1973 1974 1975 1976 1977Budget Revised Budget
Estimate Estimate Estimate
Non-financial Corporat:Lons 49.0 61.6- - 0.7 104.7 716.7 120.6 64.7Air Ceylon Ltd. - 0.5 1.6 0.2 - - - -Ceylon Cement Corporation 1.0.0 12.0 - 6.0 7.5Ceylon Ceramics Corporation - 2.4 1.5 1.1 1.0 1.0 1.0 1.0Ceylon Electricity Board 5.0 4.0 1.3 - 3.9 - 3.9 -Ceylon Fertilizer Corporation 0.5 2.6 6.3 - - 0.5 0.5 0.5Ceylon Mineral Sands Corporation - 0.4 0.1 2.5 2.5 2.5 2.5 2.5Ceylon Petroleum Corporation 1.0.0 8.0 10.0 15.0 5.8 - 4.0 -Ceylon ShLpping Corporation - - 0.5 1.0 1.0 2.0 2.0 2.0Ceylon Steel Corporation - 0.5 3.8 7.3 4.0 4.0 1.0 2.0Ceylon Tyre Corporation 2.0 3.2 7.0 - - 2.0 8.0 2.0Co-operative Wholesale Establishment 1.5.0 2.0 8.6 4.0 0.6 1.0 3.0 1.0Eastern Paper Mills Corporation 2.0 0.8 1.8 3.5 3.0 3.5 3.5 3.5National Salt Corporation 0.5 0.3 0.7 0.7 1.0 2.0 2.0 2.0National Textiles Corporation 2.0 2.0 3.5 0.8 4.0 3.0 2.0 3.0Paddy Markceting Board - - - 1.9 5.0 - - -ParaLnthan Chemicals Corporation 0.4 0.2 0.2 0.4 0.6 ]L.0 1.0 1.0Port: Tally & Protective Services Corporation - 0.5 2.5 1.0 0.5 0.2 0.3 0.2Sri Lanka State Trading (General) - 3.2 2.5 4.0 5.D0 5.0 5.0 5.0Sri Lanka State Trading (Textiles)
Salu Sa:La - 1.9 3.0 6.0 8.0 - 8.0 -Sri Lanka State Trading (Tractor) - 0.8 - 0.5 0.5 1.0 1.0 1.0Sri Lanka Sugar Corporation 1.0 0.8 3.3 - 5.5 'i.0 5.0 5.0Sri Lanka Tobacco Industries Corporation - - 0.2 1.5 1.O' 5.0 5.0 5.0State Distlilleries Corporation -- - - 25.0 30.0 45.0 20.0State Flour Milling Corporation - 1.5 0.5 8.0 11.0 1.0 3.0 1.0State Gem Corporation - - 0.3 6.0 2.0 - 2.0 -State Graphite Corporation of Ceylon - - 1.0 0.9 0.B 0.7 0.3 0.7State Pharmaceuticals Corporation of Ceylon - - - 1.2 1.2 1.2 1.2 1.2State Timber Corporation - - - 3.0 - - - -Weaving Stupplies Corporation - 1.2 0.5 2.0 2.0D 2.0 5.0 2.0Othera/ 0.3 0.2 0.9 2.2 2.3 3.1 5.4 3.1
Financial Inistitutions 5.4 8.7 14.9 13.4 15.6 23.0 21.0 21.0Bank of Ceylon 0.3 1.0 3.0 2.9 3.0 4.0 4.0 4.0Insurance Corporation of Ceylon 5.0 7.5 11.5 9.0 10.ID 12.0 12.0 10.0National Savings Bank - - - 1.0 2.1 2.!0 2.0 2.0People's Blank 0.1 0.2 0.4 0.5 0.5 5.0 3.0 5.0
'Total 54.1 57.7 76.5 94.1 120.:3 99.7 141.6 85.7
1/ Please see footnotel/ to Table 5.1 for fiscal years.
2/ Building Materials Corporation, Ceylon Akyurvedic Drugs CDrporation, Ceylon Hotels Corporation,Ceylorn Oils & Fats Corporation, Ceylon State Plantations Corporation, Sri Lanka TradiLng (ConsolidatedExports) Corporation, State Film Corporation, and State Printing Coirporation, which mnade some remittancesto the Treasury in the period covered but in amounts less than Rs 1 million a year.
Source: ministry of Finance.
Table 5.1: CAPITAL TRANSFERS TO PUBLIC CORPORATIONS, 1970/71-1977.11(Rs miillion)
1970/71 1971/72 ]L973 1974 1975 _ 1976 1977
Budget Revised BudgetEstimates Estimates Estimates
Agriiculture & Irrigation 118.1 126.2 144.3 195.7 229.4 201.1 201.1 144.8
Mahaveli Development Board 47.6 54.3 59.9 113.8 -- 148.3 47 100.2
RiLver Valleys Development Board 613.5 68.2 79.7 72.0 64.8 46.8 46.8 29.5
Oi:hers-l 2.0 3.7 4.7 9.9 3.5 6.0 6.0 15.1
FiLsheries 11. 0 17.6 7.8 9.0 28.5 23.1 23.1 17.8
Ceylon Fisheries Corporation 11. 0 17.6 7.8 9.0 28.5 23.1 23.1 17.8
Manufacturing &i Mining 111.2 69.3 IL20.1 69.2 276.1 391.4 414.2 587.7
Ceylon Cement Corporation 7.0 8.8 - - 12.1 25.0 25i.0 24,9
Ceylon CeramiLcs Corporation - - 21.9 2.5 17.4 57.4 57.4 30.5
Ceylon Mineral Sands Corporation - 1.2 3.3 0.3 21.9 30.0 30.0 42.0
Ceylon Plywoods Corporat:ion 24.9 9.0 20.1 5.2 4.9 6.6 6.6 9.1
Ceylon Steel Corporation 1.2 0.5 5.5 4.3 7.7 21.6 21.6 67.4
Eastern. Paper Mills Corporation 17.6 8.7 29.2 37.3 134.0 78.6 78.6 65.0
National Millk Board 7.5 11.4 14.6 1.9 1.9 4.4 4.4 4,2
National Texitiles Corporation 27.4 18.7 9.0 3.9 26.6 56.3 56.3 55.2
Sri Lanka Sugar Corporaltion - - - 7.1 31.3 20.0 20.0
Sitate FertilLzer Manufacturing Corporation - - 2.4 66.7 66.7 275.0
Sitate Gem Corporation 15.0 - - - - - -
Sitate T'imber Corporation 7.3 - 12.2 2.8 1.7 - - 1.9
Otbers~2/ 1D.3 11.0 4.3 3.9 lIg8 24.8 47.6 12.5
Other 34.2 45.0 112.2 104.3 186.3 206.4 222.5 297.5
Ceylon Apprenticeship Board - - - - 9.1 12.8 12.8
Ceylon Electricity Board - 25.6 10.0 10,0 10.0 10.0 6.5
Ceylon ShippLng Corporaltion - - 12.1 15.5 *- - - -
CeLylon Translport Board 17.7 - - - 42.0 7.2 7.2 75.0
Industrial Development Board 7.5 9.1 12.5 - 7.0 7.0 0.5
Land Retform Commission - - - 2.5 *- 62.0 62.0 72.5
Livestock Development Board - 0.5 1.0 26 .2 36.9 365.9 20.0
Paddy Marketing Board - 7.2 13.0 8.5 22.2 3.9 :3.9 2.0
Research & Scientific Institute 1.4 10.1 27.8 14.9 34.1 25.0 25.0 9.1
State Engineering Corporation - - 0.5 40.0 - -
Divisional Development Councils - - - - - 30.0 30.0 75.0
Others2/ 7.6 18.6 20.2 11.9 45.1 11.6 27.7 3t6.9
Total 281.4 258.1 384.3 378.2 720.3 822.01' 860.93/ 1,047.82/
1/ Please see footnote 1 to Table 5.1 for fiscal yeaxs.
