Sri Lanka 

Sri Lanka country policy

Policy established 17 August 2011

• Guarantee of monetary authority (Ministry of Finane, central bank) (unconditional)
• Case-by-case assessment
• The country ceiling is 300 mln euro
• Early warning signal 300 mln euro
• - of which was used as at 2012-02-29 123 mln euro

Country class: 6

Dekkingsadviessituatie

Advice of cover situation

Publieke kopers: good governance control.

Sri Lanka country facts

Atradius Dutch State Business Economic Research
Country Report last updated :  12 July 2011 
Country :  SRI LANKA 

Political Situation
Increasing Autoritarianism

Head of state
President Mahinda Rajapaksa (since November 2005). President is both chief of state and head of government.

Form of government
Government of the United People’s Freedom Alliance (UPFA). Main opposition party UNP.  
 
Member of IMF, IBRD, UN, ADB, WTO, SAFTA, SAARC, Commonwealth.

Internal Economic Situation
Booming Economy

General situation
Sri Lanka has a relatively high income per capita and well developed business environment compared to the region. The main drivers of the economy are the relatively well developed service sector and the large export focussed textile sector. Sri Lanka ran into difficulties in 2009 due to slowing growth and poor fiscal discipline and had to be rescued by an IMF package. Sri Lanka is drawing form the $ 2.4 billion SBA and still can draw $ 750 million if payouts will be approved. A liquidity crisis was prevented in 2009 and reserves have been restored to sufficient levels. Economic growth has recovered and is forecasted at 8% in 2011, thanks to recovering exports, remittances, tourism and ‘peace dividend’ in Tamil areas.

External Economic Situation
Recovery Of Textile Export, Tourism And REMITTANCES
Main sources of foreign exchange
Textiles & clothing (43% XG), tea (12% XG), tourism ($410 mln) , remittances ($2.7 bln), gems (4% XG)

Main foreign markets
US (28%), EU (28%, UK 12%, Germany 4%), India (9%).

Main expenses of foreign exchange
Capital goods (18%), textiles (17%), minerals (20%)
 
Balance of payments 
Remittances from Sri Lankan workers abroad are a traditional source of capital inflow together with large appetite for Sri Lankan shares. FDI is likely to increase as well, since the political stability has improved.