Sri Lanka: From Peace Dividend to Sustained Growth Acceleration

43 Pages Posted: 20 Apr 2016

See all articles by Daminda Fonseka

Daminda Fonseka

affiliation not provided to SSRN

Brian Pinto

Independent

Mona Prasad

affiliation not provided to SSRN

Francis Rowe

affiliation not provided to SSRN

Date Written: September 1, 2012

Abstract

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

Keywords: Debt Markets, Economic Theory & Research, Emerging Markets, Access to Finance, Banks & Banking Reform

Suggested Citation

Fonseka, Daminda and Pinto, Brian and Prasad, Mona and Rowe, Francis, Sri Lanka: From Peace Dividend to Sustained Growth Acceleration (September 1, 2012). World Bank Policy Research Working Paper No. 6192, Available at SSRN: https://ssrn.com/abstract=2143066

Daminda Fonseka (Contact Author)

affiliation not provided to SSRN ( email )

No Address Available

Brian Pinto

Independent ( email )

No Address Available
United States

Mona Prasad

affiliation not provided to SSRN ( email )

Francis Rowe

affiliation not provided to SSRN

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