2/ Entities 4hich received lees than Rs 10 milLion every year in the periodi covered.
3/ Not adjusted for underexpenditure.
Source: Ministry of- Finance.
Page 1. of 5 pages
Table 5.12 a:: PUEILIC CORPORATIONS (Inclustrial) , 1975 -1976--(Rs thousands)
Ceylon Ayurvedic Ceylon Cement Corp. Ceylon Ceramics Ceylon Fisheries Cey:Lon Leather Ceylon MineralDrugs Corp. _ _ C Corp. _ Prolucts Corp Sands Corp.
1975 1976 1975 1976 ]L975 1976 1975 1976 1975 1976 1975 1976
I. Capital Expenditurie & Net Lending1. Capital Expenditure
a. Net Increase in Stocks 1,073 1,805 23.,872 11,290 *-6,090 7,722 -4,498 3,,252 398 - 1,328 1,000b. Acquisition of Fixed Assets 28 1,946 65 21.905 .21.423 37.600 7.141 10,663 364 LJL7 13,000 47_.70
c. Total 1,101 3,751 30,372 33,195 15,333 45,322 2,643 13,915 762 1,417 14,328 48,670
2. Net Lending - -2,000 -2,420 -3,424 1,826 864 4,188 -427 580 4,367 -11,000
3. other 600 _ 200 15,497 17.271 12632 _.000 4 32 828 287 2 500 2,5004. Total 1,701 3,951 43,869 48,046 13,541 49,148 7,667 18,135 1,163 2,284 21,195 40,170
I. Financed by:1. Current Account Surplus
a. Operating Surplus(i) Operating Receipts 6,205 13,767 160,038 213,156 66,0515 84,529 42,673 147,136 17,662 20,44W5 18,787 14,817(ii) Less: 0perating,1 xpenses 5,384 9,732 155,661 210,069 56,910 72,552 47,673 142,924 15,741 17,561 8,816 7,622
Of which: raxes: (A2 _ (135) (L,532) J.1954) (2,53L) (LL767) _(361) Q,3317) (,4A8) (L,) A) L-2)(iii) Equals: Operating Sur-plus 821 4,035 4,377 3,087 9,1416 11,977 -5,000 4,212 1,921 2,884 9,971 7,195
b. Less: Income T;ax and Prof.itTransfersg to Govit. 650 2,750 11 9 15,121 7.714 8,000 - I 53 1,7310 Ij,002 _900
c. Equals: Pog Tax Surplus 171 1,285 -7,547 -1.2,034 1,432 3,977 -5,000 4,212 768 1,154 3,971 3,2952. Capital Re 4 v7 nue- - - - - - - - - 620 7 - -
3. Gran.t from-a. Government 600 2,250 21,300 25,000 10,377 52,600 10,000 10,663 211 1,387 10,500 15,900
b. Foreign Sources 0002- -20,730
c. Total 200 2,250 21,300 25,000 10,377 52,600 10,000 10,663 211 1,387 1:3,500 36,630
4. Net Borrowing from:a. Government - - - - 400 -_b. Other Domestic Sources 907 -2,115 1,000 -2,194 -6,451 - 60 -
c. Official Foreign Sources - - - - -
d. Other :232 2.098 2,018 11,321 -4,435 1,605 3.357 7,068 - _ _ 3,278 -100
e. Total 1,:L39 -17 2,018 l1,321 -4,435 2,605 1,163 617 400 60 3,278 *-100
5. Use of Cash Balances; 28 -28 2,600 500 2,798 - 3,751 - -278 -900 -796 *-796
6. Othelr- -237 461 25,498 23,259 3,369 -10,034 -2 ! 247 2,643 -558 576 1,242 1,114
Table 5.12 aPage 2 of 5 pages
Ceylon Oils & Ceylon Petroleum Ceylon Plywoods Ceylon State Flour Ceylon State Ceylon SiteelFats p Corp. Corp. Millin1 gCor I Corp.
1975 19715 1975 19715 1975 1976 1L975 1976 1975 19,76 197.5 :L976
I. Capital Expenditure & Net Lernding1. Capital Expenditure
a. Net Increase in Stoclcs -3,947 1,650 --80,000 18,000 9,825 3,602 -12,087 -4,854 2,327 2,426 9,703 -6,795b. Acquisition of Fixed Assets 1,721 7 640 79000 22.000 241 6159 _170 1.40 613 5,l96 13.142 29,782c. Total -2,226 9,291) -1,000 40,000 12,22!6 9,761 -10,387 -4,714 2,940 8,322 22,845 22,987
2. Net Lending - - 49,000 -55,00) -2,502 13,359 -7,912 11,231 - - -7,021 -5,5083. Other 1I000 - _ _ 6.892 5,0000 _L0 - _ 1.976 4.367 - -
4. Total -1,226 9,290 48,000 -15,000 16,61.6 2.8,120 -7,299 6,517 4,916 13,:L89 15,824 17,479
II. Financedl by:1. Current Account Surplus
a. Operating Surplas(i) Cperating Receipts 58,509 66,074 1,879,100 2,104,200 87,3()0 134,270 178,570 274,852 37,759 46,074 309,352 272,336(ii) Less: Operating2 , penses 57,597 62,726 1,849,100 2,004,200 84,817 124,328 177,68:2 271,915 38,105 42,045 288,943 252,947
Of vhich: Taxes:- 2(50 (5 2) 0 80,0CD (30,30D) (1.2(i) (2.272) -(ULa) (2.55) •1,709) (2,901) (3,7C17) (3,645)(iii) Equals: Operatinig Surplus 912 3,348 30,000 100,000 2,483 9,942 888 2,937 -346 4,029 20,409 19,389
b. Less: Income Tax and ProfitTransfers to Gcv' t. - _ 24.000 _Q.,900 _ _ - 532 1 762 - - 13,100 14,700
c. Equals: Pogy Tax Surplus 92 6,000 40,00 2,483 9,942 356 1,175 -346 4,029 7,309 4,6892. Capital ReZenue- - - - - - - - - - - -3. Grarlt from-
a. Government 8,4.64 6,500 - _ 6,500 6,200 - - - - 7,505 13,100b. Foreign Sources - -- - - - - - 2.375 8.500c. Total. 8,464 ,50 - _ 6,5(00 6,200 - - - 9,880 21,600
4. Net Borrowing from:a. Government - - - - - - - - 6j627 8,605 - -b. other Domestic Sourcies -3,961 -974 - - - - - - - - 7,117 -10 ,381c. Official Foreign Sources - - 12,000 -155,000 - - -d. other -4,151 -214 32.000 _97.00D -2,875 _2,493 - -3 004 -3p580e. Total. -8,1.12 -1,188 44,000 -58,000 -2,875 2,493 - _ 6,627 8,605 4,1:13 -1.3,961
5. Use of Ca'sh Balances 1.50 - -6,000 3,000 2,909 -5,157 -5,123 4,640 -61 15 - -
6. Other5-1 -2,640 630 4,0C10 - 7,599 146,462 -2,532 702 -1,304 540 -5,478 5,151
Table 5.12 aPa.ge 3 3pages
Ceylon Tyre National Milk National Paper National Textile National Salt Paranthan ChemicalsCorp, Board _ Corp. Corp,, Corp. _ Corp. _
1975 1976 1975 1976 197 5 1976 1975 1976 1975 19,76 1975 1976
I. Capital Expenditure & Net Lending1. Capital Expenditiure
a. Net Increase in Stocks 5,155 1,765 -7,880 6, 599 -5,547 4,405 13,429 1,979 2,380 710 -1,935 1,004b. Acquisition of Fixed Assets _ 700 18.6:1 _3.89 15.463 207.3'8 81,05ti 37.256 109,246 1.658 7.763 12.808 2,D54c. Total 5.,855 20,396 -4,691 22,162 201,781 85,461 50,685 111,225 4,038 8,473 10,873 3,058
2. Net Dr-nding 21,576 -2,615 -5,956 1,980 -13,613 -4,680 9,255 *-7,029 -612 6t96 2,246 6573. Other - 2.800 4 -7 - - - 1-000 1 0 .j, 600 6004. Total 8.,431 20,581 -10,647 24,142 193,106 94,956t 59,940 104,196 4,426 10,169 13,719 4,315
II. Financed by:1. Current Account Surplus
a. Operating Su:rplusMi) Opeirating Receipts 117,942 127,429 258,534 305,668 170,500 237,640) 281,209 327,451 20,733 21,696 25,697 25,176(ii) Iess: 0perating2 YXpenses 941,333 102,465 254,372 297,591 148,994 206,730 280,000 3L5,830 11,509 10,686 20,476 20,277
Of which: Taxes-' ,) t5.7'3) _5(777) 323) (6,05 0) (7.702) tl3.649) t]7.340) (206) t216) (26) 246)(iii) Equals: Operating Surplus 23,609 24,964 4,162 8,077 21,506 30,910 9,209 11,621 91,224 11,010 5,221 4,899
b. DDss: Income Tax and ProfitTransiEers to Govlt. - - - 14,000 5 -_ - 'i.500 5.406 2.,075 3.155
c. Equals: Po3t7 Tax Surplus 23,609 24,964 4,162 8,077 7,50)6 30,91(; 9,209 11,621 e3,724 5,604 3,146 1,7442. Capital Reqnue- .. 3,567 - - - - - - - - - -3. Grant from
a. Government - 1,940 2,6525 102,515 20,674 25,219 13,266 - - 5,852b. Foreign, Sources 0- - 74 105() ,024 ti0,924 -c. Total .. _ 1,940 2,t625 103,21.9 21,724 3:1,243 74,190 - -,85
4. Net Borrowing from:a. Government - - - - - - - - - 5,184 -b. Other Domestic Sources 640 -2,023 - 5,522 10,151 26,400 1:1,819 -.1,023 -1,420 -114 203 2,055c. O:Eficial Foreign Sources -- - - - - - - - - -d. Other -_ - -24.837 3.448 95,978 2 -16131 3644 364 200 -e. Total 640 -2,023 -24,837 8,970 106,129 4,175' -4,312 2,621 -1,056 86 5,3872,055
5. Use ot Cash Balances -18,872 -10,168 4,798 -1,385 -26,799 28,473 7,403 -183 197 5,290 -802 4766. Other-V 3,054 4,241 3,290 5,855 3,051 9,674 16,397 15,947 1,561 -811 136 40
Table 5.12 apage 4 TT-pages
Sri IsLnka Sugar Stat:e Distilleries State Fertilizer State Graphite State Printing State Rubber Man-C_____orp. _ _ Corp. _ Manufac. Corp. Corp _ Corp, _ ufacturin Cor .
1975 1976 1975 1976 1975 1976 1975 19,76 1975 1976 1975 1976
1. Capital Expenditure & Net Lending1. Capital Expenditure
a. Net Increase, in Stocks 7,703 4,375 -2,764 25,550 - - 2,763 3,332 -878 - -22 377b. Acquisition of FPiced Assets 68.458 73.98 26.1.58 51,000 343 97 5.120 2'760 657 3.713 6,728 6,311c. T'otal 76,161 78,359 23,394 30,550 343 97 7,883 6,092 -221 3,713 6,706 6,688
2. Net Lending 9,021 -2,008 54,991 49,876 3,420 -2,405 -3,376 1,t6ll -2,087 '750 154 2153. Other 5.000 5.000 36,152 33,894 56.52'4 41259 750 750 200 200 -4. Total 90,182 81,351 114,537 114,320 60,287 409,951 i,257 8,453 -2,108 4,663 6,80 ,3
II. Financed by:1. Current Account Surplus
a. Operating Surplus(i) Operating Receipts 127,336 193,597 470,700 486,970 139 1,090 19,201 23,735 15,388 22,454 5,434 11,914(ii) Leass: Cperating2E2xpensesr 101,103 137,426 347,000 389,735 1,210 2,075 14,777 19,667 13,524 19,'975 5,944 10,5976
Of which: Taxes- (3.630) (5437) (47,000) (72.895) - (10) (21) (17) (153) (8) (11) 1(83)(iii) Equals: Operating Surplus 26,233 56,171 123,700 97,235 -1,071 -985 4,424 4,068 1,864 2,479 -510 938
b. less: Income Tax and ProfitTransfers to Gov't. - 4.500 7200 58,341 - 50 2,725 2,590 -_
c. Equals: PogO Tax Surplus 26,233 51,671 49,500 38,894 -1,071 -1,035 1,699 1,478 1,864 2,479 -51]0 91382. Capital Relnuez 9,721 5,000 - - - - - - - - - -3. Grant frost
a. Govermunent 32,000 15,000 - 7,076 61,936 411,600 2,165 2,167 - 611 7,365 6,200b. Foreign Sources - - - - - - - - - -. 1ic. Total 32,000 15,000 - 7,076 61,936 4-11,600 2,165 2,167 - 5115 9,519 6,2004. Net Borrowing from:a. Govermaent - 65,327 70,000b. Other Domestic Sources 12,581 -5,870 - - - - 2,551 3,275 26c. Official Foreign Sources - - - - - - - - - - -d. Other 884 6.519 -33,094 3851 340 135 -1.014 623 -'3.779 1546e. Total 13,465 649 32,233 73,851 340 135 1,537 3, 898 -'3,753 646
5. Use o0 Cash Balances 4,243 31,790 -6,480 742 196 1,591 _ 2,813 _ 331 -6596. Other- 4,520 9:,031 1,014 979 -1,660 -945 -1,735 910 -3,032 927 -2,480 -176
Table 5.12 aPage 5 of 5 pages
State Timber_ _____ Co ,Sub--Totals
1975 1976i 1975 1]976
I. Capital Expenditure & Net Lending1. Capital Exlpenditure
a. Net Increase in Stocks 9 -1,05oCI -45,t583 88,244
lb. Acquisition of Fixed Assets 3.912 5.583 521,348 524.479
c. Total 3,921 4,53'3 475,165 612,723
2. Net Lending -4,746 776i 82,218 -4,920
3. Other 1.5t0 - 152,.749 502,835
4. Total 675 5,309 710,632 1L,110,638
II. Financed 'by:1. Current Account Surp'lus
a. Operating SurplusMi) Operating Receipts 48,740 54,790) 4,431,564 5,231,266
(ii) Less: Operating2 Expenses 47,O0L4 50,712 4,126,685 4,802,766
Of whiclh: T,axes-d (1. 121) (1.418) (272,376) (163.534)(iii) Equals: Operating Surplus 1,726 4,078 304,879 428,500
b. Less: Incoime Tax and ProfiLtTransfers to GIDvtt. 2,400 2.730 165,973 184.735
c. Equals: Po} Tax Surplus -674 1,348 138,906 243,765
2. Capital Re nue- - - 10,341 8,574
3. Grant from-a. Government 6,127 3,729 320,576 616,548
b. Foreign Sources - - 14.257 91.204
c. Total 6,127 3,729 334,833 707,752
4. Net Borrowing from-a. Government - - 77,538 78,605
b. Other Domestic Sources -4,7B3 100 33,637 9,461
c. official Foreign Sources - - 12,000 -155,000
d. Other 95 -178 45 226 114,354
e. Total -4,6B8 -78 168,401 47,420
5. Use o Cash Balances -2,0DO -3,06:3 5,413 14,398
6. Other- 1,910 3,37:3 52,738 88,729
1/ Provisional f igures for 1975 and budget figures for 1976.
2/ Paymients for FEECs and other taxes included in operating expenses.
3/ Proceeds from the sale of fixed assets, lands, copyrights or other intangible assets.
4/ Grants received for supplementing working capital or for capital expenditures.
5/ Net drawings on time deposits and/or savings deposits, proceeds from sale of government securities, etc. Including errors and omissions.
Source: Ministry of Finance
Page 1 of 3
Table 5.12.b: PUBLIC CORPYUATIONS (Trading), l975-19/6 -
(Rs thousands)
Building Ceylon Cooperative Paddy
Materials Fertilizer Wholesale Marketing
Corporation Corporation Establishment Board
1975 1976 1975 1976 1975 1976 1975 1976
I. Capital Expenditure & Net Lending1. Capital Expenditure
a. Net Increase in Stocks -5,181 -7,320 -61,222 -111,769 2,730 - -90,716 74,840
b. Acquisition of Fixed Assets 1.552 3.194 490 5.700 2.530 18.922 40,560 11,670
c. Total -3,629 -4,126 -60,732 -106,069 5,260 18,922 -50,156 86,510
2. Net Lending -7 1,549 -29,041 -814 -24,774 -60 -11,762 11,487
3. Other 800 800 950 900 4,500 2,000 - -
4. Total -2,836 -1,777 -88,823 -105,983 -15,014 20,862 -61,918 97,997
II. Financed by:
1. Current Account Surplus
a. rl-eratine Surplus
(i) Operating Receipts 100,245 168,816 483,818 510,878 311,500 386,600 370,344 900,102
(ii) Less: Operating,Fxpenses 96,338 155,546 474,818 501,474 301,500 375,638 371,264 882,875
Of which: Taxes=, (1.000) (1,686) (4,838) (5,109) (1,900) (2,500) (-) (
(iii) Equals: Operating Surplus 3,907 13,270 9,000 9,404 10,000 10,962 -920 17,227
b. Less: Income Tax and ProfitTransfers to Gov't 2,650 7,850 5,400 5,703 6,000 6,600 - 10,336
c. Equals: Post Tax Surplus 1,257 5,420 3,600 3,701 4,000 4,362 -920 6,891
2.Capital Revenue2' - - - - - _ _ _
3. Grants from:4/a. Government - - - - - - 19,127 3,850
b. Foreign Sources - - - - - - 3,066 -
c. Total - - - - - - 22,193 3,850
4. Net Borrowing from:a. Government - - 5,348 -19,000 -10,996 - -40,024 21,492
b. Other Domestic Sources 5,695 -4,824 -75,991 -114,318 -10,031 15,513 -47,999 60,000
c. uOffcial rureig: Sources - - - - - - - -
d. Other -6.650 -2,390 -2,873 -6,666 - - - -
e. Total -955 -7,214 -73,516 -139,984 -20,334 15,513 -88,023 81,490
5. Use of Cash Balances -70 100 1,127 -1,327 20 - 37 -
6. Other5/ -3,068 -83 -20,034 31,627 1,300 987 4,795 5,764
Table 5.12.bPage 2 of 3
Sri LankaState Trading Sri Lanka Sri Lanka Sri Lanka(kConsolidated State Trading State Trading- State TradingExports) Corp. (General) Corp. (Textiles) Corp. (Tractor) Corp.
1975 1976 1975 1976 1975 1976 1975 1976
I. Capital Expenditure & Net Lending1. Capital Expenliture
a. Net Increase in Stocks 5,000 -1,347 -29,708 20,000 35,250 -2,282 3,012 5,937b. Acquisition of Fixed Assets 1.833 556 1,875 5,025 328 821 50 185c. Total 6,833 -791 -27,833 25,025 35,578 -1,461 3,062 6,122
2. Net Lending -3,857 -749 185 -320O0 -764 784 52 -4363. Other 508 508 4,000 2,000 - 8.000 500 5004. Total 3,484 -1,032 -23,648 24,025 34,814 7,323 3,614 6,186
II. Financed by:1 Gurrent Account Surnlus
a. Operating Surplus(i) Operating Receipts 212,566 384,755 214,374 141,320 239,641 343,408 55,610 88,824
(ii) Less: Operating -xpenses 205,242 379,395 193,442 130,4L2 247,240 319,897 49,075 82,337Of which: TaxesW/ ( (-) (1,965) (1,287) (2,395) (3,423) (556) (888)
(iii) Equals: Operating Surplus 7,324 5,360 20.932 10,908 -7,599 23,511 6,535 6,487b. Less: Income Tax and Profit
Transfers to Gov't 3,662 2,680 12,559 6,581 - 14,300 4,004 3,709c. Equals: Post T7x Surplus 3,662 2,680 8,373 4,327 -7,599 9,211 2,531 2,778
2. Capital Revenues3 - - - - - - - -
3. Grants from:4/a. Government - - - - - - - -
b. Foreign Sources - - - - - - - -
c. Total - - - - - - - -
4. Net Borrowing from:a. Government - - -150 -588 16,900 6,785 - -
b. Other Domestic Sources -1,291 -3,119 -23,333 11,235 54,237 -24,903 922 3,211c. Official Foreign Sources - - -750 - - - - -d. Other - - - -e. Total -1,291 -3,119 -24,233 10,647 71,137 18,118 922 3,211
5. Use of Cash Balances 1,172 - - - -618 -1,780 2 -6. Other5/ -59 -593 -7,788 9,051 -28,106 18,010 159 197
Table 5.12.bPage 3 of 3
State WeavingState Film Pharmaceuticals SuppliesCorporation Corporation Corporation Sub-Total
1975 1976 1975 1976 1975 1976 1975 1976
I. Capital Expenditure & Net Lending1. Capital Expenditure
a. Net Increase in Stocks -123 500 19,983 -1,497 -7,821 -27,398 -128,796 -50,336b. Acquisition of Fixed Assets 506 6,640 6,107 2,385 147 10 55,978 55,108c. Total 383 7,140 26,090 888 -7,674 -27,388 -72,818 4,772
2. Net Lending -358 4,310 -2,660 - -23,251 -73 -96,237 12,9983. Other 200 200 1,200 1,517 2.000 2,000 14,658 18,4254. Total 225 l1,650 24,630 2,405 -28,925 -25,461 -154,397 36,195
II. Financed by:1. Current Account Surplus
a. Operating Surplus(i) Operating Receipts 13,212 20,774 44,275 55,182 338,553 399,965 2,384,138 3,400,624
(ii) Less: Operating Expenses 9,729 16,851 39,620 50,418 317,162 386,706 2,305,430 3,281,549Of which: Taxesl/ (1.522) (201) (437) (546) (3.374) (3,995) (17,987) (19,635)
(iii) Equals: Operating Surplus 3,483 3,923 4,655 4,764 21,391 13,259 78,708 119,075b. Less: Income Tax and Profit
Transfers to Gov't 2,090 2,354 1,840 1,554 12,780 7,862 50,985 _ 69,529c. Equals: Post Tax Surplus 1,393 1,569 2,815 3,210 8,611 5,397 27,723 49,546
2. Capital Revenuel/ - - 4,895 - - - 4,895 -3. Grants from:4/
a. Government - - 2,302 1,700 - - 21,429 5,550b. Foreign Sources - - - - - - 3,066 -c. Total - - 2.302 1.700 - - 24.495 5,500
4. Net Borrowing from:a. Government - - 55 467 -420 -6,145 -29,287 3,011b. Other Domestic Sources - - - - 5,841 -18,597 -91950 -75,802c. Official Foreign Sources - - 898 - - - 841 -d. Other -376 4.423 18,484 -2.857 -43.389 -6.271 -34,804 -13,761e. Total 376 4.423 19.437 -2.390 -37.968 -31;013 -155,200 -86,552
5. Use of Cash Balances 559 -1,434 882 -892 -327 - 2,784 -5,3336. OtherS/ -1,351 7,092 -5,701 777 759 155 -59,094 72,984
I/ Provisional figures for 1975 and budeet fi2ures for 1976.2/ Payments for FEECs and other taxes included in operating expenses.3/ Proceeds from the sale of fixed assets, lands, copyrights or other intangible assets.4/ rrants received for sunnlementina workine an stal or for -it.1 e-e.dit-r-S/ Net drawing on time deposits and/or saving deposits, proceeds from sale of government securities. etc.
Including errors and omissions.
Source: Ministry of Finance.
Page 1 of 2
Table 5.12.c: PUrBLIC COROnAnTIuNS 'Other), 1975-c978E(Rs thousands)
Sri Lanka State CeylonPlantations Ceylon Electricity Air Ceylon ShippingCorooration Board Limited Corporation1Q75 1976 1Q75 1976 1975 1976 1975 1976
I. Capital Expenditure and Net Lending1. Capital Expenditure
a. Net Increase in Stock -4,142 8,163 3,100 2,000 699 600 -430 -b. Acquisition of Fixed Assets 7.165 4.494 143.500 137,000 24,079 8.307 77,764 1.800c. Total 3,023 12,657 146,600 139,000 24,778 8,907 77,334 1,800
2. Net Lending -1,432 9,563 -12,000 - -259 -235 -19,192 3003. Other 2.975 65 24,800 27.700 18.922 11.535 24.298 16,1654. Total 4,566 22,285 159,400 166,700 43,441 20,207 82,440 18,265
II. Financed by:1. Current Account Surplus
a. Operating Surplus(i) Operating Receipts 94,083 165,473 162,500 185,000 57,460 84,280 185,680 196,615
(ii) Less: Operating Expenses 82,703 165,075 120,300 134,400 59,594 80,123 151,959 175,724Of which: Taxes2/ - - (1,500) (1.700) (2,341) (2,672) ... ...
(iii) Equals: Operating Surplus 11,380 398 42,200 50,600 -2,134 4,157 33,721 20,891b. Less: Income Tax and Profit
Transfers to Government - - - - - - 7,000 9,800C. Equals: -ost Tax SurpLus 11,380 398 42,200 50,600 -2,134 4,157 26,721 11,09
2. Capital Revenue/ - - -
3. Grants from: 4/a. Goverment 2,825 3,000 10,000 11,300b. Foreign Sources - - 67,800 37,600c. Total 2,825 3,000 77,800 48,900
4. net Borrowing fro:a. Government -345 -150 25,000 - 5,900b. Other Domestic Sources -4,216 18,152 - - 3,000c. Official Fonreiogn Suces^^ - - _- 2 2 _711 _
d. other 4,401 -332 - - 12.318 -
e. Total -160 14,681 25,000 - 21,218 - 22,7115. Use of Cash Balances -100 1.012 9-900 10000 2,057 -300 12,268 -5,9006. Other5/ -9,379 3;194 4,500 57,200 22,300 16,350 20,740 13,074
lable 5=12-cPage 2 of 2
Ceylon NationalCeylon Transport Broadcasting LotteriesBoard Corporation Board Sub-Total1975 1976 1975 1976 1975 1976 1975 1976
I. Capital Expenditure and Net Lending1. Capital Expenditure
a. Net Increase in Stock 23,420 11,260 762 300 799 -209 24,208 22,114b. Acquisition of Fixed Assets 5-93 200 448 23.770 1.929 4.035 14.263 31t 106 3668241
c. Total 74,213 211,708 24,532 2,229 4,834 14,054 355,314 390,3552. Net Lending 5,238 -7,500 451 700 - - -27,194 2,8283. Other 2,400 3,600 - - 73.395 59.065
4. Total 81,851 207,808 24,983 2,929 4,834 14,054 401,515 452,248
I I. Finaniced by:1. Current Account Surplus
a. Operating Surplus(i) Operating Receipts 655,123 695,922 17,980 19,900 29,012 33,222 1,201,838 1,380,412
(ii) Less: Operating Expenses 657,514 775,480 20,381 23,840 29,130 33,126 1,121,581 1,387,768Of which: Taxes2/ (6,519) (6,664) (60) (75) (240) (275) (10,660) (11,386)
(iii) Equals: Operating Surplus -2,391 -79,558 -2,401 -3,940 -118 96 80,257 -7,356b. Less: Income Tax and Profit
Transfers to Government - - - - 35 71 7,035 9.87ic. Equals: Post Tax Surplus -2,391 -79,558 -2,401 -3,940 -153 25 73,222 -17,227
2. Capital Revenue3/ 500 750 - - - 1,290 500 2,0403. Grancs from:4/
a. Government 42,000 174,523 23,770 4,429 _ - 78,595 193,252b. Foreign Sources - - - - 67800 37,600c. Total 427000 17 4,523 2,71 70 4429 - _ 146,395 230,852
4. Net Borrowing from:a. Government 15,430 50,000 - - 4,000 14,700 49,985 64,550b. Other Domestic S---eas - - - -1,216 18-152c. Official Foreign Sources - - - - - - 22,711 -
d. Other 3.300 20 - - - - 20019 3,301e. Total 18,730 50,020 - - 4,000 14,700 91,499 79,401
5. Use of Cash Balances -925 4,000 - - 384 499 23,584 9,3116. Other5/ 23,937 58,073 3,614 2,440 603 -2,460 66,315 147,871
1/ Provisional figures for 1975 and budget figures for 1976.2/ Payments for FEECs and other taxes included in operating expenses.3/ Proceeds from the sale of fixed assets, lands, copyrights or other intangible assets.4/ Grants received for supplementing working capital or for capital expenditure.5/ Net drawing on time deposits and/or saving deposits, proceeds from sale of government securities, etc.
Including errors and omissions.
Source: Ministry of Finance.
Table 6.1: MINIMUM WAGE RATE, 1968-1976
(197 0 = 100)
Private PublicYear Loney Real 1/ Money Real 1/
1968 00 lO 90 101
1969 99 105 93 98
1971 102 99 100 971972 110 ?7 100 921973 1st Qtr. 114 99 103 89
2nd Qtr. 114 98 103 883rd Qtr. 118 97 103 854th Qtr. 129 102 111 88
1974 1st Qtr. 136 105 111 872nd Qtr. 151 113 121 913rd Qtr. 153 112 121 884th Qtr. 156 112 121 86
1975 1st Qtr. 163 115 128 902nd Qtr. 173 121 132 923rd Qtr. 174 121 132 914th Qtr. 174 121 132 91
1976 1st Qtr. 174 121 138 962nd Qtr. 175 120 138 95
1/ Money wage deflated by Colombo CPI.
Source: Central Bank of Ceylon.
Table 6.2 : ANNUAL PERCENTAGE CHANGE IN CONSUMER PRICE INDEX FOR COLOMBO, 1971 - 1976
Year Quarter By Comodity Group _ _ ectorAll iterls Food Clothing Fuel Misc. DomestLic Import Expart
Weight:s 1(0.0 61.9 9.4 4.3 18.7 70.0 35.0 5.0
1971 Average 2.7 1.8 5.6 3.5 4.1 4.2 3.3 0.4
1972 Average 6.3 6.0 12.8 3.6 6.2 8.5 4.9 -11.0
:1973 Average 9.7 11.7 14.0 12.7 0.3 3.8 19.4 22.3
.1974 Average 12.3 15.1 9.9 34.4 4. 9 4.9 20.4 46.2
:1975 Average 6.7 7.,7 :1.8 7.3 7.6 7.6 9.1 -14.7
1L975 1st 10.2 12.4 8.5 4.2 7.2 8.2 14.0 9.0
2nd 8.4 11.2 0.0 2.0 7.0 7.4 12.6 -10.0
3rd 5.6 6.2 0.0 7.1 7.3 8.2 7.1 -28.3
4th 3.2 1.5 -1.0 1]5. 7 9.0 6.5 3.2 -27.2
1976 1st 1.8 -0.2 -2.0 16.5 7.1 3.7 1.8 -1 9.8
2nd 0.7 -0.4 -0.2 2.1 4.8 2.2 1. 6 --5.8
Source: Central Bank of Ceylon; DepartTrent of Census arid Statistics.
Table 6.3: INTEREST RATES OF MAJOR CREDIT AND SAVINGS INSTITUTIONS, 1971 - 1976(Percent per Annum)
1971 1975 1975 1976________ (As of Sept.) Dec. _Aug.
Deposit Rates
Post Office Savin.gs Blank 7.21/ * * *Ceylon Savings Bank 1/
Savings 70- * I IFixed Deposits 7.5±- * * i
Savings Certificate Fund (10 years) 5.0 * * i
National Savings BanlV/Savings 3/ * 7.2 7.2 7.2Fixed Deposits, * 7.5 7.5 7.5Saving Certificate (10 years)-- * 11.0 11.0 11.0
Lendig R.ates
Ceylon Savings BaLnk 10.0-12.0 * * ICNational Savings Bank * lt).0-L2.0 10.0-12.0 9.0--12.0State Mortgage Bank 5.0-12.0 5.0-12.0 5.0-12.0 5.0--12.0National Housing Department 11.0 6.0- 9.0 6.0- 9.0 6.0-- 9.0Agricultural & Industrial Credit Corporation
Development, Purposes 9.0-10.0 9.0-10.0 9.0-10.0 9.0--10.0Other Purpcses 10.0-12.0 1(.0-12.0 10.0-12.0 10.0--12.0
Development F'inance Corporat:ion 9.5-10.5 9.5-12.0 9.5-12.5 9.5--12.5
L/ W'ith effect from January 1, :1971.2/ Effective from April 1, :l972, when the National Savings Bank took over ithe assets and liabilities
of the Post Office Savings Bank, the Ceylon Savings Bank, and the Savings Certificate Fund.3/ Rate on deposits for 12 montlhs. The rate on fixed deposits of Rs 100,000 and over is 8% with
effec.t from May 27, 1975.4/ Simple annual interest paid on principal only at maturity.
Source: Central Bank of Cey:Lon
Table 6.4: MONETARY SURVEY, 1971-1976(RLs miLllion)
At the End of: 1971 1972 1973 1974 1975 1975 1976Aug. Dec. Aug.
Net Foreign Assets -455 -376 -:30 -211 -360 -429 -L24CerLtra] Bank -572 -551. -251 -530 -661 -738 -526Commercial Banks 117 175 222 3.19 301 309 402Net Domestic Assets 5,011 6,013 5,424 6,451 6,560 6,924 7,854Net Cre!dit to (,ovt. 2,724 2,900 2,679 2,5:32 2,487 2,831 3,L00Credit to Privatte Sector 1,760 2,187 2,165 3,239 3,379 3,404 3,919Othter Credit 31 10 15 37 33 21 34OthLer Assets 497 916 567 593 660 668 802Central Bank
(excluding Guarantees) (68) (71) (81) (78) (184) (149) (343)Commercial Banks (429) (845) (486) (5:L5) (476) (520) (458)
Monetary Liabilities 3,379 3,917 4,093 4,505 4,482 4,711 5,781Money 2,128 2,461 2,757 2,923 2,906 3,064 3,824Currency (1,115) (1,202) (1,437) (1,5:39) (1,534) (1,610) (1,925)Demand Deposits (1,013) (1,259) (1,320) (1,383) (1,372) (1,454) (1,899)Quasi-M[oney, 1,251 1,456 1,337 1,582 1,576 1,648 1,957
Other Liabilities 1,176 1,723 1,3301 1,734 1,718 1,784 1,948Central Bank(excluding Guarantees) 456 490 522 634 744 708 898Commercial Banks 720 1,233 780 1,1()1 975 1,075 1,050
Source: Central Bank of' Ceylon.
Table 7.1 : VOLUME OF AGRICULTURAL PRODUCTION, 1970-75
(Indicies, 1968 = 100)
1L970 1971 1972 1973 1974 1975
Tea 94 97 95 94 91 95
Rubber 107 95 94 104, 92 100
Coconuat 97 101 114 74 78 94
Paddy 120 103 97 97 119 86
Highland Crops 130 157 164 221 25:3 285
Livestock and Livestock PFroducts 104 109 129 125 116 113
Minor export crops 93 95 91 120 228 197
Total 106 108 112 119 125 127
Source: Central Bank of Ceylon.
Table 7.2 VOLUME OF INDUSTRIAL PRODUCTION D 1971-75(Indices, 1.970 - 100)
1971 1972 1.973 :1974 1975
Food, beveragtes and tobacco 107.5 115.3 127.2 131.9 170.2
Textile weaving appariel andleather industries 115.7 132.2 111.'5 69.8B 105.1
Wood and wood productsincluding furniiture 125.9 148.6 195.:3 :205.2 135.4
Paper and paper products 128.6 124.91 1.15.9 :116.2 153.7
Chemicals, petroleum, coal rubberand plastic products 151.8 121.8 1L08.(0 .133.3 126.3
Non-metallic mineral lproductsexcept petroleum and coal 73.1 86.2 69.5 88.1 75.4
BaLsic metal products 148.8 158.4 ]L08.5 180.2 193.8
FaLbric:ated meltal lproducts,machinery and equipment 94.3 86. 4 78.8 68.1 70.3
Manufactured products
N.E.S. 93.6 82.8 60.8 24.2 46.8
Total 116.1 1.14.6 109.4 111.9 129.3
1/ This :Lndex is based on the value of industria,l production at (1970) izonstant prices.
Source: Central 'Bank of Ceylon.
Table 7.3: PADDY PRODUCTION AND RICE AVAILABILITY, PROCUREMENT AND DISTRIBUT:ION, 1.970-1977
19 76 197 71970 1971 1972 1973 1974 1975 Estimate Forecast
Paddy Production:
Paddy Production (million bushels) 77.4 66.9 62.7 62.9 76.8 55.3 60.3 92.5
Gross Acreage Sown ('000 acres) 1,878 1,794 1, 794 1,792 2,038 1,476 1,779 2,321
Net: Acreage Harvested ("000 aLcres) 1,510 1,457 1,349 1,411 1,682 1,256 1,557 2.,188
Fertilizer Issue ('000 tons) 89 90 81 99 118 43 70 165
Average Yield (buslhel per acre 51.3 45.9 46.5 44.6 45.7 44.0 38.7 42.3'harves ted)
Rice Availability:1/
Rice Production ('000 tons) 1,081 934 876 B78 1,072 772 842 1,2922/
Net: Domestic Rice Supply ('000 tons) 965 834 782 784 957 689 713 1,1563/
Opening Stock of FC ('000 tons) n.a. 255 177 73 72 61 96 1264/
Rice Imports ('000 tonls) 526 339 266 338 297 450 444 3825/
(Inmports/Rice Consumptionr els %) (42.0) (29.4) (23.7) (26.7) (23.5) (40.7) (37.2) (24.4)
Total Rice Available for Consumption 1,251 1,152 1,123 1,265 1,265 1,104 1,192 1,568('000 tons)
Procurement and Distribution:
Paddy Procured by PMB (million bushels) 26.2 32.4 25.2 22.9 20.9 1.1.3 12.9 26.0
(Procurement/Production as %) (33.9) (48.4) (40.2) (36.4) (27.2) (20.5) (26.5) (28.0)
Rice Distributed by FC ('000 tons) 640 879 792 685 558 617 6,70 678
(D:Lstribution/Rice Consumption as %) (51.2) (76.3) (70.5) (54.2) (44.1) (55.9) (56.2) (43.2)
1/ Based on the conversion factor: 71.62 bushels paddy = 1 long ton rice.
2/ Equals rice product:Lon less seed and wastage, whicth are estimated to be about 12% of total production.
3/ FC = Food Commissioner.
4/ Food. Commissioner's data.
5/ This is the apparent rice! consumption which is estimated to be equal to the total rice available for consumption.The latter is estimated eas net domestic rice supply plus imports plus clhange in the FC's stocks; the change in thestocks of private traders and the Paddy Marketing Board (PMB) is omitted.
Source: Central Bank of Ceylon, Mlinistry of Planning and Economic Affairs, and the Food Commissioner.
Table 7.4: ACREAGE AND PRODUCTION OF SUBSIDIARY FOOD CROPS, 1972-76
Acreage Cultivated Production('000 Acres) _ __ _ ('000 Cwts) _ _
1972 1973 1974 1975 _976-- 1972 1973 1974 1975 19763/M[anioc (cassa,va) 146.2 127.1 225.6 195.7 333.3 6,251.4 13,022.6 16,723.9 15,093.1 25,052.7,Maize 40.1 60.0 95.1 99.0 126.9 261.3 268.4 469.4 680.4 1,035.8Chillies 59.8 90.0 102.7 81.6 123.8 238.0 382.4 312.6 321.3 ci75.,7Red Onions 14.31 17.3 16.0 15.6 25.3 1,223.0 1,342.9 1,396.8 1,423.1 1,832.6Groundnuts 12.0 15.4 19.1 19.2 28.2 107.8 181.8 144.8 149.7 218.9SGreen Gran 7.1 13.2 :26.4 22.9 43.7 24.6 62.9 116.0 116.5 234.,5Sorghian 0.2 3.0 3.0-h/ 9.3 18.1 0.6 22.2 30.21/ 126.0 240.9Soyabean n.a. 0.4 3.2 2.8 5.0 3.2 4.5 24.8 22.8 43.7Potatoes 7.8 7.0 2.52-/ 6.3 14.2 922.6 1,063.0 180.5-2/ 647.3 1,466.5Sesame n.a. 17.1 32.1 31.4 65.8 n.a. 56.7 96.9 116.3 335.8Cowpem n.a. 0.6-/ 2.6- 21.6 40.6 n.a. 12.5 15.7 148.8 291.1Black Grami n.a. 0.1 3.4 5.0 7.9 n.a. 6.8 12.9 20.6 70.2
1/ Matha cinly.
2,/ Yaila only.
3/f Tatrgets of the Ministry of Aericttltnlre and Lands
Source: Central Bank of Ceylon
Table 7.5: TREE CROPS PRODUCTION STATI'STICS, 1970-1977
1970 1971 1972 1973 1974 1975 1976- 1977
TEAProduction (million lbs.) 468 480 471 466 450 471 430 480Planted area ('000 acres) 3/ 597 597 598 599 598 598 598 599Average yield (lbs. per harvested acre)- 800 833 816 803 752 790 719 801
4/ (882) (920) (839) (937)Replanted Area (annual Acreage)-' 6,853 6,640 6,418 5,953 4,27:3 4,360 2,200 5,000Fertilizer issues ('C00 tons) 107 111 97 92 101 107 110 110
RUBBER
Production (million lbs.) 351 312 309 341 291 3:28 345 370Planted Area ('000 acre) 569 568 567 565 563 562 560 568Average Yield (lbs. per harvestec acre) 707 657 658 694 613 691 727 787Rieplanted Area (atnnuELl acreage)-' 10,239 3,477 8,742 7,276 7,076 7,980 10,000 10,000Fertilizer issues ('000 tons) 22 16 12 15 12 7 25 30
COCONUT
Production (million nuts) 2,510 2,617 2,963 1,935 2,044 2,585 2,300 2,000of which: Coconut Oil " 826 .1,005 1,031 469 532 962 1,060 n.a.Desiccated CoconuLt " n.a. 372 333 258 293 351 '311 n.a.
Fertilizer Issues ('000 tons) 64 58 48 39 40 40 50 n.a.
1/ Revised estimates mostly based on the preliminary result:s of' the first half--year.2/ Preliminary forecasts as of September 1976.3/ Harvested area excludes the :immature tea acres and, as f'rom 1974, the abandoned tea lands. The figures insidethe brackets for 1974 onward indicate the yields calculated on the basis of new definition of harvested areta.For comparison purpose, the old series is also continued to 1976.4/ By the end of 1969, the totaL area planted under tea. was 33,428 acres and that under rulbber 276,126 acres.
Sources: Sri. Lan,ka Tea Boarcl, Rubbeir Control Department and Coconut. Marketi'ng Boar(l.
Table 7.6 : TEA -- PRODUCERS' UNIT COST STRUCTURE, 1971-1977
(SL cents per lb.)
19371 1972 1973 1974 1975 19 / 2/177
1. Average Cost 180 191 203 252 295 320 340
a. Transport 5 C 7 11 1. a. n.a. n.a.
b. Fuel Oil, etc. 7 8 12 20 n.a. n.a. n.a.
c. Fertilizer 15 15 16 24 11.a. n.a. n.a.
d. Tea Chests 13 14 15 21 nl.a. n.a. n.a.
e. Labor 86 88 94 110 n.a. n.a. n.a.
f. Other Costs (including 54 60 59 66 n. a. n.a. n.a.
depreciation)2. Export Duty Rebates 6 2 5 1 1 1 1
3. Subsidies from Tea Subsidly Fund 6 6 7 28 31 29 29
4. Net Costs (1-2-3) 168 183 191 223 263 290 310
5. Colombo Auction Gross Price :188 199 197 :301 310 405 425
6. Sales Tax. 7 1C 8 36 32 32 32
7. Colombo Auction Net Price (5--6) 181 189 189 265 278 373 :393
8. Producers Margins (7--4) 13 6 --2 42 15 83 83
1/ Provisional e!stimates.2/ Preliminary forecasts.3/ In addition to the sales tax, Government has been levying an export duty of Rs 0.39 per lb.
throughout the period under consideration an,d cesses amounting to Rs 0.10 per lb. unti:L 1975
and Rs 0.11 thereafter.
Source: Tea Control Department.
'F;hlp 8.1 : STATE ITNDUSTRTAL CORPORATIONS - CAPACITY UTILIZATION, 1973 - 1976
(Percentage)
CorLporatior- Product -apa-tyUtliz
1973 1974 1975 1976 1/
Oils & Fats Provender 59 48 44 51ratty Acd's 40 34 9 24
Glycerine n.a. 31 32 29
Flour Milling Wheat, Milled 96 88 100 125
Textile Yarn 67 74 62 38Cloth 40 53 46 57Finishing 37 54 66 65
Leather Footwear 60 72 58 42Chrome Leather 105 90 79 93Bark Leather 66 124 48 45
Plywoods Plywood (3ply) 64 53 54 133
Paper Paper & Board 86 76 83 100
Paranthan Caustic Soda 92 90 77 95Chlorine 56 50 41 44
Petroleum Refinery 98 75 73 69Blending Plant 95 74 86 90
Tyres Standard Tyres 56 67 67 20
Ceramis Geornamic Ware 108 104 09 70
Sanitary Ware 115 120 131 100Kaolin 96) Qr116 88
Cem.ent Cement Ut U U 580 32
S2tee'l Rolled Prouducts 34 43 29 44Wire & Wire Products 26 41 83 68
Hardware Mammoties 90 86 65 35Castings 52 29 n.a. n.a.
Mineral Sands Ilmenite 102 89 69 73Rutile 52 72 72 48
1/ January - June figures.
Source: Ministry of Industries and Scientific Affairs.
Table 8.2 : STATE INDUSTRIAL CORPORATIONS -
FORLIGN TPAD, COMPONENT OF PRODJCTION, 1975
Imported Materials as percent of
Total Raw Value of Exports as percent ofCorporations Material Usage Production Value of Production
Oils & Fats 37.0 31.1 9.7
Flour Milling 100.0 88.9 6.0
Textile 98.5 42.6 Nil
Leather 60.9 10.7 46-2
PlY-oods 53.8 19.3 52.4
Paper. 59.3 31.7 30.1
Paranthan 59.9 5.2 40.8
'I~ An 0 o PetroLeum 100.0 ,8.1 25.3
Tyre 83.0 33.1 n.a.
Ceramics 16.0 59.7 16.0
Cement 15.0 1.5 61.5
Steel 100.0 61.5 Nil
Hardware 83.6 44.8 1.9
Salt Nil Nil Nil
Graphite Nil Nil 85.2
Mineral Sands Nil Nil 58.6
Source: Ministry of Industries and Scientific Affairs.